Distributor list price

Distributor list price DEFAULT

How to price your product for retail, distributor, and direct to consumer sales

Lots of articles will talk about how to implement cost-based pricing or value-based pricing, but this is a real world discussion of what to expect and how to price your product when selling your product through various sales channels.

Determine your Cost Of Goods (COG)

This is of course elementary, but you’d be surprised how often we encounter clients who don’t have a detailed grasp on their cost of goods. Everything will start from here, so you need to know exactly how much your basic unit of sale costs. What’s a unit of sale? Well let’s use the traditional business school widget for our example. If you sell widgets individually, then one widget is your unit of sale. However, if you only sell them in boxes of five, then the box is your unit of sale. If you sell them both individually and in a box - then you have two types of selling units. And you need to determine the cost of goods on each.

How do you determine the cost of goods? What’s included?

Well, anything that goes into the final unit of sale should be included. Then we’ll add a little bit for variable costs (to average things out). So for our widget, let’s assume the raw materials cost 60¢, processing the raw materials costs 10¢, and fabricating the product (either by production line or by hand) costs 30¢. So far our COGs is $1.00. But we’re not done yet. This is only the total cost for our manufacturing process - going from raw material to finished product.

Raw + Processing + Fabrication = Manufactured Cost ($1.00)

Normally, your finished product will need packaging. To determine your packaging costs, include the cost of any unfinished materials (tubes, bottles, packing peanuts, etc.) and the cost of finishing - printing on the box, a label, silk screening on the tube, etc. So if our widget goes in a jar, and the jar costs 30¢ and the label for the jar, after printing, costs 20¢ (average for each label if we order 1000 labels). We also need to include application of the label. This may be automated or by hand, but it still needs a cost associated with it. Let’s assume we’re applying the label by hand, to 1000 jars, and after labeling we stick our widget in the jar, and seal the jar. This process takes about 60 seconds for the average worker. The warehouse workers are paid $10.00 per hour - so the cost for label application is approximately 17¢ - we’ll round it up to 20¢ since there will be variability in the process.

Now, our jarred widget is supposed to look premium, so we put our jar in a box. Now, we need to add our box and box printing costs to our packaging cost. And we’ll need to add time for placing our jar into a the box and sealing the box. Let’s assume the printed box is 20¢ and we’ll allot for 10¢ of time to place the jar in the box and seal the box.

Packaging Materials + Assembly + Manufactured Cost = Packaged Cost ($2.00)

Don’t forget shipping & pack-out

We may have a finished selling unit; our boxed, jarred, widget. But we’re not done with COGs. We need to amortize additional costs into the cost of our product. So far, we’ve only essentially dealt with hard costs. But we need to include some soft costs. These are items which are required to deliver our product to market. Since we’re selling to retailers, distributors, and direct to consumers - we’ll need to account for shipping and external packaging to all three sales channels.

When selling to retailers and distributors, we’ll need to accommodate shipping to their locations. And since they can’t simply buy one at a time, we’ll have to price out external packaging and any pack-out materials. Assume we ship a minimum of 12 widgets to retailers and distributors. We’ll need to purchase a corrugated box that holds our 12 individually boxed widgets for safekeeping during transit. We’re lucky, and we find a U-Line box that fits our 12 widgets almost perfectly. It costs $2.00 per box. But we also need to add in 40¢ for packing materials (foam peanuts, packing tape) and 10¢ for the exterior label and 50¢ for filling our ship box with 12 widget boxes and sealing it up. So a final ship-ready retailer or distributor box will cost $3.00 and hold 12 units. The pack-out cost per selling unit (boxed widget) is 25¢. Now to ship our box of twelve widgets, we’ll get the best carrier rates and average this out too. Of course, this will be variable, since the distance we’re shipping and the total number of boxes, etc. affect our shipping costs. So here we have to do our best. Let’s assume, typically, it’ll cost $20 to ship our box of 12 - that’s about $1.66 per selling unit, but we’ll average up to $1.75 to allow for some wiggle room (and to make my math easier).

Shipping + Pack-out + Packaged Cost = Delivered Cost ($4.00)

Well, that should be it - right? We’ve determined our cost of goods?

Unfortunately, not quite. We also have to allow for some miscellaneous costs and variable costs. For instance, we haven’t allowed for overhead, shipping of goods during manufacture, graphic design (somebody was paid to design our boxes and labels), research and development, and marketing. Now a Wharton Business School graduate would probably have a nifty formula for figuring this all out down to the penny. But here’s where we simply apply 30% and call it a day. Since these costs all fluctuate, we’ve found it easier to simply assign a percentage to cover it. If you feel you really need a fancy formula, go talk to your nearest MBA.

