Boiler channel economics: wholesale, rep agencies or direct to contractors

The three routes in plain terms

Stocking wholesale. A plumbing and heating wholesaler buys your boilers, holds stock in branches and sells to contractor accounts. You get reach and credit handling. You compete for counter attention with every other line on the shelf.

Manufacturer's rep agency. An independent agency represents your line, along with complementary ones, to wholesalers, mechanical contractors and specifiers. Common in commercial boilers. You get relationships and specification influence; stocking still happens through wholesale.

Direct to contractor. You sell to qualified installers yourself, often from a central warehouse, with your own training and support. You get control and data. You carry the costs a wholesaler would otherwise carry.

Most brands combine routes, for example wholesale for residential models and a rep agency for commercial.

Build a per-unit model

The honest comparison is not "what margin do we give up" but "what do we keep per installed boiler after supporting it". Set up one column per route and fill in these lines with your own figures:

1. Net price you receive per unit under that route's terms.
2. Freight and handling to the point of stock.
3. Training cost per unit. Total training spend for the province divided by expected units.
4. Marketing support per unit. Locator, co-branded pages, co-op funds and content, divided by units.
5. Warranty and technical support per unit. Calls, claims handling and field visits by your team or partner.
6. Credit and collection cost, if you carry contractor accounts directly.
7. Inventory carrying cost, if you hold stock in Canada.

Contribution per unit = line 1 minus lines 2 to 7.

A worked example with placeholder numbers

The figures below are invented to show the mechanics. They are not market rates and should not be used as benchmarks.

In this made-up case, direct only beats wholesale if the extra net price per unit, $X, exceeds $305 ($485 minus $180). If your terms give you less than that, wholesale wins at this volume, even though the headline margin looks worse.

Now change one assumption: volume. Training and marketing are largely fixed per province, so their per-unit cost falls as units rise. Double the volume in the direct column and those two lines might drop from $200 to $100 combined, cutting the gap to $205. That is why direct programs often make sense for a brand's strongest province and not for its newest.

Look past the per-unit number

Three factors do not show up cleanly in the model but often decide the outcome.

• Sell-through visibility. Direct routes give you installer-level data. Wholesale routes may not, unless you negotiate reporting. Without data, you cannot tell which dealers to support.
• Contractor loyalty. Installers stay with brands that train them, answer the phone and send them work. Whoever does that, brand or distributor, owns the relationship.
• Coverage gaps. A national wholesaler with weak branches in two provinces may cost you more in lost sales there than the model shows.

Questions to ask a prospective distributor

• Which branches will stock the line, and in what quantities?
• How many counter staff and outside sales staff will be trained, and by when?
• Will you share sell-through by branch and by contractor account?
• How will warranty claims flow, and who answers technical calls?
• What joint marketing will you commit to in the first heating season?
• Which competing boiler lines do you carry, and how will ours be positioned?

Write the answers down. Contract terms belong with your lawyer; the answers tell you what to measure.

Measure the channel, not just the sale

Once a route is live, track these each month:

• Active installing contractors per province.
• Units per active installer per season.
• Training completion rate.
• Locator enquiries per dealer and dealer response time.
• Repeat orders from the same contractors.

If units per active installer are low, the channel is stocking but not selling, and dealer marketing support is usually the fix. If active installers are few, the channel itself may be the problem; revisit channel strategy.

How the model changes by province

The same route can produce very different numbers in different provinces. Freight to Atlantic Canada or the territories costs more per unit than freight within the Prairies. Training costs rise where installers are spread thinly across long distances. And in Quebec, French training and documentation add to the marketing line.

So build the model per province, not once for Canada. A route that wins in Ontario may lose in Newfoundland and Labrador, and a hybrid network often emerges naturally from that exercise: wholesale where branch density is high, a rep agency or a direct program where it is not.

Common mistakes

• Comparing headline margins only. Support costs change the answer.
• Assuming national means national. Verify branch coverage province by province.
• Skipping reporting terms. Without sell-through data, every later decision is a guess.
• Running direct too early. Prove demand through partners first, then consider direct where volume supports it.
• Ignoring the installer's view. Ask a few contractors what they need from a brand before you design the program.

For the order in which provinces should open, read the launch sequencing guide. See pricing for our published plans, or call, text or email to work through your own model with us.