How to Set Prices for Gluten-Free Wholesale and Retail
Many aspiring entrepreneurs want to know how to set prices for wholesale and retail—particularly those that just started working in the gluten-free industry. The reason for that is the rising competition in this particular sector.
According to statistics, the gluten-free food market is expected to grow more than 9.4% CAGR from 2019 to 2026, with a value projection of £10.5 billion. Due to the increased consumer health consciousness, more and more people are interested in making the most of gluten-free benefits.
But, there is one problem. Unless you set the prices right, you risk losing potential clients. And in an unforgiving marketplace, like this one, this is a mistake you simply can’t afford to make. If you want to know how to create the perfect prices, you’ve come to the right place. Here you can find a quick guide on some practical information.
Basic Formula When Setting a Wholesale Price
The whole point of a business is to generate profit. When setting a wholesale price, you should create a formula that generates a profitable output. You can achieve that by calculating the TCP (total cost price) and profit margin.
The TCP sum is determined by the amount spent during manufacturing and collecting raw materials. To do that, you will add the labour costs and overhead expenses, such as packaging and shipping. Once you’ve determined the TCP, you can work with your wholesale price and profit margin. The percentage of your profit margin is the TCP divided by the total revenue.
Do Your Research
Before you jump at determining prices for a gluten-free retail product, it is crucial that you research the market you are planning to capture. Is your business a discount brand, or are you looking to sell high-quality products? For you to be able to create a competitive advantage, you must do thorough research. Tailor your services towards your customers so that you will inspire them to pick your product over that of the competition.
Think About Adding a Dual Pricing Strategy
If your gluten-free business is selling to retail partners, you might want to opt for a dual pricing strategy. That way, you can ensure you are profiting from sales no matter if you are selling at retail or wholesale.
Sometimes this could be a worthwhile approach to offset the extra costs of working in a foreign market. Because gluten-free products are popular all around the world, some companies are choosing dual pricing when working overseas.
Do have in mind, however, that this is seen as an aggressive move practiced by manufacturers. The goal is to take market share away from your competition. You mustn’t use it with the intent to dump goods on a foreign market. According to experts, manufacturers must be well-versed in this kind of strategy before they try to implement it in their business.
Understanding the wholesale and retail formula can take some trial and error. But, without effective product pricing, you can’t expect your gluten-free wholesale business to thrive.