The implications for pricing policy are profound. But by thinking costs are fixed, distribution managers cut price just enough to cover costs, plus a little more. In doing so, they essentially diminish pre-tax returns, because operating expenses actually rise with volume, even if their product costs fell because of bigger buys. As you have been here, your book is skeptical of wholesalers who yield pricing authority to their sales forces. Distribution has been and remains a relentlessly sales-intensive business.
Most distributors are content to sell like hell and count the spare change at year-end.
Perhaps, but in my experience, it doesn't happen often enough. Whether it's plumbing, electrical, heating and air conditioning, mill supplies, whatever, the products are mostly commodities. The ones that aren't are pseudo-commodities on old product platforms. They look like those gasoline stations of a bygone era, where the attendant ran out, pumped the gas, washed the front window, checked the oil, and made change. That model gave way over time to self-service paid for with credit cards at the pump, because the typical customer was no longer willing to pay for the attendant's services.