Delivered Cost x 30% = COG ($5.20)

Finally, we have our Cost Of Goods, now what?

Well, now we have our COGs and it’s inclusive of hard, soft, and variable costs, so we can evaluate our market and our sales channels and determine if our product is viable. Obviously, we can always sell direct to the consumer. The rule of thumb is you’ll deliver the product at 2x or 4x COGs. So we could sell our product directly to the end user for between $10.40 and $20.80. We’d have to adjust our direct price to reflect market conditions - and if we scan the competition, we find the average boxed widget sells direct for $25.00. This is great; we can sell at this price or lower and still we’re selling at nearly 5x costs. In this case, $19.80 is a terrific margin for direct sales. We could sell it direct for $15.00, undercut everyone, and we’ll be on easy street!

However, selling direct isn’t always the best scenario. Sure, it always offers the best margins, but it entails a lot of additional marketing and sales-related costs. The burden of building awareness, creating desire, and supporting the sale falls entirely on you. And unless you’re well funded, it can be difficult to scale an operation on direct sales only. So normally, you’ll be looking to other sales channels and accept lower margins in exchange for less burden and more regular orders and cash flow (hopefully).

Determining a Manufacturer Suggested Retail Price (MSRP)

As soon as you expand your sales beyond selling direct, you’ll need to establish an MSRP. This is the suggested price you want everyone to sell your boxed widget for in their stores or online. And this is where things start to get tricky. You need to establish an MSRP that is competitive and that allows for profit across all sales channels. You’ll might need to reconfigure your initial price based on the margin (or points) you’re doling out to your new channel partners.

Distributor Discounting

First, we’ll look at distributors. Why? Well they’ll usually command the largest discount percentage simply because you won’t need to support them much beyond your initial sale to them (and then their reorders). Now this is an oversimplification of this partnership; in reality you’ll need to work with your distributors regularly to keep them excited about your products and inform them of new products and/or specials. But for this example, we’ll focus on the expected discount rates.

Be prepared to take 60% to 70% (and maybe more) off your price when selling to distributors. Remember, a distributor will be reselling to a retailer who will then have to sell it to consumers. So there must be margin available for all, throughout the process, or it won’t work (or sell). Let’s examine our above example - where we intended to undercut the market and sell the boxed widget direct for $15.00. Will this work now for distributors?

$15.00 x .3 (70% discount) = $4.50 - margin (- 70¢)

Well that’s not good. The distributor will want to buy it for $4.50 and our COG is $5.20. We’ll be out of business really soon if we do this deal. So one of two things must happen. One, we have to reduce our costs - which is possible by increasing volumes or efficiencies, or reducing quality or the size of our product. Or two, we can raise our MSRP. In the first scenario, we’d be betting the farm if we did the deal without a guarantee of volume or an influx of capital, so the simplest course of action is to raise our MSRP. If we sell at the average market price…it seems we can do distribution and make a little bit of money.

$25.00 x .3 (70% discount) = $7.50 - margin $2.30

$25.00 x .4 (60% discount) = $10.00 - margin $4.80

That’s not a great margin. In fact, it rather sucks. But at least we’ll stay in business. And hopefully, with wider distribution, our volume will increase and we can negotiate lower costs on our manufactured, packaged, and delivered costs. And we’ll make money while we do this. It’s not a great deal, but at least we can do it and we don’t need to start at 70% discount. We’d need to try to negotiate a 60% discount for distributors ($25 x .4 = $10). At $10, things would be much more comfortable and allow for any market or cost volatility. And we could reserve offering 70% discounts for distributors who order large volume. Or course, negotiating with and managing distributors is another discussion.

Retail Discounting

Well, we took it on the nose with distributors, but it’s doable at $25.00 MSRP. So how will Retailers fare? Well, since more retailers will expect a 40% to 60% discount, you’ll be fine. Since we know things work at 60% off, less of a discount will only make things better. So retail will offer better margins. However, retailers will also expect additional allowances (as will some distributors) but we’ll discuss this next, under hidden costs.

$25.00 x .6 (40% discount) = $15.00 - margin $9.80

Retailers will want more support. They’ll want marketing dollars or allowances (usually a portion of free products or percentage off an order). After all, this will allow them to market your product as available for sale (promoting your brand). This marketing allowance can vary, but it should be accounted for as we’ll describe below. Further, returns, damaged products, and sampling options will all be frequent requests. Be ready for them.

