Retrospective pricing is any contractual mechanism that adjusts the effective price of prior transactions once measured conditions are met. Volume tier retroactive rebates are the most common form; price protection is another.
Why retrospective pricing is powerful
It allows the parties to commit to a headline price while preserving flexibility on the effective price based on how the relationship actually performs. Both sides can plan around the base terms while sharing in the upside of scale.
The reconciliation requirement
Every retrospective adjustment triggers a reconciliation - was the condition met, over what period, and applied to which transactions? Doing this manually across a portfolio is where retrospective pricing becomes expensive to administer.
