16 types of dealer schemes used in Indian trade
Scheme circulars look different in every company, but underneath they are built from a small set of mechanics. Knowing the set helps in two ways: you pick the mechanic that matches the problem instead of repeating last year's slab sheet, and you can tell whether your systems can actually calculate what the sales team wants to announce.
Dealer schemes in Indian trade fall into 16 common types: quantity discount slabs, growth over last year, milestone blocks within a month, collection or payment discipline, cash discount by days to payment, daily or spurt schemes, new dealer schemes, revival of inactive dealers, star rating or annual status, retailer counter-sales schemes, in-kind gift and tour schemes, order booking schemes, festival or motivational schemes, share of wallet, target achievement, and product-mix or premium-share bonuses. Each rewards a different behaviour: volume, growth, timing, payment, range or loyalty. Most brands run four to six at once.
All 16 at a glance
| # | Scheme type | Mechanic in one line | Use it when |
|---|---|---|---|
| 1 | Quantity discount slabs (QPS, TOD) | Rate per unit or percent rises with lifting in the period | You want steady volume from the whole base |
| 2 | Growth over last year | Pays on lifting above the dealer's own base from the same period last year | Large dealers are coasting and small dealers cannot reach absolute slabs |
| 3 | Milestone blocks within a month | A fixed amount for every completed block of units | You want repeat orders through the month, not one push at the end |
| 4 | Collection or payment discipline | Incentive depends on outstanding cleared by a date or within credit days | Receivables are stretched |
| 5 | Cash discount by days to payment | Per unit or percent by days from billing to full payment | You want early payment as a habit, invoice by invoice |
| 6 | Daily or spurt scheme | Extra rate for lifting in a short window of one to ten days | A depot has stock to move or a month needs a late push |
| 7 | New dealer scheme | Higher rate or welcome benefit for the first months after appointment | You are expanding the network |
| 8 | Revival of inactive dealers | Benefit for a dealer with no lifting in a defined past period who restarts | The dormant list is long |
| 9 | Star rating or annual status | Yearly performance sets a tier with standing benefits | You want year-long loyalty and something to defend |
| 10 | Retailer counter-sales scheme | Pays the retailer or sub-dealer on what he buys or sells through the dealer | Stock sits with dealers and needs pull at the counter |
| 11 | In-kind gift and tour | A gift or trip at a volume threshold instead of money | Recognition matters more than rate |
| 12 | Order booking scheme | Benefit for orders placed or advances paid in a booking window | You need demand visibility before a season or price change |
| 13 | Festival or motivational scheme | A short seasonal scheme with gifts or a bonus rate | Festive demand, or morale after a hard quarter |
| 14 | Share of wallet | Pays on your share of the dealer's total category purchases | The dealer stocks several brands and you want to be the main one |
| 15 | Target achievement | Pays by percent of an assigned target achieved | Territories differ too much for one slab sheet |
| 16 | Product-mix or premium-share bonus | Extra on premium products if they reach a minimum quantity or share | Volume is fine but the mix is poor |
Volume schemes
Quantity discount slabs
The base scheme in most categories. Slabs on monthly or quarterly lifting, with the rate per unit or the percentage of value rising at each slab. It is called QPS when run on quantity and TOD when run on turnover. The key decisions are the thresholds and whether the slab rate is paid on all units or only above the threshold. See the QPS scheme guide and the slab designer.
Growth over last year
The dealer is measured against himself: lifting above, say, 110 percent of the same month or quarter last year earns a rate. It is fair across dealer sizes and does not pay for volume that would have come anyway. It needs clean history, a rule for dealers with no base and clubbing of old and new dealer codes.
Target achievement
Each dealer gets a target, usually from the sales officer, and the payout depends on achievement: for example one rate at 90 to 99 percent, a higher one at 100 percent and above. It suits uneven territories. Its weakness is the target itself, which is negotiated, so keep the method of setting targets consistent and recorded.
Share of wallet
Rewards the dealer for giving you a larger share of his category purchases. It is powerful in multi-brand counters and hard to verify, because you only see your own invoices. Brands use dealer declarations, counter audits or a proxy such as growth well above the market. Use it with a few large dealers where you can check, not across the base.
Timing schemes
Milestone blocks within a month
A fixed amount for every completed block, for example every 200 bags lifted in the month. A dealer who lifts 650 bags completes three blocks. Unlike slabs there is always another milestone close by, which spreads lifting across the month and suits depots that struggle with month-end dispatch load.
Daily or spurt scheme
An extra rate for lifting within a short window, sometimes a single day. It moves stock quickly. It also trains dealers to wait for the next spurt if used too often, and it brings sales forward from the following weeks. Keep the window, the depot and the product tight, and look at the fortnight after before calling it a success.
Order booking scheme
A benefit for confirmed orders or advance payments made in a booking window, with delivery later. It is common before a season or an announced price increase. It gives production and logistics a view of demand. The condition to state clearly is what happens when a booked order is cancelled or only partly lifted.
Festival or motivational scheme
A short scheme tied to a festival or the year end, often with a gift at a threshold and a simple message. It is as much about the relationship as the rate. Plan it against the calendar in festive trade schemes, and expect a dip in lifting after the window.
Payment schemes
Collection or payment discipline
The volume incentive is paid in full only if the dealer's outstanding is cleared by a date, or stays within credit days through the period. Some brands pay a separate collection incentive on amounts collected by a cut-off. It aligns the sales team's scheme with the finance team's concern. It needs payment data from the ERP, not just invoices.