Beware hidden costs

There are a lot of pitfalls and traps that will appear when dealing with various sales channels. First, damaged or lost shipments. This can be frustrating and expensive if not dealt with effectively. Sales partners can become irritated and you’ll be forced to reship additional products, driving up your costs and lowering margins. To prevent loss or damage, make sure your outbound shipping packaging is up to the task. You may need more interior packaging to safeguard interior items. And put into place cross-checking of outbound orders. This will insure that the correct items are sent and that the total number of shipped items is tallied at least twice. Knowing there are four boxes will help when determining fault - if your carrier only delivered three, your freight carrier is at fault. You can insure shipments - though this is usually cost-prohibitive and unnecessary in most circumstances, as the default insurance rates will usually cover you.

Retailers (and distributors) will want samples. Sampling is a good way for retailers to promote your product. But they don’t want to take it out of their inventory. So often they’ll negotiate a percentage per order that’s dedicated to sampling (that’s free to them). In some situations you can offer samplettes or smaller versions of the product for sampling, and in others, sampling just isn’t possible. But you should anticipate the request and be prepared for it.

How do distributors and retailers deal with returned products? This can be another tricky situation. You want to verify the return occurred and you want to figure out why, but shipping product back through the channels can be impossible or costly. So you have to watch out that returns don’t become an issue, and jump on it if they start to rise. You may have a bad batch or manufacturing defect - which is a hint to code your products with batch numbers and expiration dates (if applicable).

Guaranteed sales is an issue that can crop up also. Guaranteed sales is never a good policy. It’s when a distributor will only take on your product line if you guarantee to take the product back and return the money if it doesn’t sell. Think of it like consignment, but worse, since you’re unlikely to hold the payment in escrow. So if they do return the product, you’ll have to come up with the money to return to them.

Promotions. Don’t forget that from time to time you’ll also want to offer promotions to your various sales channels. It may be to clear out inventory to prepare for a new product update or it may be cyclical (i.e., Christmas season). So you’ll need to insure there’s margin available to offer discounts or buy one get one offers. And don’t forget that any offer you might make to your customers (if you’re selling direct) will be found and desired by your sales partners. So be careful to craft any direct-to-consumer offers (e.g., on your website) so they also work throughout your sales channels. Or you’ll get angry emails and phone calls from your buyers demanding equal treatment. Or worse, they’ll simply stop ordering from you.

How to handle these hidden issues? Typically, one solution is to offer an additional 2-3% discount to cover most of the aforementioned issues. If returns or freight issues or sampling grows beyond that - you’ll need to address it immediately on an individual channel partner basis. But of course, if you take this approach, you’ll need to be aware how if affects your margins.

In conclusion

Pricing your product doesn’t have to be difficult or an off-the-cuff decision. Start by determining your complete cost of goods, figure out your various sales channels, and establish a MSRP that works across all your channels. Or course, if you have the capital, you can also hire MBAs and accountants to figure it all out with fancy spread sheets. But then don’t forget to account for their salaries in your overhead portion. Good luck and happy selling.


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Sours: https://www.nuvonium.com/blog/view/how-to-price-your-product-for-retail-distributor-and-direct-to-consumer-sal/P100

List price

Price that the manufacturer recommends for a retailer to charge

"MSRP" redirects here. For other uses, see MSRP (disambiguation).

Pictures of five cultivators with promotional text and prices.
This 1916 advertisement distinguishes the list price and a lower our special price.

The list price, also known as the manufacturer's suggested retail price (MSRP), or the recommended retail price (RRP), or the suggested retail price (SRP) of a product is the price at which the manufacturer recommends that the retailersell the product. The intention was to help standardize prices among locations. While some shops/stores always sell at, or below, the suggested retail price, others do so only when items are on sale or closeout/clearance.

Suggested pricing methods may conflict with competition theory, as they allow prices to be set higher than would otherwise be the case, potentially negatively affecting consumers. However, resale price maintenance goes further than this and is illegal in many regions.

Much of the time, shops/stores charge less than the suggested retail price, depending upon the actual wholesale cost of each item, usually purchased in bulk from the manufacturer, or in smaller quantities through a distributor.

In certain supply chains, where a manufacturer sells to a wholesale distributor, and the distributor in turn sells to a reseller, the use of SRP is used to denote Suggested Reseller Price. In that case, the list price is used to convey the manufacturer's suggested retail price.

Concepts similar to the list price exist in many countries, but equivalents of the list price often cannot be compared directly internationally since products and services may differ to meet different legal requirements, and price figures communicated to consumers must include taxes and duties (for example) in the EU but not in the US.

India and Bangladesh do not have a list price but instead have a maximum retail price.

United Kingdom[edit]

In the United Kingdom, the list price is referred to as a recommended retail price or RRP.

In 1998, the Secretary of State for Trade and Industry prohibited the placing of RRP on electrical goods under the "Domestic Electrical Goods Order", but this ruling was lifted by the Competition Commission in February 2012.[1]

United States[edit]

In the United States, the list price is referred to as the manufacturer's suggested retail price or MSRP.

