Wholesalers – How to Get the Price of your Products Right

Over the last month, we’ve been having a look at how to help wholesalers to get the selling price of their products right. Typically the selling price has always been a fixed mark-up on the price of a product.

So if a wholesaler bought a product for 80p, then he would be adding a 25% mark-up and selling the product for £1 which should have enough margin to cover the overheads of storing the product, handling and delivery etc.

However, today using this pricing strategy has its limitations, and why is that? Firstly, there are competitors in the marketplace and each competitor is setting their own price of the product based on their own specific cost structures e.g. storage, distribution and how much they bought the product for in the first place. The larger the purchasing power of the wholesaler the better discounts the wholesaler can get from the manufacturer.

Hence, to be able to set your own price, you’ll need to see how much the competition is selling in the marketplace for. If you’re price is too high, then the customers will go to the competition. If you’re too low then you’re throwing away good margin. Hence, getting the price right is essential and the first step to doing this is to know what your competitors sell at.

Secondly, there will be products which are bring customers in e.g. Coca Cola cans, Red Bull etc. which are very popular products and can be promoted at a special price to lure customers into buying. These products will be on promotion and typically loss leaders.

However, you will also want to see what the competitors have on promotion and whether you can beat or compete with that price. It may be the case that a competitor has such a low price on a promotional product, that you cannot compete with the price and so best to promote a different product or wait until the competitors promotional period is over.

This is what our ‘Improve That Price’ analytic’s product does.

A wholesaler can see the competitor pricing for all products, and then decide how to price their own products. They can also download variance reports which will show which products are 5%, 10%, 20% etc higher priced than a competitor and make changes accordingly. The can do this instantly for all of their product range, and even against the closest match of a competitor.

This is a great piece of software and now used by some of the largest wholesalers in the UK. So if you want to see how this works, then email faisal@improvethatprice.com and he would be very happy to give you a demo!

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