Rebate income

Definition

Money from the buying group that arrives after the sale, and is part of the margin.

Why It Matters

A meaningful share of a hardware store's gross profit does not come from the customer at all. It arrives later, from the co-op or buying group, and it depends on volume tiers, on program participation, and on the store remaining a member in good standing. That makes it the most fragile line in the margin: a change of ownership can reset the tier, and a buyer who models the seller's rebate as recurring may be modeling somebody else's purchasing history. Ask for two years of rebate statements and the tier they were earned on.