Channels might include:

• Selling through sales employees who are paid mostly on salary
• Sell through sales employees who are paid mostly on commission
• Sell through reps who do not take title before selling your products.
• Sell through distributors who take title before reselling your product
• sell by direct mail
• sell by phone
• sell through TV and radio
• sell through internet

 What costs should be included in Channel Costing analysis?

• Normal direct product and service costs
• Any additional product and service costs for a specific channel (e.g. special packaging, free postage)
• channel sales costs
• channel marketing costs
• incremental administrative costs (e.g. more returns due to more lenient return policy, special invoicing, special terms)
• additional capital (e.g. call center for marketing)

Do you know what it costs to: 

• Market to different channels?
• Sell & Take Orders of for different channels?
• Additional administrative costs?
• Acquire materials and stock for different channels?
• Different staff requirements (e.g. foreign language skills)

Do you have an Activity Based Costing system to answer these questions or are you still using an inaccurate traditional allocation system?

Call John Antos or Jim Brimson at 972-980-7407 to find out how Channel Costing analysis will help you understand and then take correct action to reach your goals.