It is a good idea to analyze your customer base each year to determine where you are making money and where your expenses exceed the profit you generate independently on each account.
As a distributor, you have limited resources available to service your customer base. Inventory management is critical, cash flow management is critical, cost containment is critical and a definitive pricing strategy can be your “edge” in creating competitive advantage.
If your organization is not skilled in activity based cost analysis you might try to determine your most profitable customers using a simpler approach. This approach uses basic calculations to give you some sense of where your money comes from and where it goes.
Most of your cash is tied up in inventory and accounts receivable. Consequently, you need to be disciplined enough to ration your cash investments to only those customers who provide a return.