Whether you already sell internaionally or you are considering doing so, your business will need a clear and workable wholesale pricing strategy. For small businesses, the need to set attractive while competitive prices across different geographical markets this can prove to be a tricky and often confusing task.
Here's some advice regarding the best practices involved in setting international wholesale pricing.
Before getting into the dos and don’ts of international pricing it may be useful to consider how businesses arrive at a wholesale price point in the first place.
According to information that we collected in an earlier article about wholesale pricing, it is generally accepted that your wholesale price should be 50% of the retail price to ensure you can turn a 100% profit on your investment (ROI)is enough to turn a 100%. Meanwhile, your overhead and material costs are coming out at 25% or less.
If you are working to achieve increased turnover and you have inventory management software like TradeGecko that offers you sales insights and allows your business to grow and scale you may already use a sliding scale. In other words, the more the client buys the less they will have to pay per item.
Whether you are selling to a local or global market, you won't be making those sales unless the price is right. This means that you are going to need some kind of benchmark at where to pitch your wholesale price list. In the real world, one reliable benchmark is your direct competitors, and keeping a check on what they are doing will require some legwork.
While considering the prices that everyone else is selling the same or similar products as your own at, you may also need to look a little more closely at the supply and demand in each individual region that you want to sell in. This point alone is likely to have a strong impact on how you should structure both unit and volume pricing in different locations.
Whether you are aware of how your competitor's businesses work or not you can be sure that many of them will be keeping a close eye on yours. By regularly checking what your competition is selling for and reacting quickly to any big change you will be able to remain competitive in your market sector.
When it comes to international pricing, there are other unique considerations that need to be brought into any pricing strategy and these may be such things as:
You won’t want to be spending your valuable time constantly adjusting your wholesale price lists to reflect the ever changing currency exchange rates. The great news is that you don’t have to because TradeGecko inventory management system and B2B eCommerce shop enables you to manage multiple currencies and designate price lists by country and currency.
When it comes to the international wholesale market your system needs to be able to take account of everything from customs and local taxes to variable pricing for quantity purchases.
You also need to pay attention to factors such as demographics and buying patterns and each local market can, of course, be factored in. This however calls for some due diligence before the business takes the plunge and sets a system in motion.
Imagine how good it would be if you were able to set custom price lists for your entire inventory for different customers. Well the great news is that TradeGecko's B2B eCommerce platform allows you to do exactly that!
If you have done your homework and thoroughly researched both your competitors and the buying habits of your potential clients in each location you will be able to price accordingly. It is always worth bearing in mind that affordability may be a key factor in some locations and that can mean that some of your products are only worth what the customer is able to pay.
Setting international wholesale prices will always be about so much more than taking the net cost of the goods and adding a reasonable profit margin. Not only is it necessary to apply different prices to different locations, as we now see, it is also important to establish the ideal selling price to specific clients within those locations.
On the plus side, custom wholesale pricing offers your business the flexibility to sell its products to each individual client at a price that can be tailored to a specific trading deal with you. It also allows you to do this no matter where the customer is located.
While it may prove difficult to find an argument against using a system that enables custom wholesale pricing it is worth bearing in mind just how transparent and open the marketplace is.
Your competitors will be making it their business to know all about yours and it is not always easy to retain confidentiality concerning how we deal with individual clients. Unfortunately, such information could be used by a competitor and even other clients to their advantage in leveraging a better deal from your business. For such reasons, it pays to ensure that all of your custom pricing data is kept secure and only disclosed to those within your organisation who need access to it.
The bottom line is of course that through custom pricing for location and individual client, your business has the ability to take the concept of giving the customer what they want to a whole new level. Through using the right system you will be able to instantly react to currency fluctuations and price increases at the press of a button.
Sign up for a free trial to see what a difference TradeGecko can make to your wholesale business.