I didnt explain that last thing very well.
If you are a new company, you will be in the position of trying to convince a distributor why they should carry your product. With new, unproven companies, there is risk attached to picking up new companies. What if your stuff doesnt sell? They get caught holding the bag.
So if you underprice your product, then when you try to convince the distributor to carry you, you are saying:
"Hi. I am a brand new company. You dont have any reason to believe my product will sell, but I want you to risk it and carry my stuff anyway. And in addition to that risk, I have also underpriced my product so that even if any of my products do sell or do sell and dont get returned, your profit margin on my product will be less than on other products. What more can you ask for: unknown name, great risk AND less money for you!!! Doesnt that convince you to pick me up?"
See what I mean?
If you are the distributor, you might say "thanks but no thanks kid." This is a business after all. Its all about the distribution.
Clark