Supplier price increases for distributors: what to reprice first
A distributor buys and resells the same SKU, so every supplier increase lands in your margin until your sell price catches up. With thousands of lines, the question is which to reprice first and how much the delay costs.
The method
- Find every line whose cost changed. On a long list, that is the free price list compare tool or an XLOOKUP comparison.
- For each changed line, gross profit at risk per year = annual units x (new cost - old cost). This is what you lose if you do not reprice.
- Sort by that, largest first. Percentage is the wrong sort key: a 9% move on a slow line can matter less than 3% on a fast one.
- For each line you reprice, the sell price that keeps your margin is new cost / (1 - current margin). Round to your price endings.
- For customers on quoted or contract prices, size the exposure until the price can change.
Gross profit at risk, with annual units in B2, old cost C2, new cost D2:
=B2*(D2-C2)Sell price to hold margin, with current sell in E2, rounded up to the next 0.05:
=CEILING(D2/(1-(E2-C2)/E2),0.05)Worked example: five lines from an electrical supplier's new list
| SKU | Item | Units/yr | Cost | Cost change | Margin before | Margin at old sell | Sell at same margin | GP at risk/yr |
|---|---|---|---|---|---|---|---|---|
| EMT-075-10 | 3/4in EMT 10ft | 2,400 | $11.42 to $12.10 | +6.0% | 24.9% | 20.4% | $16.15 | +$1,632.00 |
| WG-12-500 | 12 AWG THHN 500ft | 180 | $84.10 to $91.60 | +8.9% | 24.9% | 18.2% | $122.00 | +$1,350.00 |
| FT-LED-4 | 4ft LED strip fixture | 500 | $14.60 to $15.70 | +7.5% | 30.5% | 25.2% | $22.60 | +$550.00 |
| BOX-4SQ-D | 4in square box | 3,600 | $3.18 to $3.29 | +3.5% | 26.9% | 24.4% | $4.50 | +$396.00 |
| GFCI-20-WR | 20A GFCI, weather resistant | 900 | $21.95 to $19.80 | -9.8% | 25.6% | 32.9% | $26.65 | -$1,935.00 |
Total gross profit at risk on the increases: $3,928.00 a year. The 3/4in EMT line has a +6.0% cost move, but it tops the list because of volume. The GFCI line went down, which is margin you gain if you hold its price, or room to sharpen a quote.
Customers locked at quoted prices
If 30% of the EMT volume is sold on quotes that run four more months, you carry the cost increase on those units until they expire: 2,400 / 12 x 30% = 60 units a month, x 4 months x $0.68 = $163.20. Run that for your largest quoted accounts before you decide whether to ask the supplier for price protection on open quotes.
The margin impact calculator runs one line in detail, and the bulk increase tool applies a percentage to a whole sell list.
Pricecheck takes the supplier's email as it arrives, PDF included, compares it with the last version and sends back only the lines that moved. $49/mo, first month free for early signups. No payment now.