This was developed because a current pricing manager came to us because his sales team kept saying that “our prices are too high and if it was lower, we could sell more.” This is a common thought process from the sales team in distribution. When you present the math to them, it poses the question whether they can actually sell “X” times more. Does that amount of sales even exist in that particular market. Distribution revolves around margin dollars. Regardless of the person’s position in a distribution business, everyone is hired with one purpose… create margin dollars! From CEO to order puller, it’s the same goal. Many times when the numbers are placed in from of the sales person, they admit that they will be unable to sell that much more of that product.
|Original GP%||Original Cost||Sales $ Needed||Margin $ Produced at Proposed||Margin $ Delta||Sales $ Delta||Sales $ Needed||Sales $ Increase|