Pennsylvania independent distributor gives strategies on pricing

Getting the right prices for products is an ongoing challenge for mobile distributors. Jeff Rosensteel, an independent distributor in Jeannette, Pa., works hard to get his margins, and will only deviate in specific situations.

As a general rule of thumb, Rosensteel holds to about a 35 to 40 percent markup on tools and equipment for many of his customers who are on payment plans. For cash payments, he'll generally include a discounted markup of 30 to 35 percent.

For big-ticket items, including racks and other large equipment (at $10,000 or more), he'll lower markup to 25 percent.

When asked how he handles customer objections on price, Rosensteel says that it's generally the same group of technicians that will debate him on pricing. If they advise they can purchase the product for less "down the road" or online, he'll explain the advantages of purchasing the product from him.

"If you're going to the store and you're paying $5 less, you have to pay for it in full, on the spot," said Rosensteel. "You're getting it on a payment (plan) for four to six weeks with me."

Rosensteel holds fast to his prices, but if a good customer challenges a price, he'll see what he can do to keep their business. He says he'll talk and work with his customer a bit more, and in return he asks the same of the customer, telling him or her "I can do this price if you work with me a little more." 

Rosensteel stocks products for detail shops, shop supplies, as well as tool and equipment products. His main customers include a few motorcycle shops and dealerships, independent shops and truck garages. The recent influx of natural gas fracking in the area has increased his business at oil rigs as well.

Another strategy Rosensteel utilizes when determining a discounted markup: customer fliers.

In addition to supplying his customers with fliers from ISN, Rosensteel will review fliers of his competition to determine a strategy on what to stock and offer at discount for customers. He has competition from all flags including Snap-on, Matco Tools, Mac Tools and Cornwell in his area "Just pick up other sales fliers that other distributors leave (at shops)," he said. "Check into the same products and see what you can do."