Costs and pricing
Part of Promotional products: budget and quote checks
Choosing between promotional products pricing models
Compare four promotional products pricing models by flexibility, stock risk and cash flow, with VAT and supplier questions.
What to take away
- Choose the pricing model before the product, because it sets your unit cost, cash-flow timing and who carries the risk of unsold stock.
- Pay-as-you-go suits one-off orders under about 500 units, where flexibility matters more than the lowest unit rate.
- Tiered pricing rewards accurate forecasting, but only if your quantity estimate is honest.
- Retainer and open-book models suit repeat branded merchandise programmes where you want margin visibility.
- Every figure below is illustrative, in pounds sterling, and labelled as an example rather than a market rate.
How the main models compare
Promotional products pricing models fall into four families. Each transfers a different mix of cost, risk and admin between buyer and supplier.
The comparison below is about how each model allocates cost, cash flow and stock risk, not a guide to current market rates. Confirm payment dates and stock ownership in the supplier’s quote and contract.
| Model | Unit-cost basis | Cash-flow pattern | Stock risk | Best fit |
|---|---|---|---|---|
| Pay-as-you-go | A unit rate plus setup for each order | Costs arise with each order | Limits bulk commitment, but the buyer risks surplus stock ordered | One-off orders where flexibility matters |
| Tiered | Unit rate falls at higher quantity bands | Payment is tied to the quantity ordered | The buyer risks surplus if it orders more to reach a lower rate | Buyers with a reliable quantity forecast |
| Retainer | Fixed monthly fee spread across a programme | Regular monthly outlay | The contract should specify stock ownership and responsibility; the supplier may handle storage and fulfilment | Repeat programmes needing central sourcing and fulfilment |
| Open-book | Supplier cost plus an agreed margin | Payment timing depends on the agreed terms | The contract should specify who owns stock and carries surplus risk | Buyers who need visibility of costs and can check invoices |
Four pricing models compared
Pay-as-you-go
- Billing basis
- Per order
- Setup charges
- Yes
- Best for
- One-off orders
- Margin visibility
- Low
Tiered
- Billing basis
- Quantity bands
- Setup charges
- Yes
- Best for
- Bulk buys
- Margin visibility
- Low
Retainer
- Billing basis
- Monthly fee
- Setup charges
- Included
- Best for
- Multi-team programmes
- Margin visibility
- Medium
Open-book
- Billing basis
- Cost plus margin
- Setup charges
- Shown
- Best for
- Invoice checkers
- Margin visibility
- High
Pay-as-you-go prices each order separately: a unit rate plus setup, usually artwork and screen or print charges.
A team ordering 250 branded mugs might pay £2.80 per unit plus a £45 setup fee. The effective rate tops the headline price.
Our promotional merchandise costs and budget guide for England shows where those setup costs sit in a full budget.
Tiered pricing sets bands, for example 250 to 499 units at one rate and 500 to 999 at a lower one. The saving is real only if you genuinely need the larger quantity. Buying 600 units to chase a lower band often costs more in total than buying 400.
Retainer pricing spreads a fixed monthly fee across a programme of items. It suits organisations issuing branded merchandise across several teams or regions, where one supplier handles sourcing, storage and fulfilment.
Open-book pricing shows the supplier's cost and adds an agreed margin. It gives the clearest view of where your money goes, and it works best when you can check invoices.
A scoring rubric for choosing
Score each model from one to five against the criteria that matter, then weight them. The table is an illustrative example for a quarterly buyer.
For a usable rubric, score each model from one (poor fit) to five (strong fit) on the criteria below. The weights are an illustrative quarterly-buyer example, not a universal recommendation. Multiply each score by its weight and add the results; adjust the weights to reflect your own priorities.
