Functional discounts are legal when they reasonably reflect the supplier's savings or channel member's costs.

Question

Quizplus · Accepted Answer

Functional discounts are legal as long as they are based on the supplier's actual savings or the channel member's costs. These discounts are intended to incentivize channel members to perform certain functions such as marketing, distribution or sales promotion. The discounts must be reasonable and not exaggerated to the point of being unfair to other channel members. Therefore, functional discounts are legal as long as they reflect the actual costs or savings associated with the function being performed.

Functional Discounts Are Legal When They Reasonably Reflect the Supplier's