There have been several articles and commentaries over the idea of rebates in tooling and sales of products. Notorious for this are the Big Three automakers, who are asking their Tier 1 suppliers for a rebate (a euphemism for kickback). Asking isn't stealing. However, many manufacturers take this "request" as a veiled threat. If you know your client wants a 5 percent rebate, but you make a 3-5 percent margin, you have two choices:
Become a nonprofit organization like a church or the Boy Scouts, making products for the sheer pleasure of serving your automotive masters.
Mark up your products and services and then give the mark-up back in the form of a rebate.
Neither of those choices are good business.
However, one thing that hasn't yet occurred to the Tier 1, 2, or 3 suppliers is a simple fact of life. If the bottom end of the food chain doesn't exist, the entire system collapses. The highest form of profit in the molding industry is getting contracts where you can make a profit, but turning down money-losing jobs and saying "No!" to those that require givebacks.
With virtually every client on just-in-time delivery, if there is a threat to pull jobs, simply stop production and wait. With only a week's inventory in most company pipelines, it is the molder who is really in control and not the client.
Most molders don't realize it takes six months for their client to find a new supplier if the job is pulled. Thus the molders are in control to maintain their profits and can freely exercise this right whenever they want.
It is good business for both the client and the vendor to make money. This makes for a continuous stream of product, good relations, and a future for everyone.
Rebates should be done on a "give-give" basis. If the client will fund something that will lower the cost of the product, then that investment should reap a rebate. However, molders who make the investment by themselves are only improving their own productivity and profit. There is no obligation for a rebate in this instance.
If we are scared of our clients or they think we are overcharging them, then it is the worst of all business relationships, because it will always be based on mistrust. Do what you must to ensure your profits.