The wholesaler wants a bigger discount: how to work out if you still make money

The wholesaler down the road buys in bulk, and he knows it. “Give me 4% more and I’ll take double.” It sounds like a good deal: more volume, one big customer, less running around. Before you say yes, do one small sum. It takes two lines and it often changes the answer.

The two-line sum

Say you buy a product at ₹90 and sell it at ₹100. You make ₹10 a piece.

• Give 4% off: you now sell at ₹96, and make ₹6 a piece.
• To earn the same profit as before, you must sell 10 ÷ 6 = 1.67 times as much. That is 67% more volume, just to stand still.

The thinner your margin, the worse this gets. On a 10% margin, a 4% discount takes away 40% of your profit. On a 5% margin it would take 80%.

The costs that don’t shrink

A bigger order does not make delivery, loading or breakage free, and a wholesaler who takes a discount usually wants credit too. If he pays in 30 days, your money is tied up for a month on a thinner margin. Read the company wants cash, the shops want credit for how that adds up.

Cheaper things to offer than price

Other things that cost you little and matter to a big buyer:

• Delivery on the day he chooses, or first thing in the morning.
• First stock of a new launch or a scheme item.
• A bigger credit limit in exchange for paying on time, instead of a lower price.

If you still say no

Say it about the numbers, not about him: “At that price I lose money on every case. I can do one free with every 24 instead.” A clear reason and an offer on the table keeps the relationship; a flat no loses it. Where the rest of a distributor’s margin quietly goes is covered in where a distributor’s margin actually goes.

How Mulberry Sales helps

Every day closes with profit worked out at what each item cost you, and that cost is fixed on the bill at the moment of sale, so a later price rise cannot rewrite last month (Every plan). Every discount is recorded shop by shop and salesman by salesman. Salesmen can change a price only if you allow it (Growth plan and up), and free-goods schemes like “1 free with 24” go onto the bill by themselves (Growth plan and up). Full profit by product and shop is on Business plan. See billing software for distributors.