Wholesale price bands and who gets which, decided in advance

3 days ago
3 min read

Introduction

Most wholesalers negotiate prices account by account, and after a few years nobody can explain why one customer pays less than another buying similar volumes. The answer is usually historical: somebody negotiated hard in 2019, or a sales manager wanted the account, or a discount was given as a one-off and never withdrawn. None of those reasons survive being said out loud to another customer.

Buyers discover this. They talk to each other, they see each other's invoices when goods are delivered to the wrong address, and an unexplainable price difference between two similar customers is a genuine commercial problem. It also makes every future negotiation harder, because the precedent exists.

Published bands with stated qualifying criteria solve it and remove the negotiation entirely. They also make your sales conversations shorter.

1. Wholesale price bands and who gets which should be objective

The criteria must be measurable.

Qualify on volume over a period

Annual or rolling quarterly spend, or case volume. Rolling twelve months is the fairest basis. Something countable from your own records rather than promised. Promises are not qualifying criteria.

Publish the thresholds

On the price list. Customers can then move themselves up, which is far better than asking you to move them. It also removes the negotiation from every order.

2. Set the bands where your orders already cluster

Look at the data before choosing.

Plot your accounts by annual volume

The natural groupings will be visible. Use twelve months of data. Place the thresholds just above where clusters sit so accounts step up. Tell customers when they are close to a threshold.

Keep the number of bands small

Three or four. More becomes impossible to administer and to explain. Three is usually right.

3. Review band membership on a schedule

Accounts drift and prices should follow.

Reassess annually against actual volume

Both directions. Moving accounts up is the easier conversation. An account that dropped below its band should move down, and saying so in advance makes it routine. Put the rule on the price list.

Give notice of a downward move

A month, with the figures. Send it in writing rather than mentioning it. Applied without warning it feels punitive. Offer them the chance to hold the band by ordering.

4. Handle the exceptions deliberately

There will be some.

Write down any off-band price and why

Exclusivity, a listing commitment, a genuine strategic reason. Anything else is just a discount. Without a recorded reason it becomes the standard. Note the date and who agreed it.

Put a review date on every exception

Otherwise a temporary concession becomes permanent, which is how the current mess was created. Diarise every one.

5. Use carriage and terms rather than price

Price is not the only lever.

Vary carriage-paid thresholds instead

It costs you less than a unit discount on every single line and it changes order behaviour more. Customers consolidate orders to reach it.

Offer settlement discounts for early payment

That buys cash flow rather than giving away margin, and it is genuinely worth something to you. Two per cent for seven days is common.

Conclusion

Publish your bands with measurable qualifying criteria based on volume over a defined period, taken from your own records rather than from what a buyer promises — then customers can move themselves up instead of negotiating with you.

Plot your accounts by annual volume before setting thresholds, place them just above where clusters already sit, and keep to three or four bands. Reassess membership annually in both directions with a month's notice on any downward move. Record every off-band price with a reason and a review date, because that is how the current inconsistency was created. And prefer carriage thresholds and settlement discounts to unit concessions, since both cost you less and change behaviour more.