Setting the right price for a product is as important as initiating a new marketing campaign. If not taken seriously, the results may be unpleasant. On the other hand, when you are selling bulk products choosing the best pricing strategies will strongly influence your growth in the future.
Deciding which type of pricing strategy to go for can be a tedious process, but in time, it can become very fruitful for your business.
If you’re a business owner who deals in B2B products, you might want to read ahead and see the tips and tricks we’ve compiled over the years.
First things first – Do you want to upgrade your online store and become a wholesaler?
As technical as it sounds, it is just a matter of installing an easy-to-use extension. If you use WooCommerce as your preferred online platform, a wholesale plugin is exactly what you need to transform your store into a hybrid B2B+B2C platform.
However, choosing the right plugin does not guarantee that you will be able to sell well. For that, you need to come up with the perfect pricing strategy that compliments your company’s goals and objectives.
Don’t worry; we took the time to create a list of the most commonly used pricing strategies in the B2B industry to help you.
Types of Pricing Strategies for Wholesalers
Businesses use many types of pricing in marketing. Though this list may seem a bit long, we have outlined all wholesale pricing strategies so you can choose which one is best for your business.
– Demand Pricing
The main element considered in this pricing method is the demand for a product or service. Demand pricing is also commonly known as customer-based pricing and demand-based pricing.
The price of a product is affected by the consumer’s demand for the value of a service or product. Prices can also increase due to festive seasons, bad weather, or even due to natural disasters. If the demand for the product is affected due to any of the reasons, the price will change.
– Competitive Pricing
Competitive pricing, also called strategic pricing, is a wholesale pricing method that is influenced by the prices set by competitors. With this method, businesses either set prices above their competitors or below them.
By setting your prices higher, you can reflect that your brand is superior and your cost of production is higher. On the other hand, you can attract their customers by setting a lower price to tackle your competition.
– Cost-plus Pricing
One of the safest types of pricing strategies is the cost-plus method. Also known as markup pricing, this is a method in which a fixed percentage is added to the cost to come up with a price.
When setting a price using this method, you add up all the costs and the markup or profit percentage. This result is your cost-plus price.
Note: as long as all the sales and costs have been calculated accurately, you’ll always generate a profit.
– Penetration Pricing
The penetration pricing method is utilized when a business uses low prices to enter a market or introduce a new product or service. This strategy is used to attract customers to test your product.
It is also used to scare competitors from entering the market with a similar product, as they’ll also have to go with low prices. Once you have established a good customer base, you can increase the prices gradually and maintain your clientele.
– Price Skimming
This traditional wholesale pricing strategy involves a business selling products at high prices to generate more revenue. With this strategy, earn more before any competitor enters the market and get an instant return on their production cost.
If sales are good and a competitor enters the market, you can always reduce the price to attract a whole new set of customers.
This strategy is mostly used while introducing new products. Once a business generates a good profit, the prices are altered as new and cheaper alternatives enter the market.
– Economy Pricing
Economy pricing is known to be a volume-based wholesale pricing strategy where revenue is based on the number of sales and products that are low priced. This strategy focuses on keeping prices low and targeting a certain segment of the population where sales can be high.
This pricing method is known to be effective for businesses with low overhead costs. For example, budget airlines, supermarkets, generic drug brands are common businesses that rely on a high number of daily buyers.
– Psychological Pricing
This wholesale pricing method is where prices are displayed lower than a whole number. This is a very common strategy used by businesses globally. A minor price reduction will feel like a huge difference to customers.
For example, a product that costs $99.99 will always feel cheaper than something priced at $100. Studies have also known the power of the number 9 as an attractive digit to customers. This strategy was also given the following title “charm prices.” Other types of psychological examples include store displays like buy one get one free, flash sale, 50% on your 2nd meal, and more.
– Discount Pricing
Discount pricing is a great strategy to sell products in large quantities. The original price is reduced for those who wish to buy in bulk. This eventually increases both the demand and sales. Companies use this strategy to stay competitive in the market and reduce costs.
Discount pricing can be divided into loss leaders, promotional discounts, seasonal discounts, and quantity discounts. All these discounts are dedicated to generating more sales in the short term.
– Geographic Pricing
This type of pricing strategy for wholesalers is used to target customers that belong to different geo-locations. The prices are affected by certain factors like demand, shipping costs, tax, and the level of competition present.
– Price Bundling
A common practice that wholesalers opt for in times when they aren’t able to sell some of their products. This strategy is used when two or more products are packaged together at a single price.
There are two types of product bundles. Mixed bundles and pure bundles. Mixed bundles are products that can be bought individually or as a pack. On the other hand, pure bundles are goods sold only as a package.
The Verdict!
Whichever wholesale pricing strategy you choose, remember to consider all the costs, demand, and level of competition currently present. With complete knowledge of all these factors, you’ll be able to understand at which price your products or services will sell better.
The different types of pricing strategies mentioned above are all being used by businesses across the globe. You may have to test a few before you find success, but better to take the risk now and achieve success as a wholesaler.
