QPS stands for Quantity Purchase Scheme. Enter your unit price, retailer margin and up to four quantity slabs, choose retroactive or incremental payout, and see what each retailer earns, where the slabs create dumping cliffs and what the scheme costs across all counters.
QPS stands for Quantity Purchase Scheme. It is a trade scheme in which a retailer (sub-dealer) or dealer earns a payout for buying a minimum quantity of a product within a fixed period, usually a month or a quarter. The payout rises in slabs: buy 100 units and earn ₹5 per unit, buy 250 and earn ₹8, buy 500 and earn ₹12. Brands in wires and cables, paints, pipes, lubricants, electricals and FMCG use QPS to push volume on focus SKUs, fill the pipeline before season and reward counters that commit to stock. The full form matters because sales teams shorten it in circulars, and new distributors and retailers often ask what a "QPS scheme" is.
A QPS differs from a turnover discount in three ways. It is measured in units of a named product, not in rupee turnover across the range. It runs for a short period, not a year. And its slabs are close together, which is what makes it powerful and also what creates the "cliff" behaviour this calculator flags. For designing rupee-value slabs across the whole range, use the Scheme Slab Designer. For a longer treatment of design choices, read QPS scheme: quantity purchase scheme design, examples and mistakes.
Take slabs of 100 units at ₹5, 250 at ₹8 and 500 at ₹12, and a retailer who buys 300 units in the period.
| Payout mode | How 300 units are paid | Payout |
|---|---|---|
| Retroactive | All 300 units at the ₹8 rate of the slab reached | 300 × ₹8 = ₹2,400 |
| Incremental | Units 101 to 250 at ₹5, units 251 to 300 at ₹8 | 150 × ₹5 + 50 × ₹8 = ₹1,150 |
Retroactive pays more than double for the same quantity, and it creates a step at every threshold. At 249 units the retroactive payout is ₹1,245; at 250 it is ₹2,000. One unit is worth ₹755. If the product bills at ₹450 with a 12 percent retailer margin (₹54 per unit), a retailer sitting at 236 units can buy the 14 units needed to reach 250, sell them at cost, give up ₹756 of margin and still gain ₹820 of payout. That is the cliff mechanism, and it is why retroactive schemes see bunching just above each threshold in the last week of the period. The slab table grades each threshold by how wide that profitable zone is relative to the slab gap: at these numbers the 250-unit step is Balanced, while the 500 and 1,000 steps are wide enough to Watch. Incremental schemes have no step, so they are cheaper and calmer, but they motivate less because the headline "₹12 per unit" only applies to the units above 500.
Across programs Unotag runs, retroactive QPS schemes with steps above one to two weeks of a counter's normal margin show visible period-end bunching, while incremental schemes and retroactive schemes with gentle steps do not. Fixes that work: narrow the rate difference between adjacent slabs, add slabs so each step is smaller, move to incremental payout above the second slab, or pay part of the benefit as points that vest only when the next period's purchases hold up.
Most QPS payouts are settled by a credit note against the invoices of the period. Whether GST can be reduced on that credit note depends on whether the discount was agreed before supply and can be linked to specific invoices under Section 15(3)(b) of the CGST Act; a post-sale discount that does not meet the test is a financial credit note without GST adjustment. Where the payout is given as points, gifts or UPI transfer through a loyalty platform rather than as a price reduction, Section 194R treatment may apply above ₹20,000 per retailer per year (see the 194R TDS calculator). The principle is clear but the facts differ by scheme, so confirm with your advisor before you publish the circular.
QPS stands for Quantity Purchase Scheme. It is a trade scheme where a retailer or dealer earns a per-unit or percentage payout for buying a minimum quantity of a product within a period, with the rate rising in slabs as quantity increases.
A quantity purchase scheme rewards channel partners for buying a set number of units of a product in a period, usually a month or quarter. Slabs such as 100, 250 and 500 units carry rising payouts, settled by credit note, points or UPI transfer at period end.
No. A QPS is measured in units of a named product over a short period, while a turnover discount is measured in rupee purchases across the range over a year. QPS slabs are closer together, which makes them stronger and more prone to period-end dumping.
Retroactive payout reprices the whole quantity at the slab reached and motivates strongly but creates cliffs at every threshold. Incremental payout applies each rate only to units above its threshold, costs less and avoids cliffs. Many brands use retroactive for the first slab and incremental above it.
Keep the step gain at each threshold below the retailer margin on the units needed to reach it, add more slabs so each step is small, cap eligible quantity per counter, verify secondary sales with QR scans or invoices, and vest part of the payout on next-period purchases holding up.
Most QPS payouts are settled by GST credit note against the period's invoices, which can reduce GST only if the discount was agreed before supply and linked to invoices. Payouts made as points, gifts or cash through a loyalty platform may attract Section 194R TDS above ₹20,000 a year. Confirm with your advisor.