Margins

With hardware margins (this discount you give) often falling back into single figures, distributors and dealers rely on software and services to make up the shortfall. As a result, you will be giving away more margin than you would have had to 20 years ago. Table 15-3 shows some typical margins:

Table 15-3

Typical Hardware Margins

Selling to

Discount off RRP

International distributor

45-65%

Major chain

40-60%

Distributor

40-60%

Dealer

20-40%

End user (multiple sales)

0-25%

End user (single sales)

0%

In most manufacturers' eyes the real difference between a dealer and a distributor isn't their title but the volume of business they do. It is not uncommon for your largest dealer to outperform your smallest distributor.

To offer the greatest incentive, margins should be volume based. Even so, discounts should never overlap. Otherwise, promoting a massive dealer to a distributor offers no financial benefit.

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