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Is It Better To Set Wholesale Prices Via Percentage Or Fixed Pricing?

Is It Better To Set Wholesale Prices Via Percentage Or Fixed Pricing?

The success of your store depends on choosing the appropriate pricing strategy or wholesale prices for your products. This is because it influences a vast range of factors crucial to the efficient operation of your company, such as profitability, sales volume, and even brand perception.

Nowadays, many store owners are faced with the difficult decision of whether to price wholesale goods using a percentage price or set rates that are independent of the retail price. These two possibilities are frequently found in wholesale stores, however, they largely depend on the products you’re selling.

In this article, we’ll shed light on what’s better between the two. Then, we’ll walk you through the pros and cons of each and explore ways to set them up on your WooCommerce store. Let’s get into it!

What Are Wholesale Prices?

First, let’s discuss the concept of wholesale pricing.

Wholesale price is the value or price at which a product can be sold to commercial customers who are making relatively large purchases. Consequently, the sale of items in bulk for resale is referred to as purchasing at wholesale.

If your company has been around for a long time, you likely already know the price your products will sell for at retail and are simply reversing the equation to explore wholesale selling. However, pricing specialists would view this situation as somewhat counterproductive.

Instead, you may look into cost-based pricing, which is the most practical and effective formula for setting wholesale prices:

Materials Cost + (Labour Invested x How Much You Value Time) + Other Overheads (Rent, Fixed Costs, Electricity, etc) + Profit Margin = Wholesale Price

Percentage Wholesale Prices VS. Fixed Wholesale Prices

Now that you have a general understanding of pricing at wholesale levels, the question is: what kind of wholesale prices should you use at your store?

Keep in mind that whatever your strategy may be, the goal of wholesale pricing is to sell products at a greater price than what it costs to produce them. For example, if you spend $15 on labor and supplies to produce one product, you should set a wholesale price of $30 to give you a gross profit of $15.

Percentage Wholesale Pricing

If you want to price your products relative to their retail prices, percentage pricing is the way to go.

Percentage pricing is when you set a wholesale price for a product using a percentage of the usual retail price. This means giving a universal, percentage-based discount on all of your wholesale goods.

For instance, let’s say the value of your product at retail is $100. If you wish to sell it wholesale, you can give it away for 15% less, making the item’s wholesale cost $85 per unit.

product data wholesale prices percentage-based pricing
Percentage-based wholesale pricing sample (click to zoom)

One of the most straightforward advantages of this kind of pricing is its simplicity. This is because, unlike other pricing approaches, you only need to specify the percentage in this scheme. From there, you can immediately set the prices for your whole product inventory to wholesale.

Additional benefits of percentage wholesale pricing include:

  • Efficiency: It’s faster to set pricing across the board as you simply reduce a percentage from a retail price point that’s already in place.
  • Hedges against incomplete knowledge: What if you don’t know the customer’s willingness to pay? In most cases, it’s safer to show the percentage value of what customers will soon save if they buy wholesale. In contrast, displaying a fixed rate with no comparison can discourage them from making a purchase.
  • Not a resource-intensive process: Because wholesale prices will be relative to their retail prices, percentage pricing doesn’t require a lot of additional market research.

How To Set Up Percentage Wholesale Prices In WooCommerce

Setting wholesale prices in WooCommerce is made simple with the help of Wholesale Suite. In fact, we recently released a new feature that gives you more flexibility when using percentage-based pricing in our Wholesale Prices Premium plugin!

To get started, first:

  1. Install and activate WooCommerce Wholesale Prices Premium
  2. Create wholesale customer role(s) (refer to Step 2 of this guide for instructions)
  3. In WooCommerce > Settings > Wholesale Prices > Discount, add a general percentage-based wholesale discount

Once you’re all set, you have three options to set your percentage-based wholesale pricing:

General Discount Options (Wholesale Prices)

If a product a user wants to buy doesn’t have wholesale pricing defined, you may use this parameter to specify a percentage discount for each wholesale role that will be applied to the users.

You can do this by navigating to WooCommerce > Settings > Wholesale Prices > Discount. From there, you can input the percentage value you want to deduct from the regular retail price of the product.

General Discount Options Settings
General Discount Options Settings (click to zoom)

Note that you have to choose a specific wholesale role for this setting to take effect.