Under earlier US state Fair Trade statutes, the manufacturer was able to impose a fixed price for items. The fixed prices could offer some price protection to small merchants in competition against larger retail organizations. These were determined to be in restraint of trade. Many manufacturers have adopted MSRP, a price at which the manufacturer suggests the item be priced by a retailer. The term "suggested" can be misleading because in many cases, the MSRP is extremely high compared to the actual wholesale cost, opening the market to "deep discounters", who are able to sell products substantially below the MSRP but still make a profit. The discount stores benefit from exorbitant MSRPs because the discount offered increases the perceived value to customers.[citation needed]

Automobiles/motorcars[edit]

Main article: Monroney sticker

A common use for MSRP can be seen in automobile sales in the United States. Prior to the spread of manufacturer's suggested retail pricing, there were no defined prices on vehicles, and car dealers were able to impose arbitrary markups, often with prices adjusted to what the salesperson thought the prospective purchaser would be willing to pay for a particular vehicle.

Currently, the MSRP, or "sticker price", the price of a vehicle as labeled by the manufacturer, is clearly labeled on the windows of all new vehicles, on a Monroney sticker, commonly called the "window sticker." It is different from the actual price paid to the manufacturer by the dealer, which is known as the "invoice price." There are now numerous sources, such as online appraisal tools, that can be used to find the MSRP and invoice price.[2]

Minimum advertised price[edit]

A minimum advertised price (MAP) is the practice of a manufacturer providing marketing funds to a retailer contingent on the retailer advertising an end customer price at or above a specified level. Such agreements can be illegal in some countries when members and terms in the agreement match predefined legal criteria.

Fixed pricing established between a distributor and seller or between two or more sellers may violate antitrust laws in the United States.

In Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007), the Supreme Court considered whether federal antitrust law established a per se ban on minimum resale price agreements and, instead, allow resale price maintenance agreements to be judged by the rule of reason, the usual standard applied to determine if there is a violation of section 1 of the Sherman Act. In holding that vertical price restraints should be judged by the rule of reason, the Court overruled Dr. Miles Medical Co. v. John D. Park & Sons Co., 220 U.S. 373 (1911).

Because the rule of reason applies, minimum RPM agreements may still be unlawful. In fact, in Leegin, the Court identified at least two ways in which a purely vertical minimum RPM agreement might be illegal. First, “[a] dominant retailer ... might request resale price maintenance to forestall innovation in distribution that decreases costs. A manufacturer might consider it has little choice but to accommodate the retailer's demands for vertical price restraints if the manufacturer believes it needs access to the retailer's distribution network". Second, “[a] manufacturer with market power... might use resale price maintenance to give retailers an incentive not to sell the products of smaller rivals or new entrants”.

In both of these examples, an economically powerful firm uses the RPM agreement to exclude or raise entry barriers for its competition.

In addition, federal law is not the only source of antitrust claims as almost all of the states have their own antitrust laws.

In the UK in September 2010 an investigation was launched by the Office of Fair Trading into breaches of competition law by online travel agents and the hotel industry in relation to the advertised pricing of hotel rooms. As of April 2011, this was an administrative priority of the OFT.

Rack rate[edit]

'Rack rate' is the travel industry term for the published full price of a hotel room, which the customer would pay by just walking into the hotel off the street and asking for a room. In some jurisdictions, a customer may be entitled to overstay a reservation by paying the rack rate. While the rack rate is lower than the maximum rate that the hotel may be allowed to charge under local laws, it is higher than the rate most travel agents can book for their customers. Sometimes the terms "run of the house" or "walk-up rate" are used to refer to the same highest rate.

The term "rack rate" is also used by travel-related service providers, such as car rental companies or travel mobile phone rental companies, to refer to the same highest rate that customers would be charged with no prebookings.

See also[edit]

References[edit]

External links[edit]

Sours: https://en.wikipedia.org/wiki/List_price
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How to Create an Effective Distributor Pricing Strategy

Just as competition is the cornerstone of capitalism, pricing is the cornerstone of competition. Consumers weigh a series of factors when making purchasing decisions mostly price and quality, both of which have upstream impacts on retailers, distributors, and manufacturers.

Distributors, being the middle link in the traditional supply chain (manufacturers > distributors > retailers), have the most fluid and risky pricing strategies. Supply and demand have the most to do with retail pricing. Manufacturer pricing is driven by production costs and desired margins. Distributors must account for both customer demand as well as production costs, plus other things like transportation costs and storage fees, while still finding margins for profit.

