Promotions, Bonuses, and Discounts: What to Use in Distribution and When?

One of the quickest decisions when sales fall is to lower the price. A sales rep is given a new discount, a free product is offered above a certain order size, or a promotion is announced for every point of sale.

More orders may come in, but a higher sales volume does not always mean higher profit. A discount reduces the profit per product, a bonus adds product and delivery costs, and a poorly planned promotion can build up excess stock at points of sale.

So, three questions need to be answered before a campaign begins:

• What problem are we trying to solve?

• Which mechanism fits that task?

• How do we measure the bottom line, not just sales?

What is the difference between a promotion, a bonus and a discount?

These concepts are related, but not the same.

A promotion is the broader concept. It may include a discount, a bonus, a free product, a bundle offer, or another mechanism.

A discount usually lowers the price of a product at the time of purchase. A bonus is given after the condition is met, and it can take the form of extra products, a cash incentive, or credit that can be used on the next order.

When should you apply a discount?

A discount can help when price is the customer's main obstacle. For example, you may need to encourage trial of a new product, reduce a seasonal surplus, or speed up orders during a specific period.

A discount can suit the following situations:

• testing a new product at selected outlets;

• a controlled reduction of slow-moving stock;

• sales promotion in a specific territory or customer segment;

• increasing the number of orders over a short period;

• reactivating customers who have stopped ordering because of price.

However, applying the same discount to every product and point of sale may not be right. If a customer who regularly buys at full price is also given a discount, the company loses part of its profit without gaining any extra sales.

A customer may also buy more than usual during the discount period and then place no orders in the following weeks. In this case the promotion creates no new demand; it only moves a future order into an earlier period.

When can a bonus be more effective?

A bonus lets you reward a customer who meets the required condition without lowering the price for everyone.

Distribution uses several forms of bonus:

• quantity bonus: one extra box for every 10 boxes bought;

• sales-volume bonus: an incentive for a customer who reaches a set volume by the end of the month;

• assortment bonus: a benefit when specified SKUs are included in the order;

• payment bonus: a benefit for a customer who clears their debt within a set period;

• next-order bonus: the ability to use the accumulated bonus on the next purchase.

The bonus condition should be simple and verifiable. A general rule that an active customer gets a bonus can be understood differently by sales reps and customers.

Instead, the condition should be clearly defined: which products count, what the minimum order is, whether returned products are deducted from the account, whether a customer in debt receives a bonus, and when the bonus is given.

How does a discount affect profit?

Although the discount percentage may look small, its impact on the gross profit left per product can be large.

A worked example:

• regular selling price: 100,000 soums;

• cost per unit: 70,000 soums;

• gross profit per unit: 30,000 soums.

If the product is given a 10% discount, the new price is 90,000 soums. If the cost does not change, the gross profit left per unit is 20,000 soums.

So, although the price fell by 10%, the gross profit per unit fell by 33.3%.

When a company sells 100 units without a discount:

100 × 30,000 = 3,000,000 soums gross profit

To keep the same gross profit with a 10% discount:

3,000,000 ÷ 20,000 = 150 units

Sales volume must rise from 100 units to 150 units, i.e. by 50%. This estimate does not include shipping, sales-rep commissions, returns, or other additional costs. Once they are added, the required sales volume may rise even further.

Basic formulas:

• Discount price = regular price × (1 − discount percentage)

• Gross profit per unit = net selling price − cost per unit

• Required sales volume = total gross profit for the normal period ÷ gross profit per unit

If the discount price does not cover the product cost and variable costs, increasing sales volume will only increase the loss.

How much of a discount does the "10+1" bonus really give?

If the customer pays for 10 products and receives 11 in total, the free product is measured against the value of all 11 products:

1 ÷ 11 × 100% = 9.09%

So, the "10+1" mechanism is economically equivalent to a price cut of about 9.09%. But the distributor must also account for the cost of the bonus product, the extra shipping volume, and any agent commission.

