Having the right wholesale pricing strategy is key to the performance and productivity of any B2B eCommerce or supplier. Wholesale prices apply to large volume sales. Given the size of orders, prices are usually lower. But how much lower? By how much can your profit margin change? How will these prices affect demand? Determining the answers to these questions is the first step in defining an effective wholesale pricing strategy to optimize sales. Once you have taken steps to address this, we explain different aspects that you should consider.
Why getting wholesale pricing right is crucial
Firstly, don’t forget that wholesale prices will affect future sales. Although this applies to any eCommerce or physical store, the quantities of products are significant, and any price change implies large sums of money. Very high prices can increase revenues quickly but also cause reduced demand. Low prices can affect the perceived value of items and reduce the profit margin.
The experience of B2B businesses shows that the right pricing helps companies:
- Sell more products and protect the profit margin.
- Reduce operating costs by optimizing decision-making.
- Increase value for customers, who perceive you as a solid and stable seller, with consistent pricing and product catalogue.
Characteristics unique to wholesale transactions
The wholesale trade has its own idiosyncrasies and norms, which also impact pricing strategies:
- Applying discounts: Buyers are used to volume discounts, so the final selling price is usually lower than the unit price. This is possible because the higher the production quantity, the lower the costs for the supplier, but you should still identify the discount percentage applicable in each case. It can help you define a tiered pricing strategy based on purchase volume.
- Negotiate with buyers for better payment terms and better prices, especially for loyal customers.
Sales channels: Discounts, negotiations and price changes will be applied differently for each sales channel. This is even more true today, where wholesale purchases can even be made by marketplaces such as Faire, the largest B2B marketplace in the world. Faire is expected to continue to grow in the coming years.
Wholesale pricing strategies
Wholesale pricing follows the same guidelines as retail pricing but allows for the abovementioned characteristics. You can start with three basic strategies: value-based pricing, cost-based pricing, and competitor-based pricing. For these three strategies to be effective, you must collect and analyze your and competitors’ data. You must be familiar with the product bundles and prices already available on the market to adapt to them and offer better alternatives to your customers.
Pricing tools with competitor monitoring systems will help you do this by automatically analyzing all the sales channels other companies use. These tools then recommend optimal prices to help you exceed their sales and boost your growth.
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