User Settings (Override General Settings)

If you wish to offer specific wholesale customers a percentage discount, you can modify their user settings.

To do this, first go to Users > All Users and click the Wholesale Customer tab. Then, select the wholesale customer you want to give the discount to. Finally, scroll down to Override Wholesale General Discount, select “Yes” and “Use Globally Defined General Quantity Based Discounts,” and enter the percentage discount of your choice.

User Settings or Override General Settings
Override Wholesale General Discount settings (click to zoom)

This will ignore the wholesale general discount and apply this new discount to the specific customer, instead.

Product Category Settings

Lastly, you may also add percentage-based discounts to your product category settings by choosing which product categories to use wholesale prices for.

You can do this by heading to Products > Categories and selecting the category you wish to edit. Then, scroll down to Wholesale Customer and enter a percentage discount.

Product Category Settings
Product Category settings (click to zoom)

Fixed Wholesale Pricing

In contrast to percentage-based pricing, setting a fixed wholesale price entails an independent computation from the retail price.

Many wholesale store owners prefer fixed wholesale pricing mainly because of the flexibility it offers. It may also be a more accurate reflection of your wholesale price because different products may have different margins at wholesale and retail.

Fixed Wholesale Price Preview
Fixed wholesale price preview

There are different types of pricing strategies that you can use to set up a fixed wholesale price. However, the main distinction between this and the former, regardless of the technique you choose, is that you won’t have to rely on your retail price to determine fixed wholesale pricing.

Here are some of the ways you can arrive at a fixed wholesale price point:

Demand Pricing

Demand-based pricing, also known as demand pricing or customer-based pricing, is a pricing strategy that determines the price of a product or service based on the level of customer demand.

The estimated value of a product or service also plays a crucial role in determining consumer demand and therefore the price.

Prominent customer-based pricing techniques include price skimming, price point, bundle pricing, penetration pricing, and others.

Competitive Pricing

Competitive pricing, sometimes referred to as strategic pricing, is a strategy that considers the costs established by other companies or your direct rivals.

When compared to cost-plus or value pricing, which bases prices on other elements including the product’s demand and production costs, competitive pricing is more expensive.

Economy Pricing

Economy pricing is a fundamental, volume-based wholesale pricing approach in which products are inexpensively priced and profits are determined by the number of customers.

This strategy maintains low product pricing while concentrating sales efforts on a particular market niche that is highly price-sensitive.

If you want to know more about what pricing strategies you can opt for, check out our ultimate list here.

How To Set Up Fixed Wholesale Prices In WooCommerce

If you prefer to put up a fixed wholesale price, you may easily do so with Wholesale Prices Free plugin.

Simply navigate to your individual product settings, which you can accomplish by going to your admin dashboard, clicking Products, then selecting a product.

Fixed Wholesale Prices
Fixed wholesale prices (click to zoom)

In the example above, retail and regular customers have to pay a regular price of $50 to purchase the product. However, the cost of the item drops to $45 when a user with the role of Wholesale Customer logs in.

For additional information on how Wholesale Suite’s wholesale pricing operates, see this Knowledge Base article.

WooCommerce Wholesale Prices

If you want a simple approach to start offering wholesale prices, you may want to consider WooCommerce Wholesale Prices. This FREE plugin gives you the option to set wholesale pricing for each of your products.

Add wholesale pricing to WooCommerce with Wholesale Suite
Wholesale Suite, the #1 WooCommerce wholesale plugin for B2B

However, if you want more latitude in your pricing strategies, you’ll need Wholesale Prices Premium to get the job done. You can build a variety of pricing plans with this plugin, including wholesale rates that are calculated using a percentage!

Conclusion

In this post, we discussed the advantages of fixed and percentage-based wholesale pricing. These two methods have proven to be effective and beneficial for wholesale businesses, with only slight differences in their compatibility with different types of enterprises.

To recap, percentage wholesale pricing is when you set a wholesale price for a product using a percentage of the usual retail price.

You have three ways to set your percentage-based pricing in WooCommerce:

On the other hand, fixed wholesale pricing is a pricing method whose computation doesn’t rely on the retail price.

Three popular fixed wholesale pricing methods include:

Do you have any questions about fixed or percentage-based wholesale pricing? Let us known in the comments section!

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Belle Berber Writer, Content Manager
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