Obviously, there are a few more wrinkles to account for in supply chain pricing but it should also be obvious how an ineffective distributor pricing strategy could eventually end up hurting the business. We’re going to explore a few of the factors to weigh when determining distributor pricing.

Maximizing Margins and Keeping Retailers Happy

The first concept to understand when determining strategic prices for distributors is margins. Margins represent the percent of difference between the amount you paid and the amount you sold it for. Without margins, no one would make a profit and it’s important to understand that, whether a manufacturer, distributor, or retailer, all companies want to return a profit.

Manufacturers can essentially guarantee that they return a profit because they build the product and set the initial price accordingly. Distributors have to pay the manufacturer price and their margins are determined by how much they can sell it to retailers for. Retailers want to increase their profit margins by purchasing from distributors for as low as possible and therein lies the conundrum: how to maximize profit margins and also keep retailers happy with low prices.

Also, cost of goods sold isn’t the only cost that the distributors incur. They also have to distribute. Distributors also have to account for the cost to transport goods which can include international tariffs, maintaining a fleet of vehicles, and the cost to store product in a warehouse. All of these costs cut into margins, further complicating the idea of maintaining profits in a distributor pricing strategy.

Maintaining Distributor and Retailer Relationships

It’s also important to consider that strong distributor and retailer relationships can last for a long time. In fact, it’s not uncommon at all as long as both parties continue to see mutual benefits. So, consider this when pricing, as well. Sometimes it makes more sense not to squeeze every penny out of a company and forge a longer-term relationship built on mutual trust instead.

Distributor Pricing Processes

Vector illustration depicting the distributor pricing process

When it comes to strategic pricing for distributors, like many pivotal business strategies, a lot comes down to process. Having an ineffective pricing process will increase missed opportunities, are more likely to experience discount problems and have a higher likelihood of inconsistency across the sales team. Meanwhile, thorough pricing processes do the opposite: minimize missed opportunities, reduce the risk of discounting too much and enforce global consistency.

Pricing transparency and honest evaluation are critical. While developing the distributor pricing strategy, consider the effectiveness of the pricing optimization strategy already in place. Review the last year of deals and keep a tally of which deals adhered directly to the pricing model, which ones were special deals, which ones are a part of an existing customer contract and which ones had manual pricing overrides.

If the majority of the deals were for overridden prices, then the pricing model may need to be updated. If only a handful of the deals were from unique, case-specific pricing, it may not make sense to dedicate a disproportionate amount of strategic time to those deals. All in all, make sure to have a clear understanding of how your deals are priced and what pricing processes led to them.

3 Factors to Consider When Building a Distributor Pricing Strategy

Vector illustration depicting 3 factors to consider when building a distributor pricing strategy

When building a distributor pricing strategy, make sure to build a concurrent process along with it that addresses three major factors that, if structured around effectively, often yield good results:

  1. Monitoring specific and potentially costly scenarios 
  2. Increasing sales rep product knowledge 
  3. Updating or redirecting the pricing strategy to keep up with industry and market demands.

Monitoring Specific Scenarios

Build a list of scenarios and combinations of factors that, if they happened, would raise red flags for your organization. This can include incompatible products being sold together, a change to the sales channel, customer purchasing volume changing drastically, or something as simple as a new customer wanting a particular product that you don’t have. Each company’s list will be different but this is a good place to start when determining pricing as a distributor.

Then, for each item on the list, review the distributor pricing processes in place and determine how that red flag scenario can happen and how often. Ideally, each scenario only has a handful of ways to occur but if you find that there are multiple ways for particular red flag criteria to be met, then there may be a larger problem.

Increasing Sales Rep Product Knowledge

Depending on the size of your product catalog, expecting sales reps to stay familiar and educated about them all may be a formula for failure. Chances are, there are product documents stored in a database somewhere that sales reps can use themselves and share with customers to increase their knowledge of all the products available to them. This accounts for why our studies show that sales reps spend 68% of their time researching.

When building a process and strategy for distributor pricing, work in a component of sales rep education. The easiest way to accomplish this is with a technological solution that educates sales reps on-the-go, especially considering how taking extra time to learn about a product could result in a lost deal. PROS has several tools, like Opportunity Detection and Guided Selling software, designed to minimize the need for manual research giving sales reps time back to do more strategic sales activities.

Build in Flexibility to Keep up With Industry and Market Demands

Some markets and industries change daily so it’s important to have processes that allow for flexibility in pricing strategy. If the foundation of your distributor pricing strategy changes too much, you may want to consider thinking higher level about your strategy. But changing things like discount limits and product pairings several times could be necessary so work to build a pricing process that can handle these changes without too much interruption.

