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.
Quick reference for Price floor
| Check | What it means for the transaction |
|---|---|
| Category | Pricing and profitability |
| Record to keep | Record the cost basis, currency, quantity, customer scope, effective period and approval behind the amount when they apply. |
| Do not infer | A price label alone does not establish margin, landed cost or the final invoiced amount. |
Price floor and nearby terms
- Gross margin: Gross margin is the percentage of sales revenue remaining after subtracting the direct cost of the product or service sold.
