ServiSoft has balked at this idea, since ServiSoft then will either have to reduce its expected
profit margin, or increase the price at retail. To get around the national distributors, ServiSoft
is considering selling direct to retailers. This would mean that ServiSoft would contract with
a network of independent reps that specialize in software and computer products. Each of
these reps sells and services accounts in a specified sales territory and will usually sell the
products for a straight 10% commission of wholesale price. The margin allowed for the
retailer is 40%. ServiSoft figures it would need to contract with about 30 to 50 reps to cover
the U.S., with each rep managing roughly 300 accounts. QUESTIONS: 1. Should ServiSoft
cave in to the distributors, or go around them and go direct using independent reps?
2. Go through a margin analysis, and determine how much revenue ServiSoft will realize per
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- Spring '17
- Ellen Zitani
