This article is excerpted from Essentials of Profitable Wholesale Distribution, by Jim Olsztynski, published by the National Association of Wholesaler-Distributors. Containing text explanations and review questions, the book is a tool for training branch managers, salespeople and other staff in the basics of all aspects of distribution.

It sounds easy for a distributor to give bigger discounts as a convenient way to increase sales. It makes customers "like" doing business with that distributor. Sometimes a company feels compelled to lower prices to be in line with the "going rate" of what competitors are charging. These are all understandable motives. Yet, rampant price cutting is one of the quickest ways for a company to drive itself out of business.

Constantly ...