It is not enough to compare bonus options only by the sale price of the free product. The real cost to the company is the cost of the bonus product plus the additional costs of delivering it.

What should you specify when planning a promotion?

1. Choose one specific goal

"Increase sales during the promotion" is a very general goal. It should be clear which product, which customer, and which metrics need to change.

For example:

• take the first order for a new SKU at 100 eligible outlets;

• win back some inactive customers;

• reduce excess stock of a selected product;

• increase the average number of SKUs per order;

• reduce overdue debt.

Trying to increase sales, profit, assortment, debt and new customers all at once with a single promotion only complicates matters.

2. Separate the target points of sale

Instead of offering the same deal to every point of sale, you can separate them by format, region, order size, assortment, and previous sales results.

For example, a new large pack may suit wholesale outlets but is likely to move slowly in a small neighbourhood store. A bonus given to the wrong segment creates a temporary large order that can then increase stock balances and returns.

3. Choose the mechanism to match the goal

4. Calculate the promotion economics in advance

Include the following in the calculation:

• product cost;

• discount amount;

• cost of bonus products;

• sales-rep and supervisor incentives;

• additional delivery cost;

• sales materials and communication costs;

• expected returns;

• debt and payment period;

• the lower probability of sale after the promotion ends.

A campaign with higher sales but lower profit can look successful if it is measured by revenue alone.

5. Set out the conditions in one document

The promotion card should contain at least the following information:

• goal;

• start and end dates;

• products and SKUs;

• point-of-sale segment;

• the discount or bonus calculation rule;

• minimum and maximum amounts;

• how it works alongside other discounts;

• rules for customers with outstanding debt;

• treatment of returns and cancelled orders;

• responsible employee;

• result evaluation indicators.

The sales rep, operator and customer must all see the same conditions. Otherwise one price may appear in the order, a different price on the invoice, or the bonus may be calculated incorrectly.

Which indicators should you use to evaluate the campaign result?

It is not enough to track only the number of products sold or the revenue. The following indicators should be analysed together.

Incremental sales

Sales during the promotional period are compared with expected sales in a normal period. This takes into account the season, price changes, product availability, and point-of-sale coverage.

Gross profit

This checks how much gross profit remains after discounts and bonuses. If sales volume has risen while gross profit has fallen, the promotion mechanism should be reconsidered.

Net incremental result of the promotion

Net incremental result = gross profit in the promotion period − expected gross profit in the comparison period − incremental promotion costs

Here, advertising, special sales materials, overtime, and other costs not included in gross profit are subtracted.

Point-of-sale coverage

This checks how many of the points of sale that were meant to take part in the campaign actually placed an order.

Order content

This tracks the number of SKUs and the product mix alongside the average order value. Did the customer buy only the discounted product and leave the more profitable products out of the order?

Sell-through and stock balance

The fact that a distributor sells a lot of product into an outlet does not mean the product sells through quickly to the end customer. Where possible, track the product entering the point of sale and its final sale separately.

After the promotion ends, the products left at the point of sale, the returns, and the time until the next order are also analysed.

Receivables

If a customer with a large bonus does not pay for an order on time, higher sales may not improve cash flow. So the result of the promotion is evaluated together with receivables.

What are the requirements for retail promotions?

Under Uzbekistan's current retail trade rules, when a discount is announced, the price before the discount must be the lowest price that applied over the previous 30 days. The seller must keep price records and be able to confirm this information.

In addition:

• the discount is shown as a specific percentage or amount;

• the price is easy to identify and read;

• the promotional period, products, amount and purchase conditions are clearly stated;

• the conditions of the promotion are not changed after it is announced;

• the announced discount, bonus and other benefits are actually provided;

• if quantities are limited or the discount depends on a condition, the buyer must be told in advance.

Artificially raising the price and then presenting it as a discount is prohibited. These requirements are set out in paragraphs 187²²–187²⁵ of the retail trade rules of the Republic of Uzbekistan.

