Discussion: Why Smart People Pay Too Much For Paper Products And Cleaning Supplies | Bruce Gottfried

ph.logo.sublogos.news.white-DISCUSSION

Since joining Paramount Paper and Plastics Inc. I have experienced working under a different business model. Under this model an item is marked up a fixed maximum percentage to all customers. If there is extreme competitive pressure on an item it is reduced a maximum of 5%. Other items on the order are not raised to compensate. Our team can look a customer in the eye knowing that advantage has been not taken. We confidently ask for recommendations and know that we do not have to lie our way out of an embarrassing situation when confronted by a competitor’s much lower pricing because we are typically the most competitive distributor. We also do not try to sell products that lock customers in to us by offering proprietary toweling, tissue and napkins. It is to a customer’s advantage to use a universal generic product that is less costly and can be shopped. We also buy products that are effective for the customer. We support Kariout over Pactiv when it comes to soup containers and microwavable containers because Kariout offers a price advantage and is effective in use. If we find that a Solo hot cup is lower in cost than a Pactiv cup we encourage the customer to buy the better value. Lastly we buy extremely well and provide first class service. This is a refreshing company to represent.

Top Comments

Lee Nyari

Managing Partner | Pricing Consultant | Distribution & Mfrg | Price Optimization at The Innovative Pricing Group, LLC

Effective pricing strategies treat customers fairly. Distributors that let their sales reps “double sales prices” at customers who “trust the company” are in effect letting their sales reps put potentially large chunks of their volume at severe risk due to price. As a result they end up in indefensible situations, where sales folks feel they need to “lie their way out”. Management at these distributors may equate “high margins” with “good pricing” – even though “good pricing” should balance risk to volume/customer relationships on the one hand, with short term revenue gains on the other hand. Management at these distributors may lack analytics to know how to appropriately balance volume and margin in pricing, so they blindly trust that their reps will do his for them effectively (and unfortunately, many reps do not do not).

Bruce Gottfried

Independent Wholesale Paper And Food Representative

Lee the companies that I represented have lacked the analytics to get the pricing right and have empowered their sales people to set the selling price. They have directly and indirectly tied the commission to the selling price incentivizing their sales force to charge what they believe they can get away with. With my current distributor I am forced to not exceed or fall below a price basd on a fixed markup over cost. This is not ideal but in the absence of sound analytics it is a model that allows me to win customers and hold them.

Denise Neff

Director of Sales/Marketing

I find this article quite interesting The word price has many meanings. Selling price to be exact should take into account many things. Time spent at an account training, number of deliveries made in a day or week, size of the account, product mix of the items sold to the account. The list goes on and on as a cost should not just put on a calculator ‘willy nilly” with a mark up taken out of thin air

More here:

Why Smart People Pay Too Much For Paper Products And Cleaning Supplies | Bruce Gottfried | LinkedIn.

Bruce Gottfried

Independent Wholesale Paper And Food Representative