Example weight
- Unit-cost fit
- 3
- Flexibility
- 3
- Control of surplus stock risk
- 3
- Cash-flow fit
- 2
- Cost visibility
- 2
- Admin and fulfilment fit
- 2
Pay-as-you-go
- Unit-cost fit
- 3
- Flexibility
- 5
- Control of surplus stock risk
- 4
- Cash-flow fit
- 3
- Cost visibility
- 3
- Admin and fulfilment fit
- 2
Tiered
- Unit-cost fit
- 4
- Flexibility
- 2
- Control of surplus stock risk
- 2
- Cash-flow fit
- 2
- Cost visibility
- 3
- Admin and fulfilment fit
- 3
Retainer
- Unit-cost fit
- 3
- Flexibility
- 3
- Control of surplus stock risk
- 3
- Cash-flow fit
- 4
- Cost visibility
- 3
- Admin and fulfilment fit
- 5
Open-book
- Unit-cost fit
- 3
- Flexibility
- 3
- Control of surplus stock risk
- 3
- Cash-flow fit
- 3
- Cost visibility
- 5
- Admin and fulfilment fit
- 2
These example scores are a starting point for discussion, not supplier ratings. In particular, confirm stock ownership, payment timing and fulfilment responsibilities in the contract before scoring those criteria.
Scoring rubric for quarterly buyer
Pay-as-you-go
- Lowest unit cost at scale (25%)
- 2
- Cash-flow predictability (20%)
- 3
- Flexibility on quantity (20%)
- 5
- Margin visibility (15%)
- 2
- Admin burden on you (10%)
- 5
- Risk of dead stock (10%)
- 5
Tiered
- Lowest unit cost at scale (25%)
- 4
- Cash-flow predictability (20%)
- 3
- Flexibility on quantity (20%)
- 2
- Margin visibility (15%)
- 2
- Admin burden on you (10%)
- 4
- Risk of dead stock (10%)
- 2
Retainer
- Lowest unit cost at scale (25%)
- 4
- Cash-flow predictability (20%)
- 5
- Flexibility on quantity (20%)
- 3
- Margin visibility (15%)
- 3
- Admin burden on you (10%)
- 4
- Risk of dead stock (10%)
- 3
Open-book
- Lowest unit cost at scale (25%)
- 3
- Cash-flow predictability (20%)
- 4
- Flexibility on quantity (20%)
- 3
- Margin visibility (15%)
- 5
- Admin burden on you (10%)
- 2
- Risk of dead stock (10%)
- 3
A buyer weighting unit cost heavily will lean towards tiered or retainer. A buyer who cannot forecast demand should weight flexibility and dead-stock risk instead.
What changes the price most
Quantity is the biggest single lever, but decoration method, material, packaging and lead time all move the unit rate. A rush order in December costs more than the same order placed in a quiet month.
Where VAT fits
Most branded merchandise is standard-rated for VAT at 20% in the UK. Some printed matter may qualify for zero rating, but a branded item does not qualify automatically. Check HMRC VAT Notice 701/10, Zero rating of books and other forms of printed matter, and its conditions when assessing a specific product.
Questions to ask before you sign
Ask for the setup fee, the reorder fee and the artwork charge separately. A low unit price with a large setup fee is not a low-cost order.
Ask what happens if quantities change after the deposit is paid. Suppliers often hold the original band, so a smaller final order can still be priced at the higher quantity.
Ask who owns the tooling and screens, and whether they transfer if you move supplier. Our promotional merchandise cost guide in England lists the switching costs worth pricing in advance.
To find UK suppliers to invite to quote, the British Promotional Merchandise Association (BPMA) is a useful trade-body starting point. It is not a price benchmark: ask shortlisted suppliers to quote on the same specification and compare their terms.
Rules and claims that affect price
Advertising for promotional products is regulated by the self-regulatory system described by the Advertising Standards Authority's overview of how the CAP Code is enforced, so claims printed on an item must be substantiated.
Environmental claims carry particular weight. The Climate Change Act 2008 sets the UK's legal framework for emissions targets. For environmental marketing claims about recycled content or carbon neutrality, consult the CMA's Green Claims Code and keep evidence to substantiate what is claimed.
Common questions
Is tiered pricing always cheaper?
No. It is cheaper per unit only when you need the larger quantity. Compare the total invoice, not the unit rate.
Can I mix models?
Yes. Many buyers use pay-as-you-go for one-off event stock and a retainer for a recurring staff programme.
How often should I re-tender?
Review pricing annually, or sooner if quantities change sharply. Ask each supplier to quote on the same specification.
Do I need a written quote?
Yes. Ask for a quote that separates unit cost, setup, decoration, delivery and VAT so you can compare suppliers on the same basis.
