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When should you use Multiple Unit Pricing?

Multiple Unit Pricing is a pricing strategy in which consumers purchase various units of the same product while paying a lesser price for the bundle. Essentially, it is the approach in which businesses lower prices proportionally to the number of units a person wants to buy. It is often used as a marketing strategy.

Multiple Unit Pricing is often used when a business wants to push the sales of a particular product. Besides, it can be employed for exhausting the existing stock of products that were not sold the last time. In addition, Multiple Unit Pricing helps penetrate new markets by offering a new product for an attractive price. Finally, the approach can be used when a business provides customer deals and bulk orders.

Multiple Unit Pricing

As mentioned above, the pricing strategy focuses on decreasing prices for bulk orders, namely when a customer purchases a specific number of units of a product. Keeping that in mind, there are various cases when Multiple Unit Pricing proves to work in real life.

Case 1

The first case correlates to the use of Multiple Unit Pricing when it comes to pushing a product with the desire to reach higher sales. Such an approach is crucial to achieving a higher degree of market potential and a higher degree of customer conversion. Often, the case suggests that Multiple Unit Pricing should be implemented during sales days.

For instance, those can be festival days and shopping celebrations like Black Friday. Usually, the case works when the prices are reduced with the bulk purchase. In such a case, businesses show consumers how drastic price reduction will benefit their purchasing decisions. Usually, when the strategy is employed to achieve higher sales, companies try to reach particular objectives and use specific periods to boost sales.

Case 2

The other case of Multiple Unit Pricing correlates to the conditions when a company has an excess of stock lying without any action. The products might expire, or their quality can diminish in such a case. Keeping that in mind, the key purpose of the pricing strategy is to use the stock without it lying in warehouses. Respectively, the longer the products cannot be sold, the higher the likelihood of the company getting losses.

For instance, Multiple Unit Pricing is mandatory when a company operates in the pharmaceutical industry, and its stock lies in warehouses without providing its consumers. Besides, when operating with consumer care products, it is unacceptable to wait until the products will expire and then sell them. To avoid potential losses, companies use Multiple Unit Pricing. Such a pricing strategy ensures that the stock of products can be sold in a bundle. Thus companies can get rid of a major supply of unsold products.

Case 3

In most cases, when a company introduces a new product on the market, the business will face fierce competition. The existing products that have been on the market for a long time have a broader customer base, and consumers are used to them. In such a case, entering new markets requires a unique pricing and marketing strategy to attract consumers and present a new product worth buying. Keeping that in mind, Multiple Unit Pricing is a good strategy to decrease the price for a bundle of units of a product and thus attract consumers.

Essentially, combating an established product in a particular market requires a good penetration strategy. At this point, Multiple Unit Pricing helps both increase the customer base and sales. It provides an edge over the competition employing, expanding the market share. As a result, Multiple Unit Pricing coupled with a proper market penetration approach promotes new products and helps penetrate the existing allocation of products.

Case 4

Multiple Unit Pricing is also used in the cases of customized deals. For instance, when bulk orders and personalized deals are available, the buyers often expect better prices for products. How does the casework? Several free units are coupled with customized orders to reduce the price per product. It is how the pricing strategy is employed. Keeping that in mind, the approach can present itself as a major marketing deal that pushes forward ordinary products and customized ones.

Multiple Unit Pricing can be applied in the case of customized deals when it comes to supplier-manufacturer deals. For instance, in purchasing 200 units of a particular product, the supplier will get a specific number of units. A buyer can offer a deal of purchasing 1000 units of a product at one time while also requesting 100 units for free. At this point, getting customized deals can help create a win-win situation that results in a manufacturer selling a massive number of units while buyers receive some of them for free.

Case 5

Companies can use Multiple Unit Pricing when there is a desire to increase the existing share of products. The pricing strategy can be employed to both increase sales and get new clients. Respectively, several key cases suggest the benefit of Multiple Unit Pricing.

Pros and cons of Multiple Unit Pricing

While certain cases show the application of the pricing strategy, one cannot avoid mentioning the advantages and disadvantages. Starting from the pros, it is crucial to illustrate the following points:

  • The pricing strategy offers a way for rapid liquidation of the products. The stocks can be consumed faster, which later translates into profits.
  • The approach help customers get a better deal employing reducing the price per unit.
  • The method allows new products to establish themselves on the market. The key focus is affordable prices to grant competitive advantages by giving buyers lucrative deals.

There are certain disadvantages of Multiple Unit Pricing that should be considered. These are the factors worth regarding:

  • The approach reduces the profit margin of the product within companies. It is achieved through the reduction of profits margins of retailers and distributors.
  • The strategy is problematic in terms of record keeping. It means that selling products in bundles is challenging to manage in accounting books.

These are pros and cons worth considering.

Conclusion

Multiple Unit Pricing is a strategy used to help companies sell products in bundles to provide consumers with good deals or help businesses liquidate their unused stocks. When it comes to cases explored, they show how the approach can be used. Besides, there is a particular emphasis on pros and costs worth considering when using Multiple Unit Pricing.

FAQ

Find answers to some of the most common questions people have regarding the use of Competera.

What does Multiple Unit Pricing mean?


It means companies set lower prices for deals when buyers purchase a bundle of the same product.

When should you use Multiple Unit Pricing?


It should be used when penetrating a new market or trying to liquidate the stocks.
Pricing Expert, Competera
Pricing Expert, Competera

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