Worksheet: Give each channel a role, then change one term

Volume flows to whichever buyer pulls hardest unless price and terms push it elsewhere. You learn about leakage when one customer complains about another's price. This sheet gives each channel a one-word role, checks the price gaps fit it, and picks the terms to change. It builds the Competent step of the check:

Each channel has a stated role (grow, hold, migrate) and price differences between channels that fit the role.

Step 1. A role for each channel

Grow means we want more volume here. Hold means keep it where it is. Migrate means move it to another channel over time.

Channel	Share of our volume (%)	Net price per unit	Cost to serve per unit	Role (grow, hold, migrate)	Why
e.g. Independent stores through a wholesaler	12%	$2.10	$0.40	Migrate	Small drops cost more than the price carries

Step 2. How each channel is priced

There are three ways to price across channels. Pick one per channel.

Approach	When it fits	What to watch
One price for all, and we carry each channel's cost	Few channels, or channel costs small against the product's value	Costly channels are paid for by cheap ones
One price, plus a charge for the service each channel uses	Channel costs differ a lot	Customers must see the charge is real
A separate price for each channel	Each channel serves different shoppers and stock cannot cross	Stock moves across and undercuts the main channel

Channel	Approach	Price gap to the main channel (%)	Does the gap fit the role?	Where stock leaks across

A migrate channel priced below a grow channel is pulling volume the wrong way.

Step 3. Terms that reward volume you do not want

Term	Channel or customer	What it rewards today	Why we do not want it	Change at the next round	Date
e.g. Flat volume rebate	Large distributor	Scale, with no change in order size	Passes no cost saving back	Pay it on full-pallet orders only	Next renewal

Change one of the three at the next terms round. Set your own price and terms to each channel. Never tell a distributor or retailer what price to resell at, because Australian law bars it. Ask a lawyer where a case is unclear.

Done when: every channel has a stated role (grow, hold, migrate), and the price gap to each channel fits its role.

Adapted from our own beverage pricing strategy discussion (PSP, 2004).