Commercial rate

From CEOpedia | Management online

Commercial Rate which is also known as the corporate rate is kind of a service rate, which service providers offer to their regular business customers. It is usually significantly lower than the normal rate.

Rates debuted in the 19th century and are fundamentally a property tax on commercial estates. Rates are a statutory charge, the income from which is used to part-fund the annual revenue (day-to-day) expenditure of the local authority.

Applying a commonly used commercial rate for the relevant currency is fair and predictable

Why is the commonly used commercial exchange rate for the relevant currency? Plenty of factors indicate that the customarily used commercial exchange rate is fair for a given currency.

  • The commonly used trading rate for a given currency is most of a time an appropriate way to measure the damage. After all, interest is damage suffered by the party due to a lack of needed amount. Estimating damages almost always requires a hypothetical "just for" analysis. There is no possibility for a hypothesis to be perfect, but a good initial believe is that the commonly used commercial interest rate for a given currency meets the "but-for" use of money. But in the absence of the other side's payment, the damaged party would invest money in the bunk, but with the lack of the other party's payment, exceeding the overdraft amount would be lower
  • The commonly used trading rate for a given currency automatically takes into account inflation and currency devaluation. Commercial market interest rates take into account economic conditions relevant to the value of the currency (Bergsten E. (2011), p.436).

How commercial property rates are calculated

The Rateable Valuation (RV) of the business property, which is determined by the Commissioner of Valuation and set out in a Valuation List, is multiplied by the Annual Rate on Valuation (ARV) also referred to as 'the multiplier.' This equals a business's commercial rates charge. The Annual Rate on Valuation is decided by Tralee Town Council at its annual budget meeting and is based on a division of the council's total income and expenditure costs for the year. An example of the calculation of a commercial rate is as follows. A € 100 Rateable Valuation multiplied by € 81.18 the ARV for 2010 equals an € 8,118 commercial rates charge for the year.

What is the ratable value of commercial property?

The taxable value - or RV - of a commercial property fundamentally represents the annual rental value of the commercial rate on the open market. All non-domestic properties have a rateable value, which is fixed by an independent valuation officer from the Valuation Office Agency. Properties are revalued once every five years. A commercial property may house a number of tenants, so each unit of property is given its own rateable value. Non-domestic properties such as shops or restaurants that also have a domestic property incorporated - such as a flat above the commercial property - are referred to as composite properties and they are valued for both business rates and council tax.

Examples of Commercial rate

  • In the hotel industry, companies usually offer discounted rates to business customers. These rates are called Commercial Rates and they often include amenities such as free breakfast, early check-in and late check-out.
  • Airlines also offer corporate travel fares for businesses. These fares are usually cheaper than the normal fares and offer flexibility when it comes to changing and canceling flights.
  • Telecom companies often offer special rates to their business customers. These rates are usually lower than the standard rates and may include additional services such as unlimited data and discounted international calling.
  • Insurance companies offer corporate rates to their business customers. These rates are usually lower than the standard rates and can include additional coverage for employees.
  • Banks also offer corporate accounts with lower fees and higher interest rates for businesses. These accounts are usually tailored to the specific needs of the business and offer features such as higher withdrawal limits.

Advantages of Commercial rate

Commercial rate offers businesses a number of advantages, such as:

  • Reduced cost: Businesses can benefit from a lower cost of services that are usually priced at a higher rate. This can help businesses reduce their overall operating costs.
  • Flexible payment options: Businesses can get more flexible payment options from service providers, such as installment payments, deferred payments, and discounts for volume purchases.
  • Specialized services: Businesses can get access to specialized services, such as priority service and custom solutions, that are not available to regular customers.
  • Improved customer service: Businesses can get better customer service from service providers who are willing to go the extra mile to ensure customer satisfaction.
  • More reliable service: Businesses can get more reliable service from service providers who are more experienced in dealing with corporate customers.

Limitations of Commercial rate

The following are the limitations of Commercial rate:

  • The commercial rate is only available to businesses or organisations that have a regular need for the services. It is not available to individuals or one-off customers.
  • It is often difficult to negotiate a commercial rate as the service provider is usually unwilling to reduce their rate for customers who do not have a regular need for their services.
  • The commercial rate may not be available for all services offered by the service provider, and certain services may only be available at the full rate.
  • The commercial rate may be subject to conditions and restrictions, such as minimum order quantities or delivery times.
  • The commercial rate is usually only available for a set period of time, and the customer may have to renegotiate the rate after that period ends.
  • The commercial rate may not be the most cost-effective option for the customer, as the full rate may be cheaper for larger orders or for customers who only require the service occasionally.

Other approaches related to Commercial rate

One approach that is related to the commercial rate is offering discounts to regular business customers. Businesses may offer lower rates to customers who purchase in bulk or who have a long-term relationship with the provider. Additionally, businesses may offer discounts based on the customer’s payment history, or allow customers to negotiate a payment plan. Other approaches related to the commercial rate include:

  • Creating seasonal or promotional discounts - Companies may offer discounts to customers during certain times of the year or for special promotions.
  • Offering loyalty discounts - Businesses may offer discounts to customers who are loyal and have been with the company for a long period of time.
  • Providing special pricing for high-volume customers - Businesses may offer special pricing to customers who purchase a large volume of goods or services.
  • Creating bundled deals - Companies may offer package deals that include multiple services for a discounted price.

In summary, businesses may use a variety of approaches related to the commercial rate in order to provide discounts to regular business customers. These approaches include offering discounts, creating seasonal or promotional discounts, offering loyalty discounts, providing special pricing for high-volume customers, and creating bundled deals.


Commercial rate — recommended articles
Applicable federal rate — Lehman formula — Residual payment — Output tax — Automatic Premium Loan — Net rate — Placement fee — Royalty fee — Grant date

References

Author: Monika Broszkiewicz

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