We often come across the term wholesale price in this capitalistic society. While price stands for the monetary value for any goods or services, other values also define the items' pricing strategy.
Today customers have a lot of options that allow them to buy goods and services from different sites. This step also allows them to tap into the minds of the sellers easily. There have been a lot of discussions that take place around as to what is the wholesale price?
In this blog below, we will dig further into the topic and get to the real meaning behind the goods' price on a wholesale level.
1. What is Wholesale Price?
The wholesale price definition is quite simple. In other words, the wholesale price is the monetary value charged for goods and services that are sold to the distributor or merchants in bulk.
From a mathematical point of view, the wholesale price is usually the sum of the manufacturer's cost price and profit margin. There is also another definition which goes by the term average wholesale price.
The average wholesale price is nothing but the price for purchasing the drugs from wholesalers. This price is paid by the pharmacies to maintain the supply chain management at ease.
The main reason why wholesale price finds its value is due to its large number of benefits. From mass shipping, voluminous discounts to a high-profit margin, the wholesale price is used by many vendors and e-Commerce sites today.
But there are a few things to keep in mind. The wholesale price isn’t the same as the retailer price. It means that the price is only meant for distributors and not what trickles down to the grocery stores for the consumers.
2. How to Calculate Wholesale Price?
After going through the various definitions, one thing can be easily derived that wholesale price is the monetary value that is charged by one business to another. Nowadays, many small and big companies are looking at various ways to calculate the wholesale price.
For any company that is considering an investment in a dropshipping venture, it becomes a pertinent feature to know how to calculate the wholesale price. By knowing the wholesale pricing, it will be easy for your business to find a better deal. Like mentioned before, if you know how much you should expect searching for cost, it will be easier for you to find the least price for your needs. Now let us check as to how you can calculate the wholesale price.
3. The Wholesale Price Calculator:
One of the easiest ways of the wholesale price calculator is by following this formula which is:
Wholesale price= cost price + profit margin.
Once you lay hands on wholesale prices, then you can easily calculate the manufacturer’s retail price. This is calculated by the formula:
Wholesale price x 2= Recommended retail price.
This above formula cannot be followed every time, as in some cases, the whole price becomes very low for companies. Therefore to make the whole thing work on a nominal level, there are some basic costs which can be taken into account for the same, and they are:
Labor costs: This is the cost that is paid to the laborers working for you.
Overhead expenses: It includes everything starting from manufacturing, shipping, and cost of packing.
Raw Materials: It includes the basic amount spent on manufacturing.
4. What Are the Other Methods of Wholesale Pricing?
The wholesale price list depends on different companies take on the pricing strategies. Below mentioned are some other methods which can be taken into account for wholesale pricing:
· Absorption pricing: variable unit cost + overhead expenses + administrative cost/units.
· Value-based pricing: Value-based pricing is the process by which the final selling price is derived by marking up the base price by a certain percentage.
· Differentiated Pricing: Differentiated pricing allows you to gain a higher profit margin by setting the price higher than the given market value.
5. Dropshipping Products at Wholesale Price:
The term drop shipping has gained huge momentum nowadays. This method has helped big e-Commerce giants to buy products from wholesalers and then sell it off to the customers using your site.
There are many advantages to the drop-shipping method. One of the primes among them is to not carry an inventory. Through the process of drop shipping sellers or businesses who are new to e-Commerce, they do not have to handle the hassles of maintaining an inventory.
That means if a consumer likes a product listed on your website, you can directly purchase it from the wholesaler and then ship it to the customer. In this way, you can significantly reduce both the upfront cost and risks involved, primarily when starting a new business.
The Drop-shipping model allows a new business to focus entirely on marketing, and if for any chance, the idea fails, and then you can easily change your niche.
Today many sites operate online through the gamut of drop-shipping business. One of the popular sites among them is SaleYee.com. The company has its fundamentals restfully on the drop-shipping model and is a leading supplier of goods.
A huge benefit of shopping from the site is that it has an advantageous supply chain, which makes it easy to cater to all end customers' needs. The site is also in charge of over 630,000 warehouses and also offers free membership and big discounts to its subscribers.
With effective customer support along with free and fast delivery of the goods ordered, the site has become a numero uno leader in the drop-shipping market.
Conclusion:
Now that you know exactly what does wholesale price means, it will become easier to launch your business online. Always remember once you have nailed the supply chain model, it will be a smooth run for you to operate and gain major footfalls of customers in the long run.
