Prime vendor agreement
Also called: prime vendor · broadline agreement
A prime vendor agreement commits you to buying a defined share of your purchases — often 70–85% — from one broadline distributor, in exchange for better pricing, guaranteed delivery days, and sometimes rebates. It trades flexibility for price.
| You get | You give up |
|---|---|
| Lower cost-plus markup | Ability to cherry-pick another vendor's specials |
| Guaranteed delivery schedule | Leverage in a price dispute mid-term |
| Consistent product availability | Some specialty and local sourcing |
| Simpler receiving and one AP relationship | Exposure if service quality drops |
Read these four terms carefully
- How the markup is defined. Cost-plus on what cost — landed cost, or a list price the distributor controls? This is the term that decides whether the deal is what it looks like.
- Price change notice. How much warning do you get, and can you challenge an increase?
- The compliance threshold. What happens if you fall below the committed percentage in a slow month?
- Exit. Notice period, and whether any rebate has to be repaid.
Related terms
Bid sheet
A side-by-side comparison of the same items across suppliers, normalised to a comparable unit price.
Price creep
Small, frequent supplier price increases that individually look ignorable and collectively remove several points of margin a year.
Case price vs. unit price
Suppliers quote cases; recipes need units. Comparing vendors on case price alone hides which one is actually cheaper.