Cash discount by days to payment
A per-unit or percentage benefit on each invoice, by the number of days from billing to full payment, in day slabs. On-account money is knocked off against the oldest invoices first. It is the scheme dealers dispute most because of how payments are matched. The cash discount scheme guide works an example with three invoices and two payments.
Network schemes
New dealer scheme
A higher rate, a lower threshold or a welcome benefit for the first three to six months after appointment, so the dealer can build the counter before competing on the main slab sheet. Define the appointment date, and guard against an existing dealer reappearing under a new firm name to qualify.
Revival of inactive dealers
A benefit for a dealer who has not lifted for a defined period, such as the last 90 days, and restarts with a minimum order. It is cheap volume if the dealer stays. Add a condition on the second and third month, or the scheme pays for one order and nothing more. Active dealers will notice, so keep it quiet and time-bound.
Retailer counter-sales scheme
The benefit goes to the retailer or sub-dealer who buys from your dealer, based on purchases or on sales across the counter. It creates pull below the dealer. It needs proof of the secondary sale: dealer billing data, invoice upload or a scan. Sub-dealer loyalty programs and the retailer schemes solution cover the tier in detail.
Status and recognition schemes
Star rating or annual status
A year of performance, usually volume with growth and payment discipline, sets a tier such as three, four or five star. The tier carries standing benefits for the next year: a higher base rate, priority supply, a place at the annual meet. It gives the dealer something to lose. Publish the criteria early and review at a fixed date.
In-kind gift and tour schemes
A gift or a group tour at a volume threshold. Tours are remembered long after a credit note is forgotten, and they give the leadership team three days with their best dealers. They need qualifiers tracked through the year, a cash alternative policy and attention to tax. See the Section 194R guide for the principle and confirm the treatment with your advisor.
Product-mix or premium-share bonus
An extra rate on premium or focus products, payable only if they reach a minimum quantity or a minimum share of the dealer's lifting, often with a minimum total as well. It is the usual answer when volume is on plan and realisation is not. The minimum thresholds are gates: nothing is paid until every one is met.
How to choose and combine
Start from the behaviour you want, not from the mechanic. If the problem is month-end skew, a bigger slab makes it worse and milestone blocks help. If receivables are the problem, a volume scheme without a payment condition funds the dealers who pay late. If the top twenty dealers take most of the budget for standing still, move part of it to growth over last year.
Then check the combination. Schemes stack, and the stacked rate on a large dealer in a good month can be far above what any single circular suggests. Decide whether one invoice can earn under several schemes, set a cap per dealer where needed and project the total cost on real purchase history before launch, as described in scheme cost projection and what-if analysis. For arithmetic on each mechanic, see how to calculate a dealer scheme payout.
Finally, check that the scheme can be calculated and explained. A scheme the dealer does not understand does not change what he lifts. In Unotag's dealer scheme engine, scheme kinds are configured rather than coded, 16 kinds in all, with conditions on value or quantity and incentives as percentage, per-unit, fixed or slab. The dealer sees progress and the next target for each scheme and can have it explained in his own language. The trade scheme communication plan covers the announcement side.
Key takeaways
- Dealer schemes are built from about 16 mechanics that reward volume, growth, timing, payment, network expansion, status or mix.
- Choose the mechanic from the behaviour you need: milestone blocks for month-end skew, cash discount for receivables, growth over last year for coasting dealers.
- Schemes stack. Decide what can combine, cap where needed and project the total cost on real history before launch.
- Every type needs specific data: last year's base, payment dates, secondary sales or targets. If the data is missing, the scheme cannot be calculated fairly.
Frequently asked questions
What are the types of dealer schemes?
The common types are quantity discount slabs, growth over last year, milestone blocks, collection schemes, cash discount, spurt schemes, new dealer and revival schemes, star rating, retailer counter-sales schemes, gift and tour schemes, order booking, festival schemes, share of wallet, target achievement and product-mix bonuses.
What are trade schemes for dealers?
Trade schemes are time-bound incentives a manufacturer offers dealers over and above the billed price, in return for a behaviour: lifting more, growing over last year, paying early, stocking premium products or developing retailers. They are announced by circular and settled by credit note, payout or in kind.
Which dealer scheme type is most common in India?
Quantity discount slabs on monthly or quarterly lifting, known as QPS or TOD, are the base scheme in most categories. Cash discount for early payment and an annual target or tour scheme usually run alongside it.
What is the difference between a quantity discount scheme and a growth scheme?
A quantity discount scheme pays by the absolute quantity lifted in the period, so large dealers earn more. A growth scheme pays on lifting above the dealer's own base from last year, so dealers of any size can earn by growing.
What is a spurt scheme for dealers?
A spurt scheme is a short-window scheme, from one day to about ten days, that pays an extra rate on lifting within the window. It moves stock quickly but brings sales forward and, if repeated often, teaches dealers to wait for the next one.
What is a star rating scheme for dealers?
A star rating scheme assigns each dealer an annual status, such as three, four or five star, based on the year's volume, growth and payment record. The status carries benefits for the following year, such as a higher base rate or priority supply.
How many dealer schemes should a brand run at once?
Most brands run four to six: a base volume scheme, a payment scheme, a mix or focus-product bonus, an annual status or tour scheme and occasional tactical schemes. More than that and dealers cannot keep track unless each scheme's progress is shown to them clearly.
Can different dealer scheme types be combined?
Yes, and they usually are. The circular should say whether an invoice can earn under more than one scheme, and a cap per dealer limits the stacked rate. Project the combined cost on purchase history before launching.