Costco Allowances are an agreed upon percentage held from payment to settle any freight, demo, spoils, advertising, or other fees that may occur throughout the duration of a program. Allowances ensure that the vendor will not be burdened with an overbearing debit, thus protecting the vendor in the end. Allowance arrangements vary per item, department and Costco avenue and include considerations for shipping terms, payment terms, duration of the program, guarantee vs. full sale, geographical scope, etc. Some allowances pull from the full PO amount, while others (such as New Warehouse Allowances) only apply to the applicable units.
Many allowances are optional, but some may be required. With the flow of Costco’s buying process, if an allowance is required it may not be announced until after you have submitted pricing. It can be difficult to anticipate which allowances will be asked for. You clearly do not want to underestimate allowances, but you also do not want to build too much in that you overprice your item.
It is vital that allowance costs be factored appropriately into the price of your potential product. To successfully plan your price point and consider all possible allowances, partner with VendorCo – experts in Costco sales. Contact [email protected] for more details about how our services best serve you.