For those in the wholesale e-commerce business, being able to provide a great online buying experience results to more conversions and sales.
One of the most important considerations as a wholesaler is how you set your wholesale prices. You need to be able to set competitive prices that will also bump profits. Here, we will be covering the benefits and reasons why having a simplified wholesale pricing model is good for your business.
Setting Wholesale Prices
As a wholesaler, you probably know that wholesale price is different from retail pricing. Wholesale prices are relatively lower than retail prices, and the way to set low pricing is through bulk or volume purchases. That’s why setting the Minimum Order Quantity or MOQ is so important when you are selling wholesale.
Aside from MOQ, you need to set a standard or simplified wholesale pricing for your products. There is no standard formula. When setting wholesale pricing, you need to account for these factors:
- Materials (Raw materials, Tools)
- Overhead Expenses
Aeolidia suggests, “When planning your pricing, you first need to come up with a wholesale price that pays you for your time, labor, materials, overhead, employees, etc. This price should have profit built into it so that you are able to not only stay afloat but grow your business. Once you’ve set your wholesale price, double that price to create your suggested retail price. When selling the product yourself on an e-commerce site, use that retail price yourself.”
Another suggestion that you can follow is value-based pricing, “Ensure that the final price you arrive at for retail is more than 2x your cost of production (use the Cost Based formula for this), but preferably at least 4-6x cost of production. If it’s lower than that, you need to re-evaluate where you sit in the market and try to trim your costs.” This is based on our article Pricing Retail Products for Wholesale from Wholesale Suite itself, and you can read more about it here.
There is no standard formula for setting wholesale pricing as this entirely depends on your discretion. Just ensure that you don’t slash prices too much to avoid incurring losses.
To set wholesale prices in your online store, you can download and install the WooCommerce Wholesale Prices plugin. It sets the wholesale prices for your entire product range that only registered wholesale customers can see and have access to.
Simplified Wholesale Pricing
Simply put, simplified wholesale pricing means setting standard wholesale prices for your product range. There’s a logic behind it as we discuss the benefits and reasons for simplified wholesale pricing below.
If you are offering tiered or volume-based pricing where the wholesale price gets lower as bulk purchase gets higher, you need to make the wholesale pricing as simple as possible that everybody can understand.
According to NYTimes, “Simplified pricing aims to eliminate the system of markdowns buyers have confronted for years. With it, retailers seek to re-establish credibility in the wake of a former practice of sales versus regular prices.”
In an article by Huffington Post, simplified production, manufacturing, distribution, marketing, and pricing model has catapulted businesses to success seen in Ford, IKEA, and McDonald’s.
Benefits of a simplified wholesale pricing model
Less conflict and less hassle
When you set a simplified wholesale pricing model, you will be able to set a standard and uniformity across your online store. There will be less conflict and fewer hassles when dealing with wholesale buyers.
Since you’re offering wholesale deals, these customers will order hundreds or even thousands of units of your product. Having simplified pricing will make it easier for them to understand the pricing tier and decide on ordering products wholesale.
This makes it easy to include in the wholesale agreement between you and the merchant.
So how does a simplified wholesale pricing model help your wholesale customers? One major benefit is that Wholesale customers do not need to decipher your pricing model resulting in steady business between you and the merchant.
By offering a simplified wholesale pricing model, you make it easier for accounting and inventory. Plus, it makes it easier for wholesalers to calculate and account for their wholesale orders and pay for it.
Run Special Deals and Offers
If you have a simplified wholesale pricing model, you’ll be able to easily conduct product-wide special offers and discounted pricing.
Once you’ve installed the WooCommerce Wholesale Prices plugin, you can easily set discounted prices for your products with one click.
These are the benefits of a simplified wholesale pricing model for your e-commerce business.