amount of mark-up needed to run a profitable distributorship

[chadrpalmer]

I put a post on another carwash forum website, and i kind of assume a lot of the same people read the same forums, but for the sake of trying to gain additional insight, i will pose my question here as well. Realizing there are multiple variables, is anyone willing to give a factually based ball-park estimate on the average mark-up distriubutors impose on chemicals? In the name of transparancy, i must disclose i am writing an article on the advantages of using a local chemical manufacturer vs. the national brands for carwash chemicals. I completely realize there are definite disadvantages, as well, but for the sake of my article, i am reasearching the advantages. thank you for your input, in advance.

 

[SplishSplash]

The manufacturer's sell to the distributor's at a discounted rate below the suggested list price. This keeps the distributor from marking up the price of the product for several different reasons. I am a sales manager for a manufacturer outside of the car wash industry and we make it very clear that our product is not to be sold or quoted for more than the suggested list price. I would think your article would talk more about the advantages of service from either supplier more than cost.

 

[chadrpalmer]

the subject of the article is the advantages of using a local chemical manufacturer versus national brands...cost is one factor im investigating, others include convenience, the direct contact you can have with the manufacturer, the influence you are able to have over the product, and a couple of others...i have some information on the other factors, but its like pulling teeth to get anyone to fess up to what they are making on chemicals...i get where they are coming from, especially in this day and age where everyone resents "big oil" for wanting to make a dime, i personally hold no grudge over a distributor wanting to make a living, rather he do that than join the vast amount of people living off the government tit, but i digress, as i am prone to do. your input in and of itself is valuable, as i do not have a huge amount of knowledge on the distributor end of things, just been washing cars for a while...i simply enjoy writing, and found this subject fascinating, especially after i found what a touchy subject it is.

 

[Mitch]

When considering the price that a distributor charges for chemicals it is very necessary to include the value of that fifteen minute service call to reprogram a timer or to replace a swivel that does not cost the customer a cent in labor. Parts delivery could be included at no cost, and mileage for a service call can be waived if an order of soap is delivered at the same time. Also, a good relationship with a distributor that offers good phone support is priceless, especially in the case of some manufacturers. You may pay a few more dollars for his soap, but he probabily knows what chemical setup works best in your machine and in your particular area, and one fine day you will need him on saturday at noon when your automatic is acting up as much as he needs you.
I realize that this is not exactly the information you were looking for, but this is how it goes with my distributor. Good luck with your article, Mitch

 

[rph9168]

What is the point of your article?

 

[mac]

Chad, here are a couple of random thoughts. I sell soap and equipment. Do I make money on this? You bet your bippy I do. However the cost to the end user isn't that much greater than if he got it somewhere else. I think your article would be more relevent if you focused on using local distributors rather than large national direct buy companies. I don't think where the soap is made is that important. A large manufacturer can have many good local distriburors. One of my customers decided to buy from someone else to "save" money. He called me on a recent Sunday morning to help him with an unusual problem. He seemed miffed when I suggested he call his soap supplier. I sell soap as part of my business plan to stay in business and make a profit. My soap sales help me keep well trained techs and trucks on the road, with a well stocked warehouse to support it.

 

[rph9168]

Well said Mac.

 

[DavidM]

I am not sure what the distributor's markup has to do with this comparison. If you are comparing costs of national companies vs local wouldn't the important number be the list price? Ultimately, for the operator, that is the point of comparison for price. How that price is arrived at doesn't matter, only the final price paid by the operator.

On another note, why write an article that only looks at the issue from one side? One of the biggest problems with many of our car wash mags is that the articles tend to be very one sided. The authors are often distributors or manufacturers. It would greatly improve the quality of the magazine if the articles were more balanced.

David

 

[Danny]

On another note, why write an article that only looks at the issue from one side? One of the biggest problems with many of our car wash mags is that the articles tend to be very one sided. The authors are often distributors or manufacturers. It would greatly improve the quality of the magazine if the articles were more balanced.

David

David brings up a good point. Not trying to be a ball buster more curious than anything. Chad besides authoring articles for the magazine what is your role in the industry? Are you a manufacturer, distributor, consultant, manager or operator? Personally I would love to see more articles/editorials/opinion pieces written by managers and operators. Just another point of view but what do I know? lol

 

[chadrpalmer]

this whole conversation has taking on a life of its own, which is quite interesting to me. Ive been off a couple of days, we are doing some home remodeling, so have not seen the internet since monday...to the fella who asked what is the point of the article, ive stated that twice...danny-i am a carwash manager, and yes, i too think its nice to get that perspective into the magaizines occasionally. Its kinda funny, its not like this article is all about how distributors mark up prices, i wanted some data for one sentence in the article...didnt realize the barrel of monkeys i was sticking my head into....its been a fun dialogue, though, both here and on "another forum." no one has publiclly answered my question, but thanks for the private messages, yall.