Floor Price

A floor price is the lowest price at which a sales representative or account manager is authorized to quote a product or service. It acts as an internal guardrail - preventing discounts from eroding margin beyond a level the business can absorb. Any quote below the floor price typically requires approval from a sales manager or director before it goes to the customer.

Floor prices are expressed differently depending on the business. Some set them as a fixed amount per unit. Others define them as a minimum margin percentage - for example, no quote can leave the building at less than 35% gross margin. In businesses with complex pricing structures - such as promotional merchandise with decoration costs, run charges, and setup fees layered onto product cost - floor prices may be set at the product category level or per supplier line.

How Floor Prices Work in Practice

The floor price sits below the standard selling price and above cost of goods. Between those two points, sales representatives have discretion to discount in order to win business. Once a quote reaches the floor, they need approval before it can proceed.

A well-structured floor price system makes the discount approval process explicit rather than ad hoc. Without it, discounting decisions can happen informally - a rep agrees to a price in a phone call, the job goes through, costs come in higher than expected, and the margin on that order is negative. A floor price forces the conversation to happen before the quote goes out, not after.

Setting and Maintaining Floor Prices

Floor prices must be reviewed whenever costs change - supplier price increases, changes in decoration costs, shifts in overheads, or currency movements that affect landed costs. Leaving floor prices static while input costs rise is one of the most common sources of quiet margin leakage in businesses that sell complex or configurable products.

In Zigaflow, product-level pricing rules allow businesses to set minimum margins or unit prices per product, making it straightforward to enforce floor prices at the point of quoting rather than relying on manual checks or a sales manager reviewing every quote.