Situation
Effectively pricing products can be a tough decision, especially when you're the middleman. Factors such as consumer demand and wholesaler calculations play a huge part. Wholesalers can stay competitive with retail product pricing tools to equip retail partners with optimial initial pricing backed by predictive analytics.
A footwear wholesaler wanted to assess whether they could price a boot at $29.99 when the retailer believed the boot would only sell for $19.99.
Action
The wholesaler decided to run a test with First Insight's price optimization software to evaluate what the optimal initial price should be. A test was conducted with their target audiences at a price of $29.99.
Outcome
Consumers saw great value in the boots at $29.99 and results did not show a decrease in overall demand.
The wholesaler's sales team was more confident presenting the campaign to the retailer at $29.99 and convinced the retailer to invest in the boot program with the higher ticket price of $29.99 (vs. $19.99). This allowed both the retailer and the wholesaler to obtain higher margins, as the production cost of the boots remained the same, while still maintaining demand.
