Buydowns - Lower The Cost?????

I own a retail tobacco shop and am about to go live with RMS. My question is related to the buydown feature within the pricing section of an item. In my industry it is common for the major manufacturers to run buydowns on products to facilitate discounting to the customers. Example as follows:

Product = Marlboro Carton

MY REGULAR COST = $30.00 MY REGULAR RETAIL = $32.00

MANUFACTURER FUNDED BUYDOWN = $5.00 > THEY NOW EXPECT MY RETAIL TO = $27.00

Problem for me is that when I lower my "Buydown" retail price, I show a loss.

I am currently using another POS product that lowers both the cost and the retail, keeping my cost/retail gap in place. Does anybody know of an add-in or method to fix this. Or better yet, if anybody out there is doing business with Philip Morris or R.J. Reynolds and has found an efficient method of dealing with this issue, PLEASE HELP!

Tim - Cigar Guy

Reply to
Tim - Cigar Guy
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It's OK to show the loss. Your books will show the buydown refund check as straight profit and at the end of the year everything will be OK. Yeah, your sales reports might look a little ugly in the short term but in the end it'll all work out just like it should.

If your numbers are accurate, I feel sorry for tobacco retailers. Less than

7% gross profit? Dang. I hope you make a killing on lighters.

Tom

Reply to
Terrible Tom

Reply to
Tim - Cigar Guy

Reply to
Tim - Cigar Guy

Hey Tim,

We are just starting out on Rms as well (two days now) so im not any help that way for you but i do know what you mean about the buy downs and all. We have c-stores i would like to stay in touch with you i think it could prove good for both of us. My e-mail is windman at cox dot net I have a idea about inventory as well for cigs.

"Tim - Cigar Guy" wrote:

Reply to
Doug Pic-N-Pac

We sell appliances and often get back-end discounts not unlike your buy-backs.

For example, if we order a container of washer/dryer sets (say 40 pairs) we get some small percentage back as a credit or even a rebate check later.

While we never get so much back that we sell at a loss when comparing the PO cost to the actual retail, we definitely show a reduced profit margin on these items. If I buy a cheap washer for $300 and retail it for $349 because I'm getting a $20 trailing credit instead of $399, my true profit margin is

20% ($69/$349) not 14% ($49/349) even though RMS will never see the $20.

I am sure that lots of other businesses have similar scenarios.

To me, I want the cost in RMS to be what I actually paid. If you write a check for $30/carton, then your cost is $30/carton. When you get your $5/carton buy-down check, I figure that money should go straight to your G/L as a separate income category. This way you can track how much money you made with buydows.

As a workaround, you could create a non-inventory item called buydown with a cost of $0 and sell them to yourself whenever the check arrives. Tender the total amount as check, put the check in the till and add it to the deposit. If you assign dept/ctgy same as cigs, your profit by dept will be corrected when the check arrives.

Tom

Reply to
Terrible Tom

Product = Marlboro Carton

MY REGULAR COST = $30.00 MY REGULAR RETAIL = $32.00

MANUFACTURER FUNDED BUYDOWN = $5.00 > THEY NOW EXPECT MY RETAIL TO = $27.00

Problem for me is that when I lower my "Buydown" retail price, I show a loss.

I am currently using another POS product that lowers both the cost and the retail, keeping my cost/retail gap in place. Does anybody know of an add-in or method to fix this. Or better yet, if anybody out there is doing business with Philip Morris or R.J. Reynolds and has found an efficient method of dealing with this issue, PLEASE HELP!

Tim - Cigar Guy

Reply to
CptSoft

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