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How does the cost of serving a customer through a wholesaler compare to direct?
$
COST PER LB.
Through Wholesaler
Re-D Allowance
Direct
Logistics and
Order Mgmt. Costs
ORDER SIZE
Revenue Impact
If the manufacturer employs a bracket price structure, he will be able to compare it to his total logistics
and order management cost to gain a new understanding of the profitability of various order sizes. Often,
manufacturers establish premiums for small orders which are not sufficient to cover the total cost of
service. In this case, serving these customers via wholesalers will be an even more attractive option.
Regardless of the manufacturer’s price structure, it is critical to compare direct pricing practices to the
prices charged to wholesalers in order to develop a rational redistribution allowance.
Revenue Impact Must Also Be Taken Into Account
$
Minimum
¼ Truckload
$/LB. ½ Truckload
Truckload Revenue from Sale
to Distributor
Logistics and
Order Mgmt. Costs
ORDER SIZE
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