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As originally asked by Andrew Wallis.
What is the average markup that a distributor adds on to the cost price for medical consumables?
Todd Staples, MBA
A distributor may often add $ (loads) on to your suggested list to compensate for discounts, marketing programs, commission structures, and an entire host of internal costs. Many industries utilize a straight distribution cost and let the distribution partner establish an appropriate selling price point vs. a List Less supply agreement.
The value of distribution is not only AR, but the access to the distribution channel – This access is extremely expensive to build and may take years to accomplish market penetration results. With a properly designed and executed program distribution/manufacture partnerships can accomplish amazing results – It is important to realize what distributors are. Many manufactures make the mistake of saying “XYZ is distributing my product” all I have to do is keep my eye on manufacturing and supply of the product. Nothing is farther from the truth.
Todd Staples, MBA
I agree with the other comments here however that distributor selection is critical to building a channel that reflects the core value of the product and the company that produces it.
Edward (Ted) Reesor
One bit of advice if you are seeking a distributor: don’t mix the two as human nature demonstrates that buyers tend to use the latter company as a resource, then run off to find the lowest price with the former. What happens is your champion will drop you since they burn resources and receive no sales.
Considerations by the mfg/supplier related to the sales channels (distributors/reps):
Considerations by the sales partner (distributor) related to the mfg/products:
1. Company Brand
Bottom Line – reward appropriately for the distributors’ efforts.
Reality: Nothing motivates sales better than an attractive reward.
I hope this helps some.
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