Pricing Your Products

Updated: Mar 13

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Pricing strategy is one of the most important strategy elements for a supplier to consider in order for their product to be successful.

Of course, the first consideration for any product is the perceived price consumers might be willing to pay for a product. There are many factors that go into that decision including quality, availability, awareness of product and brand awareness.

“If you improve your pricing the same amount that you're improving your volume, you're going to get three times the impact compared to getting some more leads in the funnel.” - Patrick Campbell

Apart from the many consumer related decisions that need to be factored into pricing, there are also many operational costs that must be included in the pricing strategy.

Understanding The Factors

Retail margin is a key element which varies widely from different types of retailers from major national retailers to small independent retailers.

Consumer marketing investment, in both above the line marketing and supporting retailers’ marketing programs is another important factor in pricing strategy. Again, the advertising investment required will vary widely, depending on the retail channel. In forming a pricing strategy, it’s important for suppliers to understand the retail distribution model that will be most effective for their product.

The other important inputs to pricing strategy are account management, field sales team and distribution costs. Once again, these costs will vary depending on the target retailer for the product. While other costs with the major retailers are higher, distribution and representation costs are generally lower than other retail types. Conversely, at the other end of the scale, other costs will be lower with independent retailers while sales representation and distribution costs will obviously be higher.

The Take Away

These operational factors are often overlooked when forming pricing strategy and lead to failure to launch new products or hastily adjusted launch strategies. Speaking with professionals who are experienced in the retail market space can help suppliers inform their pricing strategy and save costly mistakes.

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