Determining the right price for your product as a wholesaler can be a bit challenging especially if you are new to the wholesaling scene. When you want to set a price for your product, you should avoid the following three practices:
- Follow Other Businesses Blindly
If you begin to compare your wholesale business with your competitors, you will end up hurting your business badly because your wholesale and theirs are entirely different. Remember, you do not know what their plans of activities are and the reason as to why they settled on that price for that particular product.
- Setting Price Based On Emotions
Never set a price for any of your product based on what you feel you are ok with and you think your customers will pay. If you do this, you will end up setting a low price thinking and feeling that your product is not sufficient to be charged highly. The truth is, feelings are deceptive.
- Desperate For Cash
When you are desperate you want to make some money you will not care how much your customers are paying for your product since all you need is cash inflow. When you are desperate for money, you are likely to feel poor, and you are likely to ask for too little or too much a price for your product.
You might already be having some ideas on how to price your commercial product, but how will you determine the right wholesale price for your products without undercharging or overcharging and at the end of the day earn a profit? Well, the following five factors will help you to price your product correctly.
Set Multiple Prices
If you have a new product in your store that you would like to introduce to the market, you will have to set multiple prices for the product. Here is how you can do that.
Set one price for one month or the first say 5,000 sales for your new product, this will act as a sample. Then after one month or sample range, increase the price of the product for the same period or sample size.
You will be surprised to see that your sales will go up for that product after raising the price because your customers will perceive that the value of the product is closer to the old price that you had set.
Track your sales for the product for a while and remember to number of sales for that product by the traffic (Number of customers who bought the product) and the number of days or units of the product that you sold. You cannot set the price of the product by only looking at the total sales and confidently say that is your selling price.
You know if the price you have set for your product is right or too high depending on the total sales volume you will have in a particular period. If the price of your product is too little, you will not attract as many sales as you will think because customers will view your product as of a lower quality, so you are selling at a throwaway price. On the other hand, if your prices are too high, you will scare away your clients because they will not make a profit from selling your wares.
If you are making as many sales as you would like at a particular price and you are comfortable with the price, then you can be sure you have found the right one.
Know Your Market
When you are setting a price for your products, it is paramount that you know your market well. Know if the government has set new laws that are likely to affect the prices of commodities in the market.
Also, you should be aware whether the raw material for your product has increased or decreased and then adjust your prices accordingly. Finally, you will need to consider the future stability of the market for that product and gauge your price whether it will be sustainable in your wholesale business in the long run.
Know All Your Costs
In regular jobs, you get paid for every hour you work. However, in business it is different. In business, you will not pay yourself for every hour you work in your wholesale store, but only a small percentage of your net sales will go into your personal pocket.
To set the right price for your product, consider the following things:
- Marketing services, technical development, research and office organising.
- The team that helps you run your warehouse
- Support services and follow-ups
- Organisational structure that helps your business run smoothly
When you are setting a price for any of your products, all of the above factors should be reflected.
Have A Business Plan
When you want to set the right price for any of your product, ensure that you have a business plan that reflects your wholesale financial goals showing where your business revenue will come from.
Ensure that you have a clear business plan and vision for your wholesale business which guides you on where your business will be in the next financial year. If you have the right business plan for your business, it will be easy to set prices for your wholesale products.
Having a good sales strategy for your business will help you set prices based on valuable products or services for each level of your sales. Having a plan of activities for your wholesale business will help you build and set right prices for your goods and services.
Once you have set your right price for your products, do not forget to monitor the market prices and adjust your prices accordingly from time to time. However, it is not an easy task, setting a price that is competitive enough and still makes a profit. If you have the right know-how, focus your wholesale business and retain your wholesale buyers to achieve a good wholesome healthy business.