How to find the true cost of a distributor bill

The bill and the shelf are different numbers

Distributor bills in Pakistan often mix three ideas: the trade price, a bonus or scheme, and the retail price printed on the pack. If you record only the trade price and ignore the free packs, your margin looks worse than it is. If you record the free packs at the same cost as the paid ones, your margin looks better than it is.

Use one number: what you actually paid, spread across every pack you can sell.

A plain example

You buy a scheme of 10+1.

• You pay for 10 packs.
• You receive 11 packs.
• The invoice total for those paid packs is Rs 10,000.

True cost per pack is 10,000 ÷ 11, not 10,000 ÷ 10.

That pack still sells at the retail price printed on it. You do not need a new selling price to know whether the scheme was worth taking. You need the true cost, then you compare it with the price you are allowed to charge.

Do not treat this as permission to sell above the printed retail price. Where a price is fixed and printed, that printed price is the price the customer pays.

What to write on the purchase

For each line, keep:

• Supplier and invoice number
• Paid quantity and free quantity
• Invoice amount
• True cost per pack
• Batch and expiry, because a cheap scheme with a near expiry is not cheap

If the same product arrives later from another distributor at a different scheme, keep it as its own batch. Averaging old and new costs hides which purchase made the money.

When a scheme is a bad purchase

A lower true cost is not enough. Ask two questions before you increase the order:

1. How many packs of this item did you sell in the last 30 days?
2. Will this quantity still be inside the supplier's return window if it sells at that same speed?

Slow movers are where schemes hurt. A 10+2 on an item you sell once a week can sit until the distributor will no longer take it back. Match the order to recent sales, not to the sales talk at the counter.

Also check substitutes you already hold. Buying a second brand of the same medicine, because the scheme sounds better, often creates two piles of slow stock.

Reconcile before you file the bill

Once a week, match three things:

• Invoices the distributor says are unpaid
• Invoices you have in the file
• Stock you actually received

Short deliveries, bonus packs that never arrived, and returns that were not credited all show up here. A return of near-expiry stock should reduce what you owe or appear as a credit note. If it only exists in a conversation, it does not exist.

Key takeaways

• True cost is the amount paid divided by every pack received.
• Keep each purchase as its own batch when the cost or expiry differs.
• A scheme is only useful if you can sell or return the quantity in time.
• Uncredited returns are still money you are owed.