My company's Marketing Department wants to put together what they are calling Trade Show Kits and let our resellers (a third party that sales our products) “rent” the kits for their trade shows. The kits would cost roughly $25,000 and the rental fee would be $1,500 per week. This $1,500 in rental revenue would have a margin of $0 as the freight and the recurring costs (such as the fee from the vendor for inventorying/shipping/receiving) would roughly be $1500 as well.
The reseller rental contract would state if they broke or did not return a part, then they would be charged for the part. The kit would include posters, banners and other booth décor as well as the parts. A third party vendor would maintain the inventory of kits as well as shipping the kits to the reseller trade shows and receive the kits back in from the trade show.
I am thinking that this would either be a new revenue stream or an offset to marketing expenses. If the accounting rules dictate this to be revenue, then this process would reduce our margins.
Thoughts?
Thanks for reading!
The reseller rental contract would state if they broke or did not return a part, then they would be charged for the part. The kit would include posters, banners and other booth décor as well as the parts. A third party vendor would maintain the inventory of kits as well as shipping the kits to the reseller trade shows and receive the kits back in from the trade show.
I am thinking that this would either be a new revenue stream or an offset to marketing expenses. If the accounting rules dictate this to be revenue, then this process would reduce our margins.
Thoughts?
Thanks for reading!
