Slotting and listing fees

Getting a new product onto supermarket shelves often costs the supplier an upfront payment before a single unit is sold, and keeping it there can cost more each year. Because the payment is made before the revenue it helps to earn, suppliers have to decide when to recognise it, and the answer depends on the contract. This guide explains why listing fees reduce revenue, compares a fee with no commitment from the retailer with one tied to a multi-year supply agreement, and covers pay-to-stay fees, fees larger than the sales, the retailer's side and US GAAP.

By Mirza Fahad Baig, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. 3 minute read.

Short answer

Slotting fees, also called listing or shelf fees, are payments a supplier makes to a retailer to stock a new product or keep a place on the shelf. Under IFRS 15, they are consideration payable to a customer, and because shelf space is not a distinct service the supplier could buy from someone else, they reduce revenue rather than being a marketing expense. Timing depends on what the payment secures. If it relates to an enforceable supply contract, under which the retailer commits to buy, some suppliers recognise it as an asset and reduce revenue as the goods are sold over the contract. If there is no such commitment, it reduces revenue when the supplier pays or promises it. In this guide's example, a US$ 120 thousand listing fee either reduces revenue at once or by 40 thousand a year over a 3-year contract.

At a glance

Nature
Consideration payable to a customer
Accounting
Reduction of revenue
Distinct service?
No, shelf space is not distinct
No retailer commitment
Reduce revenue when promised
Enforceable supply contract
Asset, spread over the sales
Retailer's side
Reduces cost of inventory
Slotting and listing feesNature: Consideration payable to a customer; Accounting: Reduction of revenue; Distinct service?: No, shelf space is not distinct; No retailer commitment: Reduce revenue when promised; Enforceable supply contract: Asset, spread over the sales; Retailer's side: Reduces cost of inventory.KEY FACTS AT A GLANCESlotting and listing feesNatureConsideration payable toa customerAccountingReduction of revenueDistinct service?No, shelf space is notdistinctNo retailer commitmentReduce revenue whenpromisedEnforceable supply contractAsset, spread over thesalesRetailer's sideReduces cost of inventoryTax BakersSlotting and listing feesNature: Consideration payable to a customer; Accounting: Reduction of revenue; Distinct service?: No, shelf space is not distinct; No retailer commitment: Reduce revenue when promised; Enforceable supply contract: Asset, spread over the sales; Retailer's side: Reduces cost of inventory.KEY FACTS AT A GLANCESlotting and listing feesNatureConsideration payable to a customerAccountingReduction of revenueDistinct service?No, shelf space is not distinctNo retailer commitmentReduce revenue when promisedEnforceable supply contractAsset, spread over the salesRetailer's sideReduces cost of inventoryTax Bakers
Key facts at a glance, as set out in this guide.

Why do slotting fees reduce revenue?

IFRS 15 treats any consideration a company pays or expects to pay to its customer as a reduction of the transaction price unless it is payment for a distinct good or service. Shelf space, a listing in the retailer's range or a place in its distribution centres is not a service the supplier could obtain independently of selling its goods to that retailer, so it is not distinct. The fee is in substance a price concession to win or keep the business, so it reduces revenue from that retailer. See FMCG accounting.

Slotting fees: with and without a supply commitment

A supplier pays a retailer US$ 120 thousand to list a new range of snacks in all its stores. Consider two versions of the deal. In the first, the retailer agrees to stock the range but makes no commitment to buy any quantity and can delist it at any time. In the second, the payment is part of a 3-year supply agreement under which the retailer commits to buy minimum volumes and cannot delist the range without repaying part of the fee.

Reduction of revenue from the listing fee (US$ thousand)Reduction of revenue from the listing fee (US$ thousand)12040Year 1040Year 2040Year 3No supply commitmentCommitted supply contract
A commitment from the retailer lets the fee follow the sales it secures.

Without a commitment, the fee does not relate to any enforceable contract for future sales, so it reduces revenue when the supplier pays or agrees to pay it, here in year 1. With the 3-year commitment, the fee relates to an identified contract under which the supplier expects to earn revenue, and many suppliers recognise it as an asset, reducing revenue by 40 thousand a year as the committed goods are sold, and testing the asset for recoverability. The terms of the agreement, especially any refund if the product is delisted, are the key evidence.

What about pay-to-stay and annual listing fees?

Annual fees to keep products on the shelf relate to the sales of that year and reduce revenue over the year, usually as the goods are sold. Fees for one-off events, such as a store refit where the supplier contributes to new fixtures, are assessed in the same way: if the supplier gets nothing distinct, the payment reduces revenue. If the supplier keeps control of fixtures it pays for, such as branded refrigerators lent to the retailer, they may be the supplier's own property, plant and equipment instead. See incentives paid to retailers.

What if a fee is larger than the sales to that retailer?

A large listing fee in a launch period can exceed the revenue from that retailer in the same period. IFRS 15 does not say how to present the excess, and practice varies: some companies present negative revenue for that customer within total revenue, others present the excess as an expense. Whichever approach a company uses, it applies it consistently and explains it if material.

How does the retailer account for slotting fees?

For the retailer, fees received from suppliers are normally a reduction of the cost of the supplier's goods, not revenue, because they are part of the terms on which it buys inventory. They reduce inventory cost and are recognised in cost of sales as the goods are sold, unless they pay for a distinct service the retailer provides to the supplier at fair value. See supplier rebates and allowances.

How does US GAAP differ?

ASC 606 gives the same answer: slotting fees are consideration payable to a customer and reduce revenue, and practice on upfront payments that relate to future contracts is similar. The retailer's accounting follows ASC 705 on consideration received from vendors, which, like IFRS, generally treats such payments as a reduction of cost of sales. See trade promotion spending and volume rebates to retailers.

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Questions people ask

Are slotting fees an expense under IFRS 15?

No. They are consideration payable to a customer and reduce revenue, because shelf space is not a distinct service.

Can an upfront listing fee be capitalised?

Where it relates to an enforceable supply contract with committed purchases, many suppliers recognise an asset and reduce revenue as the goods are sold.

What if a slotting fee exceeds the revenue from that retailer?

Practice varies between presenting negative revenue and presenting the excess as an expense; the approach should be applied consistently.

How do retailers account for slotting fees received?

Usually as a reduction of the cost of the supplier's goods, recognised in cost of sales as the goods are sold.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS 15 Revenue from Contracts with Customers
  2. FASB Accounting Standards Codification: Topic 606, Revenue from Contracts with Customers
  3. Financial Accounting Standards Board: Revenue recognition

Rules and fees change. If you are reading this long after October 10, 2026, confirm the figures with the source before you rely on them.

FMCGFMCG accounting: the key IFRS issuesFMCGTrade promotion spendingRetailSupplier rebates and allowances

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This guide is general information. It is not tax or legal advice for your situation.