Even in a sluggish economy, supplier prices increases occur fairly frequently. It is safe to say that most distributors approach such increases with a sense of dread if not unbridled hatred. The reality is that supplier price increases are an unparalleled opportunity to increase profit. However, achieving that profit improvement requires a reversal in the thinking of distributors and a certain degree of fortitude in passing the price increases along to customers. This report looks at the nature of the supplier price increase issue. It does so from two distinct perspectives:
- The Emotionalism of Price Increase—A discussion of the fact that price increases are often viewed with emotion rather than logic.
- The Economics of Price Increases—An analysis of the profit impact associated with the proper handling of such increases.
The Emotionalism of Price Increases
The typical response of distributors to supplier price increases can probably best be summarized by the old political phrase, “There you go again.” This antipathy towards price increases arises from three distinct issues. First, there is something of a loss of control in the pricing process. Second, there is a substantial amount of activity that must support the price increases. Third, there is the unknown nature of the competitive response…
READ THE FULL ARTICLE: Supplier Price Increases Are Your Friend in SlingMaker Issue # 140 on Page 26.