MoneyStock
Two rates for one item: retail and wholesale
One rate for everybody quietly costs you money. Set a normal rate, a bulk rate tied to a quantity, and a floor you never go below, then write all three down.
One rate for everybody looks fair and quietly costs you money. The man buying a dozen and the man buying one should not pay the same, and neither should ever get a rate below your floor. Set three numbers per item: your normal rate, your bulk rate, and the lowest you will ever go.
One rate for everybody is the expensive kind of fair
Most small shops run on a single number per item. It is written nowhere, it lives in the shopkeeper's head, and it is the same whether the buyer wants one piece or forty.
That single number then has to do two jobs it cannot do at once. Keep it high and the man buying a carton walks to the wholesaler, taking with him the sale that would have moved your stock fastest. Drop it low enough to hold him and you have just cut the rate for every walk-in buyer as well, including the ones who were happily paying more an hour ago.
So the shopkeeper does what everybody does. He keeps the high number for strangers, quietly gives a lower one to whoever pushes hardest, and remembers none of it exactly. Six months later the same customer is on four different rates depending on who served him, and nobody in the shop can say what the real rate is.
Two rates written down is not a bigger system. It is the same thing you are already doing, made honest and repeatable, and it is the difference between a discount you chose and a discount you were talked into.
Who has actually earned the second rate
The bulk rate is not a reward for asking. It is payment for something the buyer gives you, and there are only three things that qualify.
The bulk rate is earned, not asked for
- He takes the full quantity today, not over the month
- He pays on the spot, or on terms you set
- Your own record shows he really buys, month after month
- He asks before he comes, so you are not caught short
- He takes the bulk rate and a long credit line too
- He walked in this morning saying he buys a lot
He takes quantity, in one go. Not "I will take twelve over the month". Twelve today, carried out today, off your shelf and into his.
He takes it for cash, or on terms you set rather than terms he sets. A bulk rate and a long credit line are two separate favours, and giving both to the same person on the same sale is how shops end up funding somebody else's business.
He is steady, and you can see it in your own record. Not a stranger who arrived this morning saying he buys a lot. If the record shows six months of real buying, he has earned the second rate. If it shows nothing, he has earned your normal one, and he can earn the other later.
The one to watch is the buyer who takes the bulk rate and then sells in your own street. He is not a customer at that point, he is a competitor buying his stock from you, and he should be paying at least what your other resellers pay. Some shopkeepers happily supply him anyway, and that is a perfectly good business, but it is a decision to make with open eyes rather than one to drift into.
The floor: the rate you never go below
Before you set a second rate, set a third number that nobody outside your shop ever sees. Your floor.
The floor is the lowest rate at which selling this item is still worth doing. Not your buying rate. Your buying rate is what the goods cost; the floor also has to carry the shop, and that means the rent, the light, the helper and the packing that sit on top of every sale you make.
Say a carton of 12 costs you Rs 1,008 and the shop costs Rs 6 a piece
Work it out once for the lines you sell most, not for everything. Twenty items usually carry most of a small shop's turnover, and knowing the floor on those twenty is worth more than a guess on two hundred. If you have never separated the cost of the goods from the cost of the shop, work out your real profit first and the floor falls out of it almost by itself.
Then treat the floor as a wall, not a suggestion. Bargaining below your buying rate feels like a loss and everybody avoids it. Bargaining below your floor feels like a small win, which is exactly why it happens so often and costs so much.
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How wide the gap should be
The gap between your normal rate and your bulk rate should be the smallest one that gets the sale. That is the whole rule, and most shopkeepers set it too wide out of nervousness.
Start from what he saves you rather than from what he asks for. A carton sold in one go saves you handling, saves you the shelf space, and turns your stock back into cash weeks earlier. That is real, and it is usually worth a few percent, not a quarter of your rate.
Then tie the rate to a quantity, out loud. "One to five, the normal rate. Six or more, this rate." Now the discount belongs to the quantity, not to the person, and the next buyer who wants it knows exactly how to get it. That one change ends most of the arguing, because there is nothing left to argue with.
Tie the rate to the quantity, not to the person
Keep the two rates within reach of each other. When the gap is wide, every regular customer eventually hears about it and feels cheated, and you will spend more on repairing that than the bulk sales ever earned. A tight gap that everybody can see beats a generous one that has to be kept secret. It also makes it much easier to answer the one big buyer against twenty small ones question honestly, because you can see what each of them is actually worth.
