Price On Application (POA)
TermiKnowledge - Supply Chain, Procurement and Inventory Terminologies
Price on application, also known as POAs, is a common term seen frequently on price lists, classified ads and is also widely used when it comes to commercial property costs. According to one definition, the Price on Application (POA) is "a fixed rate charged for an inventory or report" and "it is used to establish the value of a firm's property or its goods." So what is it? Price on application is a contractual agreement between a buyer and a seller that establishes the price that is to be paid for a certain item once all parties have agreed to buy or sell at a certain price, sometimes agreed upon in advance by the supplier and/or manufacturer. In other words, price on application is a contract between a buyer and a seller that establishes the price that must be paid for a certain item once all parties have agreed to buy or sell at a certain price.
One reason why businesses use price listed agreements (PPAs) is to avoid unpleasant surprises to the party that is being purchased. For example, if a firm decides to purchase a large lot of office furniture, it normally would pay a minimum bid, or "bid" price, which is the price at which the buyer purchases the item from the supplier. However, if the buyer were to pay the minimum bid amount, he would only be able to get a certain quantity of office furniture. If he wanted to take advantage of the full market value of the item, then he would need to "overbuy" - that is, agree to buy at a higher price than was originally agreed upon. The PDA allows a firm to do this without having to go through the expensive expense of paying the bid price, because the seller will then charge a service fee known as a "postage-paid purchase price" for the excess amount, or "wear and tear" or "wear and tear capital," whichever is applicable.
Price On Application also helps agents keep their clientele. In today's economy, people are not as willing to spend large sums of money up front to purchase a car or home. It is not surprising that many individuals turn to the Internet to try and get the best deal possible. A PDA can make a potential buyer aware of all of the available options, and allow an agent to present the advantages of the car or house to the buyer in a clear and concise manner.
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