Here are some tips and an example on how to manage pricing and offer clearing strategically so you get the best profit margin.
Reduce friction to get customers active
Price more aggressively for new or inactive customers.
We have found that it helps grow your customer base and create competition in the long run if you price more aggressively with new and inactive customers. You want to let new customers try out your product with as little friction as possible.
Inactive customers likely haven't bought because they are buying from your competitors. Even if these customers offer on smaller quantities, consider accepting close to your low to get them active.
Double check recent deals
Time your list price decreases.
If you are lowering a list price, be mindful of larger deals that you may have just closed at the higher list price. If you just sold a large quantity to a customer at a higher price, and your new list is the same price or lower than what your customer just paid, he/she will complain, and you risk losing the deal.
Use the 7-day sales charts to see whether you have recently closed deals at high prices.
Look at recent customer activity
When clearing offers, check customers' recent offers.
When clearing offers, use the Recent Related Activity table to see whether a customer bought or offered on the same product in the last 7 days. Sometimes, a customer will try to offer you $5 lower than what they paid yesterday just to see if they can get away with it.
You're in the driver's seat
When demand outstrips supply, push up prices.
During periods of high demand and/or low supply, two things may happen:
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Your Estimated Days to Book may fall well below your target
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You may start finding that you have more offers than you have quantity.
In these periods, you are in the driver's seat, and you can start to hold prices firm or even raise prices in certain cases.
Consider the following example:
You have 100 of Phone A, which has a list price of $200. You have offers as follows:
- Buyer A offers 100 @ $195
- Buyer B offers 50 @ $193
- Buyer C offers100 @ $190
At this point, you know that you likely have 100 sold at $195.
You have a number of options, two of which are:
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Accept Buyer A's offer of $195 and counter Buyer B and C at $195 or even at list price. Now, it becomes a race to check out. Your buyers will be trained that if they don't move quickly, they lose the product.
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Start by countering Buyer B and Buyer C at list price and see if they check out. If not, go back and accept Buyer A’s offer.
There are likely many ways to handle such scenarios, but the general idea is that when you are in the driver’s seat, you can command a higher price. However, remember that as you push up prices, your Estimated Days to Book will start to increase, and your offers will move farther away from your list price.
Make sure you have an Estimated Days to Book target so you know when to pull back. In this way, managing pricing is a constant optimization effort, but given proper attention, you can manage closely to your targets.
A final note
The key is to recognize that your business has not fundamentally changed just because you are using a platform. This is why traditional eCommerce platforms don't work in the wholesale business. You still need to negotiate, cater to larger customers, and try to get the highest prices you can.
However, with PhoneX, you are now doing this with far more data, automation, and tools to run this process as efficiently as possible. These best practices can serve as a guide, and you will eventually develop your own best practices that work for your specific circumstances.