Write the rates down, or they get invented at the counter
A rate that lives only in your head is a rate your helper has to guess at, and he will guess low, because low ends the conversation faster.
So write all three numbers where the person selling can see them and the customer cannot. The normal rate, the bulk rate with its quantity, and the floor. Paper taped inside the counter works. A note on a phone works. What does not work is telling the helper "use your judgement", because his judgement is being formed by whoever is standing in front of him.
Wasoolo keeps this in the product itself: beside the ordinary sale rate you can save a wholesale rate and a lowest rate, and both are staff-only, so nothing of the sort ever shows in the customer app. When a line is being written below the lowest rate, the app shows a warning at that moment rather than after the sale. It does not stop you, because sometimes you genuinely mean it, and the person who should decide that is you and not an app.
The record matters as much as the rates. Once each sale carries the rate it actually went out at, you can look back at a month and see who is buying at which rate and what that is really earning, instead of guessing from the busy days.
When a retail customer hears the bulk rate
He will. Somebody always tells somebody, and there is no version of this where the second rate stays private forever. So plan the sentence now, while nobody is upset.
The answer that works is short, factual and about the quantity: "That rate is for a full carton, taken in one go. If you take a carton, it is your rate too." You have not denied anything and you have not apologised. You have told him the rule, and the rule is available to him.
What does not work is pretending it is not true, or making the other buyer sound special. Both of those turn a rate into a relationship problem, and you will be defending it for months.
There is a second half to this that is easy to forget. If a regular retail customer is buying steadily from you, week after week, he is worth as much as the carton buyer even though he never asks for anything. Give him something that costs you less than a rate cut: first pick of new stock, a bag carried to the car, a call when the thing he wanted is in. Keeping a good rate list and keeping good customers are the same job done from two ends.
Read the rates again when your buying rate moves
Rates are not a one-time decision, and the trap is not the day your supplier raises his rate. The trap is the six weeks after it, when your selling rate has not moved and you have no idea you are now selling that line for nothing.
Fix a habit instead of relying on noticing. Once a month, take the ten or fifteen lines you sell most, look at what you last paid, and check both rates and the floor against it. It takes twenty minutes and it is the highest-paid twenty minutes in the shop.
Watch the bulk rate especially closely, because it is the one with the least room in it. A rise in your buying rate that leaves your normal rate merely thinner can push the bulk rate below the floor entirely, and bulk is exactly where the volume is. And when you are deciding your own next order, remember the rate you can offer and the way you buy are two halves of the same decision.
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Common questions
How many pieces should count as bulk?
Whatever quantity actually saves you something: a full carton, a full box, a pack you would otherwise break open. Do not set it at a number nobody buys, and do not set it so low that half your walk-in customers qualify. If your regular buyers are already taking six at a time, six is not bulk, it is your normal sale.
A customer says he will buy a lot later if I give him the bulk rate today. Should I?
Give him the normal rate today and tell him plainly what unlocks the other one. Promised future quantity is not quantity, and once a person has bought at the lower rate once, that becomes his rate for ever in his mind. Nobody argues with a rule that is the same for everybody.
Should the bulk rate be lower for cash than for credit?
It is fair, and it is easier to explain than most things in a shop. The best rate goes with payment on the spot; on credit, the ordinary rate applies. Say it as a rule rather than deciding it person by person, because deciding it person by person is what makes people feel picked on.
My helper keeps giving the low rate to please people. How do I stop that?
Write the three numbers where he can see them and take the decision out of his hands: he may give the bulk rate at the stated quantity and nothing else without asking you. Guessing is not his fault. He is trying to end an awkward moment, and a written rule ends it for him without costing you anything.
Is it better to give a lower rate or to give something free with the purchase?
A free extra usually costs you less than the same value in a rate cut, and it does not reset what the customer expects to pay next time. The danger is that free items become permanent. Attach them to something temporary, like a new line or a slow month, so stopping them later is not a broken promise.
Should I show my rates on a board?
Show the normal rate wherever you can, because it saves the whole shop time. Keep the bulk rate as a rule you say out loud rather than a number on the wall, and never put your floor anywhere a customer can see it. A visible floor is not a floor, it is the opening bid in every conversation you will have that day.