Price-down
A contractual commitment that the piece price falls by an agreed percentage each year of a program, paid for out of productivity you have not found yet.
The argument to have before signing is where the reduction comes from. A 3 percent annual price-down across a 6 year program compounds to a price in year 6 that is materially below year 1, and the contract does not care whether your costs followed it down. If the quote was priced at a margin that only works in year 1, the program crosses into loss somewhere in the middle years, quietly, while the invoices still get paid on time.
Pricing it honestly means one of 2 things. Either year 1 carries enough margin to fund the later years, which risks losing the award to someone pricing hopefully, or the quote is built against a genuine productivity plan, cycle improvements, scrap reduction, a fixture that cuts a chucking, with owners and dates rather than intentions. The floors that survive price-down programs treat the reduction as a project portfolio they signed up to deliver, and the ones that suffer treat it as a discount they hoped to absorb.
The trap compounds with an understated cost base. A quote built on a stale burdened rate is already light, and the price-down subtracts from a number that was wrong on day one. The program arithmetic in what a burdened rate actually includes shows how a single understated line runs to tens of thousands across a program, and a price-down schedule multiplies that same error by every remaining year.
Worth negotiating alongside the percentage is what triggers relief. Material surcharges, volume shortfalls against the stated EAU, and engineering changes all shift cost through no fault of the floor, and a price-down clause without a corresponding adjustment clause is a one-way valve.