WHOLESALE MARK-UP

[D. WARREN]

Hi Everyone.
I have a simple question that seems to have many answers but i'am not sure which one is the correct one for us. How or what is the best method for determining wholesale mark-up? I know that a lot of dealers use a matrix and some use either a cost + or a list - calculation. I was hoping that you could give me some insite on what has worked best for you, and is fair and profitable for all involved. Thanks for your response.

[Garry House]

Our clients have found that the best way to address this is through a "Sales Volume vs. Discount" Basis. i.e. "$-0- to $2,000 per month earns List Less 25%, $2,001 to $3,000 earns List Less 26.5%, etc." This is easily administered by billing each invoice at your "minimum discount" structure, then adjusting the final monthly statement (by the additional discount earned), based on the monthly purchase volume.
Garry House
NCM Consulting Division

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[Chuck Hartle]

I agree with Gary. We actually got to a point in our wholesale operation where we completely changed our whole discount structure based on purchase volume.

We classified our customers into 3 catagories:
"Green Light" customers - loyal and purchased from us only.
"Yellow Light" customers - we were their second phone call or alternate source.
"Red Light" customers - they purchased from us only if they had too because we had the part.

You have to set a different scale based on it being either a body shop or a independent repair garage. Our thoughts on this were "why should we give the exact same discount to customers who only purchased from us because we had the part as from a loyal customer who always purchased from us.

We even took it one step further. We gave our yellow and red light customers a "low" delivery prioriety, making sure that we took care of our green light customers faster and better than the others.

What this did to our wholesale operation was give better service to our loyal customers and word of mouth turned some of our other yellow and red light customers into green light customers. It also "weeded" out those customers who were upset over our lower discounts and sent them to our competition. Ultimately, it saved us money, time, and effort and helped fine tune our customer base.

[dennis wood]

I REALLY LIKE THE WAY CHUCK HAS SET UP HIS DISCOUNT STRUCTURE I HAVE BEEN TRYING TO FIGURE OUT A BETTER WAY FOR MY WHOLESALE ACCOUNTS.
I THINK I WILL TRY THIS IF YOU DON'T MIND CHUCK?


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dennis wood

[Chuck Hartle]

Hi Dennis,

Go for it. Let me know what results you see following this game plan!

Chuck Hartle'