From: John Trayner
Sent: Monday, March 22, 1999 3:28 PM
To: Robert (Robbie) Bach; Steve Schiro
Subject: FW: Retail 2000: Current Pricing across accounts
Below is a summary of what prices the retailers are paying to
distribution for a selection of our products today. Quite fascinating
(assuming the accounts are not lying to us). Ranges go from disti. cost
minus 0.5%, to disti, cost plus zero, to disti. cost + 4% and higher.
And all these prices include freight! Presumably, the distis. have been
subsidizing the cost of selling the most popular Microsoft products via
higher prices on other products (including non-Microsoft products)
and/or the distributors are remarkably efficient & cost-effective.
The disti. prices below are before the 3.5 disti. rebate is applied (so
it's not so bad).
To close the loop on the legal issue with volume pricing, we can offer a
lower price for a larger volume only to the extent we can prove that the
higher volume can be fulfilled at the lower cost. This will be worked
into our prices for things like freight, etc. (e.g. to-DC will be
cheaper then to-store because the volume will be higher per shipment and
the number of shipments lower, thus not as expensive to fulfil).
But offering "unreasonably large" discounts to an account to take an
arbitrarily large volume not to fly. So, say, a 10% discount for taking
100,000 units of product X likely will not pass the legal sniff test.
John.
From: Joseph Lacson
Sent: Monday, March 22, 1999 2:32 PM
To: John Trayner; Donald C. Miller; Alex Kotowitz; Tom Neary; Peter
Shirley; Stacy Spears
Cc: Carol Wilson; Robin Bradshaw
Subject: FW: Retail 2000: Current Pricing across accounts
Based on the discussions with accounts (thanks to Robin, Carol, Stacy
and Alex), here's how the current pricing schema shapes up:
..
General observations:
- CompUSA appears to be getting the lowest price from Disti
- Staples gets a uniform (1.5%) price above the disti
- WM pays significantly more (presumably because the figure includes the
DTS cost) but for a Win 98, they were competitive in price.
- The clubs pay more but like the WM scenario, for "strategic" SKUs such
as AOE they get a very competitive prices.
Let me know if you have questions.
Joseph
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http://edge-op.org/iowa/www.iowaconsumercase.org/011607/4000/PX04044.pdf
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court documents in the case of Comes v Microsoft.
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