Co-Marketing Credits

When you and a vendor discount a product together, you shouldn't have to eat that markdown alone. Co-marketing credit is how they share it. Let's see how it works.

You and a vendor agree to run a promotion — you knock a few dollars off a product to help it move. It sells, which is great, but your margin takes the hit. Here's the fair part: if the vendor signed off on that discount up front, they agreed to share the cost of it. Co-marketing credit is how you collect their share.

So how does this actually work? It only applies to product you bought wholesale — outright. On consignment, the vendor already shares every discount through their split, so there's nothing extra to collect. But on wholesale, when a promo the vendor approved sells the product below its normal price, they cover an agreed share of that markdown, right on their monthly credit memo.

But what counts as below normal? Every product has a baseline price we call keystone — the price that hits your target margin. You set that margin right here. At fifty percent, keystone is simply twice what the product cost you. Sell above it, there's no credit. Sell below it because of that promo, and the shortfall is what the vendor helps cover.

The math is clean. Start at keystone, the product's normal price. Subtract what it actually rang up for during the promo — that gap is the shortfall. Multiply the shortfall by the vendor's co-marketing rate, and that's their credit. Every number comes straight from your own sales data. Nothing estimated, nothing to argue about.

Now the rule you can never get wrong. Only promotions your vendor approved in advance are ever charged to them. Your own markdowns — loyalty discounts, employee pricing, an everyday sale you ran on your own — those stay on you, always. A vendor only shares the markdowns they actually agreed to. That's why approving a promo before it runs is the whole ballgame — a markdown the vendor never signed off on is simply margin you chose to give away.

And the share itself — how much of that shortfall the vendor covers — is set right here, per vendor, whatever the two of you negotiated. That's co-marketing credit: when you and a vendor discount together on wholesale product, they carry their agreed piece of it, backed by your own numbers, month after month.