In Avoiding the Top 10 Mistakes with Distributor Agreements, Glen Balzer, management and forensic consultant and expert witness in domestic and international marketing and sales, shares a checklist of ten common mistakes to avoid when drafting your next distributor agreement. Mistake #5 is entitled Frequency of Price Changes
Distributors sometimes believe that they would have a competitive advantage if their manufacturers are restricted to adjusting prices only once per year. This may serve the distributor well, but at the expense of the supplier. An arbitrary advantage of one party over the other party does not bode well for the partnership.
During periods of inflation or other rising costs, the manufacturer must have the opportunity to pass along increases in cost. The marketplace disallows aggressive price increases. Allowing a manufacturer to increase prices upon 30-day notice eliminates one opportunity for conflict and reinforces the principle of fairness in the partnership.
Glen Balzer, President of New Era Consulting, can be reached at email@example.com.