The hidden world of ingredient pricing provides protection to margins and makes sure that you don’t give away too much too soon. This strategy absolutely seems to make sense when negotiating a major deal for commoditized ingredients because every penny counts; but this is NOT the approach ingredient suppliers should take when selling high value ingredients.
Your high value ingredient pricing should not necessarily be based on volume, especially when first presenting it to the marketplace. However, a brand can only make a go-forward decision when they have pricing. Making pricing a secret creates decision-delay. So how do you give pricing without having volume from the customer? You develop pricing for the lowest volume you would allow someone to purchase your ingredient and you provide them with that price. Ideally there is very little fluctuation in pricing with higher volume but even when there is, a brand benefits by having a price on the table to determine if they can make the ingredient work in their formula and in their sales channel.
7th of 10 ways ingredient suppliers sabotage sales of high value ingredients:
Waiting for customer volume information before providing pricing
This simple mistake of waiting for customer volume to provide high value ingredient pricing has lost many great ingredient companies’ sales with top brands more than I care to think about. Brands don’t have to launch with the best ingredient on planet earth because their customers trust them to launch with ingredients they trust. But you have a real opportunity to get in with the brand quickly and be a part of their next launch if they can work on the ingredient pricing AND navigate through the distribution channels to make sure everyone along the way makes the margin they need to make this launch with your ingredient successful!
We’ll cover more about high value ingredient sales at an exclusive exhibitor workshop at SupplySide West entitled: Essentials to Getting High Value Ingredients Launched with the Right Finished Product Brands (only $25 to attend). You’ll leave that workshop with all the information you need to be sure you don’t sabotage the sales of your high value ingredients!
This workshop provides a powerful process for taking a high value ingredients from development to sales in the most efficient way possible. While customers may not be looking for your ingredient solution, and many will NOT want it, the “right” finished product brands that will launch your ingredient solution most effectively actually dream about your solution and have been waiting for you to show up…in the right way for them to move forward with a decision.
Stop struggling selling your high value ingredients and get to the workshop at SupplySide West!
And stay tuned… Still 3 more ways ingredient suppliers sabotage high value ingredient sales are coming soon!