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Distributor Margin - How is it calculated?

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  • Distributor Margin - How is it calculated?

    Question from a brewery looking to distribute. If a distributor states that their margin is 30%, how is the distributor margin typically calculated? Do they take a straight 30% margin on top of Price to Distributor (PTD) or do they put tax on top of the PTD and then calculate the Margin? (State is Virginia) See illustrative example below:

    PTD: Case $42
    Distributor Margin: 30%
    Price to Retailer (PTR): Case $60

    or is it customary for distributors to price it this way

    PTD: Case $42
    State Tax: .45 (average)
    Total Distributor Cost: $42.45
    Distributor Margin: 30%
    PTR: $60.64

    Is the second example a normal practice or are they just trying to get a larger margin without stating so? It seems odd to us if this was the norm because in the second example the effective margin is 30.74%. This scenario gets worse with kegs. Thoughts on this?
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