Using Technology to Reinforce a Distributor Pricing Strategy

Vector illustration of a team using technology and data to reinforce a pricing strategy

Once you’ve outlined what processes exist, where they are most useful and what scenarios are costly to the bottom line, consider using a technological aid to reinforce these processes and prevent these scenarios. Time spent educating salespeople or awaiting discount approval or building quotes, for example, is all time that customers can use to look up other distributors.

CPQ solutions go a long way to eliminate tedious time spent preparing quotes for clients, a process that can take weeks for complex configurations and pricing models. Ensure that your pricing strategy is prepared for any challenges your company may face by exploring the AI-powered CPQ, Dynamic Pricing, and Pricing Optimization software that PROS has to offer.

About the Author

Richard Blatcher

Richard Blatcher, Director, Industry Marketing & Business Intelligence at PROS, manages the global go-to-market strategy for PROS in its strategic industries. He has over 30 years’ experience in the industry originally based in Europe moving to the US in 2010. He spent the first part of his career in media, publishing and direct marketing managing the delivery of marketing and sales enablement services to many manufacturing and distribution blue-chip enterprises. He has also held EMEA and Global Marketing roles for $2Bn+ software company Autodesk including being responsible for launches of market disrupting SaaS software solutions into the market.

More Content by Richard Blatcher
Sours: https://resources.pros.com/blog/distributor-pricing-strategy-guide
7 Pricing Strategies - How To Price A Product

Distributor Price List definition

Related to Distributor Price List

Price List means any price list(s) issued by SAP for the applicable SAP PartnerEdge Model setting out the available software, services and the prices or fees as further defined in the in the applicable SAP PartnerEdge Model.

Track Usage Price List means the document entitled "Track Usage Price List" published by Network Rail on or about 20 December 2018 which, for the purposes of this contract, shall be deemed to incorporate any supplements to that document consented to or determined pursuant to paragraph 2.2.10 of Schedule 7 to this contract or a freight track access contract previously held by the Train Operator;

Product Catalog or "PCAT" is a Qwest document that provides information needed to request services available under this Agreement. Qwest agrees that CLEC shall not be held to the requirements of the PCAT. The PCAT is available on Qwest's web site: http://www.qwest.com/wholesale/pcat/

Wholesale distributor means anyone engaged in wholesale distribution of drugs, including, but not limited to, manufacturers, repackers, own-label distributors, private-label distributors, jobbers, brokers, warehouses, including manufacturers' and distributors' warehouses, chain drug warehouses, and wholesale drug warehouses, independent wholesale drug traders, and retail pharmacies that conduct wholesale distribution.

the Products means all products and associated documentation to be supplied under this Contract;

Tobacco products means cigars, cigarettes, cheroots, stogies, periques, granulated, plug cut, crimp cut, ready rubbed, and other smoking tobacco, snuff, snuff flour, moist snuff, cavendish, ping and twist tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, clippings, cuttings and sweepings of tobacco, and other kinds and forms of tobacco, prepared in such manner as to be suitable for chewing or smoking in a pipe or otherwise, or both for chewing and smoking.

Purchase Order Pricing/Product Deviation If a deviation of pricing/product on a Purchase Order or contract modification occurs between the Vendor and the TIPS Member, TIPS must be notified within five (5) business days of receipt of change order. TIPS reserves the right to terminate this agreement for cause or no cause for convenience with a thirty (30) days prior written notice. Termination for convenience is conditionally required under Federal Regulations 2 CFR part 200 if the customer is using federal funds for the procurement. All purchase orders presented to the Vendor, but not fulfilled by the Vendor, by a TIPS Member prior to the actual termination of this agreement shall be honored at the option of the TIPS Member. The awarded Vendor may terminate the agreement with ninety (90) days prior written notice to TIPS 4845 US Hwy North, Pittsburg, Texas 75686. The vendor will be paid for goods and services delivered prior to the termination provided that the goods and services were delivered in accordance with the terms and conditions of the terminated agreement. This termination clause does not affect the sales agreements executed by the Vendor and the TIPS Member customer pursuant to this agreement. TIPS Members may negotiate a termination for convenience clause that meets the needs of the transaction based on applicable factors, such as funding sources or other needs. Usually, purchase orders or their equal are issued by participating TIPS Member to the awarded vendor and should indicate on the order that the purchase is per the applicable TIPS Agreement Number. Orders are typically emailed to TIPS at [email protected] • Awarded Vendor delivers goods/services directly to the participating member. • Awarded Vendor invoices the participating TIPS Member directly. • Awarded Vendor receives payment directly from the participating member. • Fees are due to TIPS upon payment by the Member to the Vendor. Vendor agrees to pay the participation fee to TIPS for all Agreement sales upon receipt of payment including partial payment, from the Member Entity or as otherwise agreed by TIPS in writing and signed by an authorized signatory of TIPS.

