One of the biggest discussions in the industrial distribution marketplace is whether or not distributors will be able to charge for services in the future. The subject has taken on increased prominence in the past few years and was the subject of two workshops at the recent fall meeting of the Industrial Supply Manufacturers Assn. and the Industrial Distribution Assn.

Certainly the topic is open to question. Some distributors say they are already charging, but clearly this is not the case for most.

Customers are used to getting services for free with the costs built into the product price. As Mark Dancer, a leading consultant who has studied fee-based services, points out: "In order to sell services distributors will have to undo customer buying habits. This will require education, marketing and time."

In INDUSTRIAL DISTRIBUTIONS 55th Annual Survey of Distributor Operations , respondents said fee-based services are only a small portion of their business, with 53 percent saying they account for less than 10 percent of total revenues.

What services are distributors selling? Our survey shows that fabrication, setup/installation, faster delivery, technical product support and employee training lead the list. Those areas are followed by consigned inventory, kitting, cost reduction assistance, inventory management and tool crib management.

One criticism of distributors over the years — and this comes from buyers — is that distributors often are too quick to throw in services as an add-on to get a sale. Oftentimes, the customer doesn't want — or even need — some of these services. And distributors aren't aware of what it costs to provide them.

Ironically, a buyer told us not too long ago that he'd be willing to pay for services like technical support if they were unbundled and he could be shown their exact value.

Think, for a moment, of all the services you provide: Technical training, 24-hour delivery, special orders, etc. Should you be getting additional money for providing these services?

Distributors are optimistic they'll be able to charge for services in the future. In fact, 27 percent of the respondents to ID's survey say they expect to increase their sales of services to 27 percent of revenues in three years, up substantially from its current level of 20 percent. We'll wait and see.