Generally, the market dictates the pricing standards of various commodities. However, the chemical market has some unique traits and trends. It doesn’t matter whether there is a limited differential between suppliers. The pricing standards are rarely predictable.
For you to make awesome income, you need to price your chemicals well. This calls for applying several pricing strategies. Read on to learn more.
Restructuring the Pricing Basics
If chemical companies could start following the basics of pricing, they could see the profits rise and be more predictable.
Since you can’t change the entire market trend, you could start by making your prices stable depending on other market factors. Once customers detect that they can see your pricing fluctuation, they could send their friends your way.
Several firms have outdated pricing systems. That allows salespeople to play around with figures to their advantage. For instance, discounts on products don’t align with the low-interest rates at that time.
Also, the transportation cost depends solely on the company’s rules and not the distance they will cover to deliver. Here are three pricing strategies you can consider.
Chemicals have several grades and qualities to meet different customer’s demands. However, many companies fail to compare the products they sell to each customer and what they get from each supplier.
When you offer pure grade chemicals, your customers will have a lower processing cost. Also, they’ll make a higher quality product. Such a customer has no problem paying extra for the chemicals.
Try to understand what your customer’s needs. Then, check what each supplier offers. Pick different grades of chemicals depending on the needs of your customers. That way, you’ll be able to set a value pricing system.
When you are keen on the market trend, you can predict when the princess shoots or dives. You can do this by observing previous analytical models. Since the chemical industry is the least predictive, you can use the existing algorithm model that gives an accuracy of about 35%. It may be low, but better than not knowing anything at all.
Check what the end consumer needs in the next few months. Assess the chemicals such as in halides that need to make the product. So, you’ll predict the chemical demand and adjust you prices gradually.
Innovative Pricing Methods
Over three decades, the chemical industry has realized slight changes in product pricing. The market indices keep updating, but the sales spot prices are standard and constant. You can borrow a leaf from other industries and create a pricing system that will help increase your profit margins.
You can take advantage of auctions to market the off-spec materials. You can also use online advertising to tell the benefits and use of such products. It’s a wise strategy to clear your dead stock and maximize profits.
The best way to improve your pricing system is to observe your customers’ buying behavior. That way, you will stock the on-demand chemicals and minimize the off-spec chemicals. Then, create a pricing mechanism that will favor you and the customers.