Tobacco product means any substance containing tobacco leaf, including but not limited to, cigarettes, cigars, pipe tobacco, hookah tobacco, snuff, chewing tobacco, dipping tobacco, bidis, blunts, clove cigarettes, or any other preparation of tobacco; and any product or formulation of matter containing biologically active amounts of nicotine that is manufactured, sold, offered for sale, or otherwise distributed with the expectation that the product or matter will be introduced into the human body by inhalation; but does not include any cessation product specifically approved by the U.S. Food and Drug Administration for use in treating nicotine or tobacco dependence.

Distributor means a person who distributes.

Product Schedule means PTC’s standard order form entitled “PTC Product Schedule” (including all schedules, attachments and other document(s) specifically referenced therein) or such alternative order form as may be submitted by Customer and accepted by PTC, in each case that specifies (i) the Licensed Products and/or Services ordered; and (ii) for Licensed Products, the installation address (including the Designated Country) and the Licence Term.

Tobacco product manufacturer means an entity that after the date of enactment of this Act directly (and not exclusively through any affiliate):

licensed distributor means any holder of a distribution licence.

Original Product means the product from which You are upgrading. You are authorized to use the Software only if You are the authorized user of the Original Product and You meet the following conditions: (1) You have acquired the right to use the Software solely to replace the Original Product that You acquired legally and that is qualified to be upgraded with the Software under the Novell policies existing at the time You acquired the Software; (2) You installed and used the Original Product in accordance with the terms and conditions of the applicable license agreement; and (3) You will not sell or otherwise transfer possession of the Original Product.

Distributor Fee means any fee that you charge for Distributing this Package or providing support for this Package to another party. It does not mean licensing fees.

Product Labeling means, with respect to a Licensed Product in a country or other jurisdiction in the Territory, (a) the Regulatory Authority‑approved full prescribing information for such Licensed Product for such country or other jurisdiction, including any required patient information, and (b) all labels and other written, printed, or graphic matter upon a container, wrapper, or any package insert utilized with or for such Licensed Product in such country or other jurisdiction.

Product Marketing Materials means all marketing materials used specifically in the marketing or sale of the specified Divestiture Product in the Geographic Territory as of the Closing Date, including, without limitation, all advertising materials, training materials, product data, mailing lists, sales materials (e.g., detailing reports, vendor lists, sales data), marketing information (e.g., competitor information, research data, market intelligence reports, statistical programs (if any) used for marketing and sales research), customer information (including customer net purchase information to be provided on the basis of either dollars and/or units for each month, quarter or year), sales forecasting models, educational materials, and advertising and display materials, speaker lists, promotional and marketing materials, Website content and advertising and display materials, artwork for the production of packaging components, television masters and other similar materials related to the specified Divestiture Product.

embedded distributor means a distributor who is not a wholesale market participant and that is provided electricity by a host distributor;

Spray buff product means a product designed to restore a worn floor finish in conjunction with a floor buffing machine and special pad.

Product category means the applicable category which best describes the product as listed in this Section 94508.

Service List means the list of persons designated by the hearing officer or Clerk in a regulatory or adjudicatory proceeding upon whom parties or participants must serve motions, prefiled questions and prefiled testimony and any other documents that the parties or participants file with the Clerk unless the hearing officer otherwise directs. (See definition of "notice list" in this Section.) (See also 35 Ill. Adm. Code 102.422.)

Aerosol product means a pressurized spray system that dispenses product ingredients by means of a propellant contained in a product or a product's container, or by means of a mechanically induced force. “Aerosol Product” does not include “Pump Spray.”

New Products means new products, programs or modules offered by PowerSchool and are distinguished from New Versions and Fixes. New Versions and Fixes may include New Products that provide features, functions or applications not included in the Subscription Service(s) originally licensed by Customer and for which additional license fees apply as determined by PowerSchool to access. A New Product may be usable with or in addition to the Subscription Service(s) originally licensed by Customer. New Products will be licensed to Customer in accordance with the applicable Quote under the terms of this Agreement,

Sales territory means an area of exclusive sales responsibility for the brand or brands of beer sold by a supplier as designated by an agreement.

Existing Products Tangible Products and intangible licensed Products which exist prior to the commencement of work under the Contract. Contractor retains the burden of proving that a particular product was existing before commencement of the Project. .

Egg Product means all, or a portion of, the contents found inside eggs separated from the shell and pasteurized in a food processing plant, with or without added ingredients, intended for human consumption, such as dried, frozen or liquid eggs. It does not include food which contains eggs only in a relatively small proportion such as cake mixes.

