In order to attract clients to choose their shipyard for repair and maintenance services, companies often offer various types of discounts. These discounts play a significant role in decision-making, considering the invoice value and commercial factors involved. While discounts do offer the advantage of accessing products or services for a reduced cost, it’s essential to understand the different types of discounts and when you can expect or request them.

Tender Discount:

When a ship requires steel renewal work and the shipyard is fully booked with tank coating projects but has available manpower for steel renewal, the shipyard management may decide to offer a tender discount. This discount will apply to all works, except for net quoted items. Calculating the estimated invoice value becomes a bit complex as you must first identify all net items and then apply the discount. Net quoted items typically include works on a time sheet basis, equipment rental, specialized subcontractor services, and equipment/material purchases.

Repair Agreement Discount:

In certain cases, shipping companies can establish a special agreement with a shipyard, stating that they will exclusively send their ships to that shipyard in a specific region. In return, they receive discounted rates on all the repair works. Such agreements are usually negotiated at a high level between the companies and do not negate other applicable discounts.

Volume Discount:

If a repair agreement already exists between the companies, it may also include a separate volume discount. This discount comes into play when a client brings in work worth a considerable amount over the calendar year, say a million dollars. For every million dollars spent, they receive additional bill reduction.

Job Discount:

The most common type of discount occurs when additional work is identified during repairs onboard the vessel. The shipyard’s commercial representative calculates the cost and presents it for approval. This additional job may be eligible for a discount. Similarly, some initial quoted jobs may have special reductions, as the shipyard supports the client’s decision to select them as the repair yard.

Early Payment Discount:

For split payments where the second part is due at a later date, clients may receive a further reduction if they make an early payment. Opting for early payment can save both parties from involving banks in credit operations and can benefit the client’s cash flow if the shipyard agrees to it.

In summary, discounts are always warmly welcomed, but it’s worth noting that some complexities can arise. Ideally, shipyards and contractors should transparently know their costs and build prices based on cost and profit margins. While offering discounts may seem attractive, it can lead to confusion for clients who have to navigate where the discount applies and if it extends to additional works. It’s essential for clients to carefully read all documents and understand the terms to ensure a successful and cost-effective repair process.