A price floor is the minimum selling price a business permits for a product, service, or transaction without additional approval. It may be based on cost, required margin, contractual rules, or risk and is used to prevent discounts from making a sale commercially unacceptable.
Review points before the transaction moves
- Confirm the party responsible for the pricing decision.
- Keep the source data and approval with the transaction.
- Record exceptions instead of silently changing the original instruction.
- Make the downstream owner able to reconstruct what happened without an email search.
The boundary worth keeping clear
The definition matters because nearby terms can describe a different document, event or responsibility. Use Price floor only when the record matches the conditions above. A familiar label attached to the wrong stage creates cleaner-looking data and worse decisions. That discipline also makes reports comparable across teams, systems and reporting periods.
Related terms and distinctions
- Markup: Markup is the amount added to the cost of a product or service to determine its selling price.
- Gross margin: Gross margin is the percentage of sales revenue remaining after subtracting the direct cost of the product or service sold.
| Checkpoint | What the record should show |
|---|---|
| Inputs | Identify cost, quantity, currency and customer conditions |
| Rule | Show the formula, threshold or agreed price source |
| Exception | Name the approver when the result falls outside policy |
| Output | Carry the approved amount and assumptions into the quotation |
The trade-off
More controls add work at the start. That cost is visible. The cost of weak records arrives later as rework, delayed approval, margin leakage, a payment investigation or a delivery dispute. Set the control depth according to the amount, risk and reversibility of the decision.
Related Quotable resources
Continue with Markup, Gross margin and quote software. These pages cover the commercial workflow and the records that connect Price floor to the next transaction step.