These rules apply to sales between the retailer and the final consumer. B2B discounts and bonuses between a distributor and a point of sale should be checked separately against contractual, tax and accounting requirements. If the distributor finances a campaign aimed at the final consumer, the instructions given to points of sale should also comply with the retail trade rules.

Common mistakes in promotions and bonuses

Equating sales volume with profit

Selling more product is a positive sign, but profit after discounts and expenses must be calculated separately.

Applying a promotion to a product that is not in demand

A discount does not permanently solve a wrong assortment or a product that does not match demand. It can only introduce the product to the point of sale temporarily.

Calculating bonuses by hand

This raises the risk of spreadsheet errors as the number of points of sale, products and bonus tiers grows. If returns and cancelled orders are not taken into account, a customer may be given too large a bonus.

Giving different agents different conditions

One agent may apply a promotion to every customer while another offers it only to a specific segment. As a result, pricing policy and reporting break down.

Not tracking results after the promotion ends

Closing the report when the campaign ends is not enough. The next order, the stock balance at the point of sale, returns and debt should also be checked.

How can you automate promotions, bonuses and discounts?

When the number of points of sale and SKUs grows, managing promotions through separate spreadsheets becomes difficult. A single rule can be applied differently by the sales rep, the operator, the warehouse and the finance department.

Sales Doctor features include discount and bonus management, bonus balance display, order and payment information, and reports on sales volume, product share, warehouse and branches.

The system helps you compare the following in one place:

• which promotion was applied to which customer;

• how many discounts and bonuses were given;

• order and sales volume;

• results by product, agent, region and point of sale;

• stock balance and product availability;

• returns, payments and arrears;

• orders after the promotion ends.

Automation does not make a promotion useful in itself. Its job is to apply the defined conditions consistently, reduce calculation errors, and gather the information needed to verify the result.

Pre-promotion checklist

Before a promotion is approved, the following questions must be answered:

• Does the campaign have one main goal?

• Are the target products and points of sale identified?

• Is gross profit after the discount or bonus calculated?

• Is there enough product in the warehouse?

• Have excess-stock and return risks been assessed?

• Are conditions set for customers with outstanding debt?

• Do the agent, operator and customer see the same rule?

• Which period and indicators is the result compared against?

• Will stock balances and sales be tracked after the promotion ends?

• Does the retail offer comply with legal requirements?

Promotions, bonuses and discounts are not merely a way to lower the price. A well-chosen mechanism should encourage the customer's desired action. To achieve this, the goal, the economic calculation, the specific conditions and the way the result will be evaluated are all defined before the campaign begins.

Review your last three promotions by gross profit, stock balance, returns and debt, not by volume. If discounts and bonuses are calculated by hand, you can review the process with Sales Doctor specialists and consider how to manage them systematically.

FAQ

Are promotions and discounts the same?

No. A campaign is a program with specific goals, terms and conditions. A discount is a price-reduction mechanism that can be used within a campaign.

Is the "10+1" bonus equal to a 10% discount?

The "10+1" bonus is about a 9.09% price reduction when calculated against the full 11-unit value. The distributor must also consider the cost of the bonus product and the cost of delivery.

What is the most important indicator of campaign effectiveness?

No single indicator is enough. Incremental sales, gross profit, promotion costs, the stock balance at points of sale, returns and receivables are all evaluated together.

Can you give a bonus to a customer with outstanding debt?

It depends on the company's approved conditions. The bonus can be calculated only on paid orders, or temporarily limited if there is overdue debt. The condition must be clearly communicated to the customer in advance.

Sources

• Rules of retail trade in the Republic of Uzbekistan, paragraphs 187²²–187²⁵.

• Resolution of the Cabinet of Ministers No. 662 of October 21, 2025.

• Competition Commission: A new legal framework for promotions and discounts in retail.