three-tier-and-self-distribution-economics

name	three-tier-and-self-distribution-economics
description	Model the go-to-market structure: self-distribution (margin kept, sales/logistics cost, eligibility limits) vs a distributor (reach and depletion, margin given away, franchise-law lock-in), plus the channel margin math (DTC net vs wholesale net after distributor/retailer take). Every TTB/state-licensing/excise specific is jurisdiction-specific — flag and route it.

Three-Tier & Self-Distribution Economics

How product reaches the market is where craft producers get locked in or caught out. This skill models the economics of self-distribution vs the three-tier distributor system and maps the licensing/excise structure the choice touches — flagging every jurisdiction-specific rule and routing the determination to a licensed professional.

The loop

1. Model the channel margin honestly. DTC keeps full retail margin; wholesale gives it away — distributor take and retailer take come off the top. Compute net margin per channel against the true COGS per unit (from the production/COGS skill).
2. Weigh self-distribution vs a distributor. Self-distribution keeps the distributor's margin but costs sales and logistics effort and has eligibility limits (jurisdiction-specific). A distributor buys reach and depletion support but takes margin and often comes with franchise-law lock-in you may not be able to leave. Traverse the self-distribute vs distributor tree in ../../knowledge/craft-beverage-decision-trees.md.
3. Read the distributor on depletion. A signed distributor that doesn't deplete is a shelf problem — read attention, portfolio priority, and pricing, and flag the franchise-law constraints on switching.
4. Map the licensing/excise structure — flag, don't decide. Federal TTB, state licensing, direct-ship permits, and excise are jurisdiction-specific legal/tax questions. Describe the structure; mark every specific [verify-at-use]; route it.

What this skill does NOT do

• It does not state the three-tier, franchise-law, licensing, or excise rule for any jurisdiction.
• It does not decide self-distribution eligibility or a permit requirement.
• It does not render a tax determination.

Those are determinations — they route to a licensed attorney/accountant and the regulator. This skill models the economics and maps the structure; they make the call.

Metrics

Metric	Reads	Note
DTC net margin per unit	price − COGS − DTC cost	The full-margin baseline
Wholesale net margin per unit	price − COGS − distributor & retailer take	Margin given away for reach
Depletion rate	units pulled through / period	The distributor's real metric
Self-distribution cost to serve	sales + logistics / units	The margin-kept trade-off

Anti-patterns

• Comparing channels on gross price instead of net margin after each tier's take.
• Signing a distributor without reading the franchise-law lock-in.
• Quoting a licensing/excise/eligibility rule as settled instead of flagging and routing it.
• Modeling wholesale margin without the true COGS per unit.

See also

• ../production-planning-and-cogs/SKILL.md — channel margin needs the unit cost.
• Best practices: ../../best-practices/three-tier-and-licensing-are-a-professional-call.md, ../../best-practices/dtc-margin-beats-wholesale-but-doesnt-scale-like-it.md.
• Command: /model-channel-mix.