MDM-Podcasts-launch
Need Help? (888) 742-5060

In The News:

The Balance of Price and Value

Price sensitivity is not new. However, during the recession, distributors and manufacturers say the level of sensitivity seemed to have increased. Companies were looking for cheaper ways to do things, even if it meant not buying the "best" goods just so they could keep operating.

But according to several people at the Specialty Tools and Fasteners Distributors Association meeting in Phoenix, AZ, earlier this week, overall value is becoming more important again.

"Value doesn't have to mean cheap, but a lot of people think it does," says Tom Reilly of Tom Reilly Training. Reilly hosted a session called "Crush Price Objections" at the STAFDA event.  

But even with overall value becoming more important, that doesn't mean customers want price to go up. Rather, they want to be able to do more for less, says Cory Wilkinson, senior product manager for vise grips at Irwin Tools, a manufacturer of hand tools and power tool accessories. "We try to maintain the price while introducing new innovations," he says. "With steel prices going the way they have, prices will probably have to go up because we just can't absorb everything, but we're trying to keep it as level as possible."

How are they doing this? First, by improving the processes they use to manufacture the items. For example, the tool manufacturer uses a process called metal injection to create the buttons on some models of its vise grip in order to reduce waste, cutting overall costs.

In addition, streamlining the product line improves product costs. "Often with product improvements, we will completely replace the existing line with the new line," Wilkinson says. "The reason? It just makes better sense. It's a better product and by doing that we can often keep the price point about the same."

Irwin isn’t the only company looking for new ways to innovate without increasing costs. And in some cases, manufacturers are finding ways to reduce the cost. Such is the case with DeWalt's "bare tool" line.

"There are 16 million DeWalt 18-volt batteries already in circulation," says Christine Potter, director of marketing for DeWalt's Industrial Products Group. "And they're interchangeable. So we thought why not offer a line of tools without the battery pack included? The cost on some of the tools goes from $300 to $150 by doing that."

Bare tools won't replace all sales of power tools, but even replacing some can reduce costs for distributors and manufacturers, Potter says.

Related from MDM Premium: Meeting Shifting Definitions of Value

© 2019 Gale Media, Inc.

Please do not reprint MDM's content on your website without MDM's express permission as it is copyrighted material. To gain permission, email us, or call 1-888-742-5060. For information on PDF or print reprints, visit www.mdm.com/reprints. MDM welcomes inbound links from your site. Please cite Modern Distribution Management.

2018-top-distributors-listThe 2018 Top Distributors List

This free PDF includes lists of top distribution companies across 14 sectors.

You will also receive MDM Update, our daily distribution e-newsletter & other distribution-focused content.

Download the Free PDF now >>


MDM-UpdateMDM Update: Daily Newsletter 

Sign up to read the best source for news & trends in wholesale distribution, MDM Update. Delivered daily to your inbox. 

Sign-up for MDM Update >>

Post a comment to this article

Partner Center