The cannabis analytics firm BDSA predicts that in 2021, “Cannabis prices will decline in almost every state and consumers will benefit the most in states with very high prices today like Illinois and Massachusetts.” They go on to say, “We anticipate that the price decreases that have occurred in other states over time will occur in newly legalized states such as Illinois and Massachusetts.” This prediction comes even with the soaring nationwide flower and edible prices of 2020, which rose 18% and 11% respectively.
Wholesale flower prices can rise and fall wildly, especially when new markets open. And state-by-state inventory and distribution costs have a direct effect on pricing concerns, too. The landscape changes rapidly, and the promise of national decriminalization or legalization adds even more uncertainty to pricing. How would the complete repeal of cannabis prohibition affect the market value of flower? What will it do to the international market? It’s unclear at the moment.
Facing such uncertainty, how do you have faith in your business decisions?
When setting prices — in both the long term and the short term — you should go straight from a reliable source. But just who is reliable? What sources can you believe? And where do you start when developing a pricing strategy?
The answer is simple.
You need an ordering platform.
We normally talk about a platform being the go-to source of truth for inventory and ordering, but really pricing should be no different.
Ultimately, platforms that avoid market commoditization with a 1:1 storefront experience are the way to go. Additionally, we recommend a platform with custom inventory controls, you can control which customers see certain pricing. That way, customers can’t compare prices or add products from multiple sellers into one cart. Not to mention that you can work directly with customers to set volume pricing discounts.
In this way, rather than religiously following the market, your pricing is based more on customer relationships, than fluctuations in pricing. Obviously, you can’t charge much more than the market rate, and you shouldn’t charge below it. But by maintaining a good relationship with your customers, you’ll avoid the knee-jerk market flux and be able to change your pricing when it makes the most sense for you.
Avoid the race to the bottom. When your products must adhere to inappropriate pricing, it’s the fastest way for brands to die. On the flip side, you’ll want to stay ahead of accurate product and pricing trends to remain competitive.
How else can you stay competitive with pricing when your data is all over the place and systems are not synced? A good platform will have real-time order data to generate customized brand, product, and sales reporting for the customer. Helpful reports like pricing and distribution data and trends, wholesale revenue reports, and market-level insights can take things to the next level, helping you to see the story the data is telling.
Also, you can use a platform to gather pricing intelligence. With a solution that’s integrated with Tableau, you can gain market-level insights into pricing and distribution reports and trends. Tableau is a great tool that gives you visual data tools to survey business forecasting, planning, product sales Wholesale revenue reports, and performance comparison versus competitors and markets.
To sum it up: Helpful trend reports to support business planning and forecasting + a 1:1 wholesaler/buyer-managed platform experience = the secret sauce for pricing decision.
If you’re going to stand any chance of staying competitive with pricing, you need a platform. Period. But why not use a platform that is super-charged with powerful integrations and a common-sense workflow that boosts efficiency across the board? Kill a whole flock of birds with one stone.
Click here to learn more about the complexities of scaling your wholesale cannabis operation.
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