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operation. That's just a fact. You must have the least amount of overhead pos- sible," he says. While no step in pricing is as math- ematically stimulating as new product pricing, the nuance and expertise re- quired to manage price has a much larger impact on the overall profi tability of a distributorship. Pricing management requires the ability to evaluate data and market trends concurrently. It requires the ability to de- cipher the difference between a seasonal sales dip and a long-term slide, the skill to uncover hidden costs and tweak prices accordingly. Managing price demands critical thinking skills, and the intelligence to know when changes should, and should not, be made. "Price strategy is not a short-term thing," says Bill Wade of Wade & Part- ners. "Your price is part of what you stand for. It's not something you can jerk around." Wade says one trap distributors must avoid when managing price is becoming victims of their own knowledge. Customers don't know what you pay for your parts, nor do they know how much it costs you to sell them. Don't let what you know about your fi nances impact how a customer views your price, Wade says. "You set your price based on your margins and what you need to make," he says. Wade says this is especially important in situations where a competitor has a lower price. "Just because you fi nd a cheaper price in the market doesn't mean everyone has found it, and that everyone will jump on it," he says. "[Customers] might not even know there's a bargain out there." And even if customers do fi nd the price, Wade says that's no guarantee that they'll leave your business just to snag the cheaper rate. Not every customer buys exclusively on price. Most custom- ers who value comprehensive service will accept a higher price when it comes with great service. "Not everyone wants to be the low- dollar purchaser," Szabo says. "There are customers out there that value our service, our product knowledge, our payment structure … they value our company and are willing to pay for what we provide." In some cases lowering prices can even be met with customer skepticism, Wade says. "You don't want customers to start questioning the decision, to start won- dering if your supplier has substituted raw materials," he says. "And you don't want to be known as a business that jerks around your prices." Setting prices solely to acquire market share is another move Wade says distrib- utors are best to avoid. He says cutting or capping a price to become your market's lowest-cost distributor nets you the exact type of customer who's looking for the lowest-cost distributor. And those customers don't last. "Do you think when you raise your price you'll be able to keep them?" he says. 16 T R U C K P A R T S & S E R V I C E | M a r c h 2 0 1 6 Karmak's business system includes a pricing matrix feature that allows distributors to determine customer and price groups. Price strategy is not a short-term thing. Your price is part of what you stand for. It's not something you can jerk around. – Bill Wade of Wade & Partners Cover Story