Product Price for this Agreement has the meaning set forth in Section 6.2.

Sours: https://www.lawinsider.com/dictionary/distributor-price-list

Price distributor list

Distributor warehouse
If you are a manufacturer or supplier, and you want to sell your products to consumers, you will have to work with distributors and retailers, both in your home country and abroad. The margin for a distributor may range from 3% to 30% of the sales price, the margin for the retailer may range from very little to 60%. This all depends on the type of product and who pays for the marketing activities.

Are you looking for a distributor or retailers abroad? Click here…

Not all distribution margin is profit

You know the cost price for your goods, and you should have an idea of the sales price for the consumer, excluding any taxes. Anything in between is margin that you will have to share with your distributors, retailers or value added resellers.

However, not all margin is profit. In order to earn the margin, distributors and retailers have to make costs, for example for shipping, storage, financing and of course selling the goods. They also have their overhead, leaving only part of the margin as their profit. When negotiating with the parties further in the distribution chain, you will have to take this into account.

Average retail margin and distribution margin

Product categoryDistributorRetailer
Fast moving consumer goods3-10%8-40%
Clothing and apparel15-30%20-50%
Electronics like mobile phones3-7%3-7%
Cars5-15%
Furniture30-50%
Jewelry30-60%
Electrical equipment and lights5-7%15-25%

Please note that these figures are indications and especially for distributors heavily depend on the tasks that a distributor should do. For fast moving consumer goods 3 to 10% may be fine for just the physical distribution, but if the distributor also does promotional efforts, this percentage should be much higher. Therefore we have to look into detail in the various roles of the parties in the distribution chain.

What is the role of the retailer in distribution?

A retailer sells goods to the public in relatively small quantities for usage or consumption rather than for resale. A retailer can for example be a supermarket, preferably with multiple outlets. The retailer is the last shackle in the distribution chain and has the best information on what sales price is still acceptable.

The actions of most retailers are aimed at maximising the margin on their assets. And their most important asset is shelf space. So they will multiply the volume of your product with their margin to see how much they can earn and compare it with other products that they could have on the shelve.

What is the role of the distributor?

The distributor is the middle men between the manufacturer and the retailer, or between the manufacturer and businesses that integrate the product or use it for their own consumption. There can be a chain of distributors, for example a global distributor who sells to specialised distributors for certain industries. In B2B markets, e.g. for desks, complicated machinery or cleaning services, you generally have no retailers.

The main assets of a distributor are his sales force, transportation means and storage. He will try to optimise the margin he can get with these assets. So it helps if you create an easy ordering process for him, with packaging that he can easily split and handle, and good documentation for his sales force.

Distributor price and retail price

Your distributors and retailers should be able to cover their costs and make a small margin. Therefore the next step is to list their activities and add a value to it. These activities could include:

  • Transportation
  • Packaging and unpackaging
  • Storage
  • Financing
  • Marketing
  • Sales, either in personal sales or by putting the product in their shops

Adding up the estimated costs of these activities will give you a good basis for negotiations. Discussing the list will also help to clarify expectations, which is especially important if you work with foreign distributors.

 

Available retail and distributor margin calculation

How to calculate the distributor margin or retailer margin? The first step is to calculate what margin is available and which part of it should go to your distributors.

  • The process begins with determining the cost of your goods. Be clear about which units you sell your products in, and be consistent in you calculations to take that as a basis.
  • The next step involves establishing a MSRP (Manufacturer suggested retail price). You mustconfigure your MSRP by considering the profit earned across all your sales channels and the product competition in the market. Also take into account applicable taxes, like VAT.
  • Distributors and retailers typically get discounts on the MSRP in exchange for selling your products on behalf of you. Distributors usually command large discounts due to the bulk of their orders, and the number of retailers ordering from them. They don’t usually need too much support, except for notifications of new promotions and progress of the prices on your products.
  • You must anticipate hidden costs. Damages or product losses could occur during shipments. To avoid this, you should ensure quality containers which would require additional costs. Include it in your calculation of unit sales to adjust your margins. Most distributors and retailers would also ask for as many samples of your products as possible. Reasonable margins for your distributors should be computed only when all costs (including hidden variables and miscellaneous) are known.

The second step is to divide the margins along the distribution chain, e.g. between you, the distributor and the retailer. Keep in mind the work that each party has to do and the risks they take. In general the profitability of a product is lower for the distributor than for the retailer but distributors have more sales due to the sheer volumes that they deal with. Try to determine with what transfer prices it still is interesting for your distributor and when applicable your retailer to sell your products.

Sours: https://www.allianceexperts.com/en/knowledge/what-is-a-reasonable-margin-for-your-distributor/
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