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Importance of a Standard Pricing

by Master Fool

Standard pricing simply means to standardize your pricing across all channels. Why the need to standardize your pricing?  Why is it important to standardize your product pricing? This is simply because you want to ensure business conformity and also fair pricing towards all your business customers. Of course, this is needless to say that you can still extend special discounts to your business customers but then again it you would need to have a standard discount no matter how tempting it is to give different pricing. For example, if you have already set your standard price, next you should be setting a discount level for different channels.

For example, wholesalers, distributors, retailers, HORECA (Hotels, Restaurants, Cafes or Caterers) should all have at least a standard discount level. If you are extending a 10% discount to wholesalers, this should be the case for all wholesalers. If you would like to extend a special discount to wholesaler XYZ, you should be classifying it under special discount or promotion discount. This is to ensure traceability and sustainability to your business. What would have happened if wholesaler ABC knew you are extending a 10% discount to XYZ and not to them? You may face the wholesaler ABC buying for XYZ or them demanding a deeper discount to match XYZ.

Apart from that, setting a standard pricing also reduces price instability. You would like your consumers to find the same pricing across the market. Consumer’s would find it confusing if say they find price differences in different retailers as well especially if the price gap is huge. This would also be a disadvantage for when you are running a price off promotion because consumers would not be able to identify the savings that they are getting since your pricing varies across different retail outlets

Even when running price off promotion, you need to have a standard discount to different retailers as well. This is to ensure you do not create price war among the retailers. It may not be significant if you are just a small player in the category but the impact would come back to you later when you have a bigger market share and consumers and customers both compare your pricing levels

Always remember that setting a standard pricing would help you in the long run

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