Demystifying Wholesale Pricing: A Guide for Brands on Hivve Wholesale

Introduction

Welcome to the exciting world of wholesale pricing! If you're a brand navigating the landscape of wholesale, whether on Hivve Wholesale or on your own, understanding the dynamics of pricing is important for building successful, long-term partnerships with retailers. In this guide, we'll delve into essential concepts and offer practical insights to help you set appropriate wholesale prices, ultimately propelling your brand to thrive in the wholesale market.

Wholesale Pricing Essentials

At its essence, wholesale pricing represents the discounted price retailers pay when acquiring products in quantities larger than individual consumers would. Striking a delicate balance between offering an attractive margin for retailers and ensuring a profitable venture for your brand is key but not the only factor to consider. While pricing their product, one must always ask themselves, "what makes my brand unique and valuable to my target market?"

Distinguishing Wholesale and Retail Prices

Retail prices encapsulate the final amount consumers pay, incorporating markup. In contrast, wholesale prices are lower, as retailers benefit from discounts due to committing to larger product quantities.

Understanding Wholesale Discounts

Wholesale discounts, often applied to bulk orders, not only entice retailers to purchase in larger quantities but also fortify the relationship between you and your retail partners. The nice thing with Hivve Wholesale is that you can adjust the retailer margin as the order quantity increases. This is the ideal way to incentivize larger orders and justify the discount from the retail price.

Calculating Wholesale Prices

1. Market Research: Delve into your market, analyze competitors, and ascertain pricing benchmarks for comparable products.
2. Cost of Goods Manufactured (COGM): Rigorously calculate production costs, encompassing materials and labor, to establish a solid foundation for your pricing strategy.
3. Setting Wholesale Price: Strive to set a wholesale price that covers COGM and provides a reasonable profit margin, aligning with market expectations.
4. Bulk Discounts: A Win-Win Strategy: Implementing bulk discounts is a savvy move to incentivize retailers to order in larger quantities, fostering increased sales and improved profit margins for both parties.

Two Price Points for Success

• Retail Price (MSRP): The consumer-facing price, inclusive of retail markup. On Hivve, you can set your MSRP, offering flexibility in your pricing strategy.
• Wholesale Price: The cost retailers pay per unit, a crucial factor in ensuring profitability for both your brand and your retail partners.

Keystone Pricing Model

The keystone pricing model, setting the wholesale price at 50% of the retail price, serves as a broad guideline for the wholesale industry. However, tailor this approach to your unique circumstances, target market, and brand values. For brands with a direct-to-consumer (DTC) background, entering the wholesale arena might seem challenging. Remember, wholesale is a different business model. Instead of selling individual units, you'll sell in larger quantities, leading to cost savings in marketing and logistics.

Considerations for Pricing

• Know Your Target Consumer: Gain insight into their spending habits, preferences, and budget constraints to refine your pricing strategy.
• Competitor Analysis: Conduct thorough research on similar brands to stay competitive in the market and position your products effectively.
• Align with Brand Values: If your brand emphasizes eco-friendly practices or fair wages, consider these factors when determining your pricing structure.

Additional Insights for Hivve Wholesale: What makes you different?

We've observed local brands often undervalue themselves, especially when selling in person at local markets, for example. Remember, pricing is an element of your marketing mix along with the product, the place, and the promotional strategy used. The price charged depends on where and who you sell to (place). With Hivve, brands are able to get their brand in front of the correct target market at the right place and time, which vastly improves the success of the brand's pricing strategy.

A quote by marketing expert, Seth Godin, comes to mind here: "The problem with racing to the bottom is that you might win, or worst come second."

Focus on your brand's distinctiveness.

Price is certainly important in ensuring you attract the correct target market and provide enough margin to make stocking your products profitable for retailers. However, also try to focus on your distinctiveness as a brand. What makes you different and valuable? Successful brands pursue this strategy, and success naturally tends to follow. This strategic approach not only attracts retailers but nurtures lasting partnerships, laying the foundation for mutual success in the wholesale marketplace. Start your journey today and let your brand flourish!

Published on December 18, 2023 by Hivve Wholesale