Discounts & Wholesale

Replies to This Discussion

Permalink Reply by Clay Gordon on October 28, 2009 at 4:54pm

Andy:

I think you're asking the wrong question.

One of the things I did for my seasonal large-order customers was to offer them some special service rather than additional discounts. For example I used to offer custom product through HR departments to salespeople to gift to their customers. As this was an expense account item for them, adding a couple of percent extra discount didn't really matter to them. What really perked up their ears was the fact that I included an accounting of their order that made expense reporting easier.

For one company, they needed to know who the gift was for, the cost of each item, shipping for each item, and any applicable sales tax. So I made a spreadsheet with all that information. I also tallied up the total costs of the gifts, the total cost for shipping, and the total taxes because each of those had separate accounting codes. When you're shipping an average of 20 boxes for 10 salespeople doing the accounting for them is not trivial - to them.

I didn't need to lower my price, I offered them a valuable service that saved them time and aggravation and speeded the processing of their expense reports for reimbursement and the accounting department loved me because I included the accounting codes in the reports. A Win-Win-Win for everyone.

:: Clay

Permalink Reply by Karen Neugebauer on October 28, 2009 at 5:16pm

I treat HR departments like I do the first step wholesale and pitch the deal that way. If they are not buying enough to make the wholesale cut, then I negotiate a deal based on how close they come. Most fall in between wholesale and large retail orders so they would get about 20% or 25% discount (based on the scale you gave). This shows that you recognize their situation and does not compromise your wholesale base number. Although about have of the time, I can up-sell them into a standard wholesale min order buy throwing in free product or free custom label. Those that I do this with have been very good repeat clients!

Permalink Reply by Clay Gordon on October 28, 2009 at 5:20pm

Karen :: A very good example of how a special service can be used to help preserve pricing.

Permalink Reply by Karen Neugebauer on October 30, 2009 at 2:48am

Thanks. I have found (both in and outside of the chocolate world) that customers talk all day about price, price, price! But if you listen closely, you more often then not find that service and relationships are the deciding factor. This is why I shy away from reducing price points. If the customer really wanted less expensive chocolate why would they be talking to an artisan chocolatier who sells truffles at $2 or more a pop in the first place. Most of the time the customer is seeking a relationship with the vendor. They want to feel special and not treated as a faceless entity. Customers WANT to be loyal and just need you to make it easy for them to be. This is why services are so important. Keep in mind that consumers are faced with thousands of buying decisions and that being loyal to a vendor makes that decision quick and easy to make. If you provide a service to make their lives easier (like Clays accounting spreadsheet) or make them feel more appreciated (like a custom label), odds are, you have created a long term customer!

Permalink Reply by Andy Ciordia on October 28, 2009 at 6:02pm

Thanks Clay & Karen, both your examples and thoughts are good ideas. I think of services in marketing but I hadn't really applied the concept to the sale.

As well it gives thought to how our wholesale program differs. We use currently regularity of order instead of a price watermark. Karen brings up a different tactic we'll need to ponder more.

It's often so hard making all these guesses in the dark and waiting for them to play out. I learned in other work to not leave money on the table and it's only time and experience that lead you closer to knowing when you did or didn't.

Permalink Reply by Karen Neugebauer on October 30, 2009 at 3:00am

Regularity of orders is not a bad way to go, just a different way to go. Many companies have several price structures in place for different types of cliental. As far as figuring out different business tactics, I find that it is easier to take the cues from your suppliers and competitors in the industry. Odds are, they have tackled the same problems as you are and found a working solution. Re-inventing the wheel is great for some things such as product concept and service tactics, but for the nuts and bolts of operating a business it is best to start with a tried and true format. Then tweak it as you go along. The most valuable thing I learned to do is to ask my competitors, vendors, and industry experts questions. You will be amazed at what you will learn from a simple phone call.

Permalink Reply by Clay Gordon on October 30, 2009 at 7:19am

Karen: Great advice. I think of this as being in the "where am I willing to fall on my sword?" class of questions. In other words, where is it absolutely necessary (personally, professionally, in business) for me to own the problems and come up with my own solutions? You're right - product innovation and concept are mostly yes; but business process innovation? Mostly not.

Permalink Reply by Christa Katz on November 5, 2009 at 10:32pm

I work for a small-ish chocolate manufacturer. Our discount structure for corporate orders is:
10% off retail for orders over $500
20% off retail for orders over $2500

We also offer customization (gift cards, logos and personal messages) at cost, no markup. This seems to be a big selling factor -- a way to incorporate their logo and brand.

Hope this helps.

Permalink Reply by Andy Ciordia on November 18, 2009 at 11:22am

Branching a little to discounts as a whole, one of our retail accounts gave us some other chocolate makers buy/wholesale sheets, mostly bars or industrial produced but goodness they're discounts were slim slim slim and a few were based on annual purchase amounts.

I've always been under the impression that for retail wholesale at a minimum you needed 30% off and that many places required 50%--obviously a retailer needs to profit somehow.. I wish I could find where I could instantiate my original concept but for the life of me I cannot. Just stunned me. Over the long haul I'll be iterating through our programs that's for sure.

Back on topic of gift programs we've been having some good success with the idea of offering services instead of more cash off so thanks for those advices. :) You're right, throwing in a box that cost cents vs giving away $100 is definitely better business sense.