Dealer Incentive

AAA

DEFINITION of 'Dealer Incentive'

A corporate sales strategy in which the price a dealer has to pay a manufacturer for a particular product is reduced, allowing the dealer to make a higher profit or to reduce the price at which the product is sold to consumers. Dealer incentives can be tied to certain sales quotas, meaning that the dealer will only receive the incentive when a certain number of units is sold.

INVESTOPEDIA EXPLAINS 'Dealer Incentive'

Dealer incentives are often associated with the automobile industry. Manufacturers will reduce the price a dealer has to pay for a particular vehicle model in the hope of increasing the sales volume of that model. If the dealer charges the end consumer the same price but pays less to acquire the model, then the dealer earns a higher profit. The dealer can also pass the cost savings to the consumer, but may not be required to do so.

RELATED TERMS
  1. Dealer

    A person or firm in the business of buying and selling securities ...
  2. Dealer Financing

    Loans that are originated by a retailer to its customers and ...
  3. Auto Sales

    The major producers of domestic automobiles report sales monthly. ...
  4. Big Three

    A reference to the three largest automobile manufacturers in ...
  5. Retail Sales

    An aggregated measure of the sales of retail goods over a stated ...
  6. Public-Private Partnerships

    A business relationship between a private-sector company and ...
RELATED FAQS
  1. What content does a letter intent have to have?

    Letters of intent vary in purpose and content depending on the dealings between the involved parties. In a basic form, each ... Read Full Answer >>
  2. What is the difference between a letter of intent and a memorandum of understanding?

    A letter of intent is likely to encompass a number of different aspects, and it varies in length according to the level of ... Read Full Answer >>
  3. What are the most effective ways to reduce moral hazard?

    There are a number of ways to reduce moral hazard, including the offering of incentives, policies to prevent immoral behavior ... Read Full Answer >>
  4. What are the advantages to structuring a business as a master limited partnership ...

    A master limited partnership (MLP) offers tax benefits for corporate entities that can reduce the cost of capital for capital-intensive ... Read Full Answer >>
  5. How legally binding is a letter of intent?

    A signatory may be bound to a letter of intent depending on how the letter is drafted. In a business-to-business transaction, ... Read Full Answer >>
  6. Should I purchase a master limited partnership (MLP) in my retirement account?

    Most investors should not purchase units in a master limited partnership, or MLP, in their retirement accounts. MLPs offer ... Read Full Answer >>
Related Articles
  1. Personal Finance

    Top 10 Ways To Get Top Dollar For Your Car

    Find out what steps you can take to reduce the depreciation of your vehicle.
  2. Personal Finance

    Save On Planes, Trains And Automobiles

    Getting to, and around, your travel destination doesn't need to break the bank.
  3. Options & Futures

    Henry Ford: Industry Mogul And Industrial Innovator

    This man made his dream of bringing the automobile to the masses a reality.
  4. Personal Finance

    12 Ways To Shop Smarter

    The early bird may catch the worm, but in shopping, the worm will come to those who wait.
  5. Entrepreneurship

    What is Unlimited Liability?

    Unlimited liability means that the owners of a business are liable for the entire amount of debt and obligations of that business.
  6. Economics

    What is a Partnership?

    A partnership is an organization where two or more owners operate a business.
  7. Stock Analysis

    What Makes LinnCo Different From MLPs?

    MLPs are some of the favorite investments of dividend investors, as the surge in the energy industry increased the amount of income that MLPs paid out to.
  8. Economics

    Gas Dispute Poses Risks For Both The EU And Russia

    The Russia-Ukraine gas dispute has caused energy insecurity for the EU, which is seeking new gas suppliers, and market uncertainty for Russia's Gazprom.
  9. Investing

    What's a Transfer Price?

    A transfer price is what one unit of a business charges another unit of the same business for a good or service. The transfer price is usually close to the prevailing market rate when different ...
  10. Investing

    What's a Monopolistic Market?

    A monopolistic market has a significant number of characteristics of a pure monopoly. Though there may be more than one supplier, the market has high prices, suppliers tightly control availability ...

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center