A Forward Premium is a financial benefit that is provided to consumers before the product or service is delivered. Forward premiums are an essential concept in economics and are used extensively in business and marketing. Forward premiums can be paid to secure early access or can be paid after using a product or service and awarding it positive feedback. Forward premiums help companies secure consumer’s business early, reduce costs and increase profits.In business, a forward premium is the amount of money a customer pays your company to receive a service. For example, customers can pay for early access to new iPhone models. Apple then releases new models several weeks before they’re available to the general public. This incents customers to purchase something they originally wanted to buy. The primary objective of paying for early access is reducing costs and increasing profits. Companies — including Apple — use forward premiums as a way of running their businesses.Consumers are incented to purchase something they originally wanted to buy when they know they can earn extra money for doing so. They also know that having extra money will help them afford what they want at present time. The extra money earned from paying for early access reduces consumer’s expenses by securing goods or services ahead of schedule. They also gain time by not having to wait for things they need without sacrificing anything in return. This includes time for additional research, saving up money and physical or mental exercise before buying what they want now. Filling this need with extra cash reduces their expenditures without affecting their actual purchasing power— which is what makes forward premiums acceptable under certain circumstances.
