Dealer Incentive

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.

BREAKING DOWN '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. Purchase and Resale Agreements ...

    An arrangement between the Bank of Canada and dealers whereby ...
  2. Markup

    The difference between an investment's lowest current offering ...
  3. Privilege Dealer

    An individual or a securities firm that is registered as a market ...
  4. Dealer Market

    A financial market mechanism wherein multiple dealers post prices ...
  5. Bid Wanted In Competition - BWIC

    A situation where an institutional investor submits its bond ...
  6. Dealer

    A person or firm in the business of buying and selling securities ...
Related Articles
  1. Investing Basics

    What's a Dealer Market?

    In a dealer market, market participants buy and sell through dealers who are designated as market makers.
  2. Professionals

    MUNICIPAL BOND TRADING

    Municipal Bond Trading Municipal bonds trade over the counter in the secondary market much like OTC stocks. Municipal bond dealers provide quotes on the bonds that they deal in, to other broker ...
  3. Professionals

    Gift Rule

    Broker dealers may not pay compensation to employees of other broker dealers. If a broker dealer wants to give a gift to an employee of another broker dealer, it must: Be valued at less than ...
  4. Professionals

    D. Accrued Interest

    Accrued Interest Most bonds pay interest semi-annually, based on their maturity date. An investor who wishes to sell a bond between the interest payment dates will be owed the interest that has ...
  5. Professionals

    Registration and Regulation of Brokers and Dealers

    FINRA/NASAA Series 26 Section 7 - Registration and Regulation of Brokers and Dealers. In this section manipulative, deceptive or fraudulent devices, discretionary accounts, fraudulent acts and ...
  6. Professionals

    End Users and Dealers

    CFA Level 1 - End Users and Dealers. Learn how end users and dealers interact in the forwards market. Provides examples showcasing the role of both in a financial transaction.
  7. Professionals

    Introduction

    Securities that are not listed on any of the traditional exchanges trade over the counter or on the NASDAQ. NASDAQ stands for National Association of Securities Dealers Automated Quotation System. ...
  8. Professionals

    C. Rule 200 Definitions and Order Marking

    Rule 200 updates the definition of who is determined to be long a security. As new derivatives and trading systems and strategies have been introduced, amendments to the short sale rules under ...
  9. Professionals

    Transactions

    Riskless Principal Transactions If a brokerage firm receives a customer order to buy or sell a security and the firm does not have an inventory position in the security, the firm may still elect ...
  10. Home & Auto

    Watch the Fees on Your New Car - They Can Add Up!

    If you’re in the market for a new car, the asking price isn’t the only number you should be negotiating. The fees can cost you if you aren’t careful.
RELATED FAQS
  1. What are the differences between installment sales and credit sales?

    Determine the differences between credit sales and installment sales, which businesses often offer their customers for deferred ... Read Answer >>
  2. How does the International Chamber of Commerce define the term 'Free on Board' (FOB)?

    Find out more about the International Chamber of Commerce, Incoterms rules and how the International Chamber of Commerce ... Read Answer >>
  3. What is the difference between a repurchase agreement and reverse repurchase agreement?

    Learn how a repurchase agreement is a form of collateralized lending and a reverse repurchase agreement is a form of collateralized ... Read Answer >>
  4. If a foreign currency dealer is quoting a bid-ask spread of $1.0500-35 ...

    The correct answer is: D) Percentage Spread = [(Ask Price - Bid Price)/Ask Price] x 100 = [(1.0535 - 1.0500)/1.0535] x 1 ... Read Answer >>
  5. What are the main risks associated with trading derivatives?

    Understand derivatives trading and learn about the primary risks usually associated with trading in the derivatives market, ... Read Answer >>
  6. Why are most brokerage firms owned by banks?

    Learn about the differences between investing with a bank-owned brokerage firm or with an independent broker. Get real answers ... Read Answer >>
Hot Definitions
  1. Goodwill

    An account that can be found in the assets portion of a company's balance sheet. Goodwill can often arise when one company ...
  2. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating the capital under its control to profitable investments. ...
  3. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  5. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  6. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
Trading Center