By Few food distributors charge every customer the same. The restaurant group that takes three drops a week pays less than the café that orders twice a month, a hotel has a contract price on its fryer oil, and a new account starts at list. That is normal wholesale. The trouble starts when those prices live in a sales rep’s head, a spreadsheet and an old PDF: the order is taken at one price, the bill says another, and the customer calls to dispute it.
This guide covers how to structure customer prices so they stay simple to run, and how to make sure the price a customer agreed to is the price on every order.
The three ways to price a customer
Almost every customer price is one of three things:
- Your list price. The price for a customer with no arrangement — new accounts, occasional buyers.
- A percentage off your list. A customer at 10% off pays 10% less than list on everything. When you change the list price, their price moves with it.
- A price of their own on a product. A fixed price on one product for one customer, usually agreed for a period: a contract price.
If a customer has both, the price of their own wins on that product and the percentage applies to everything else. Keeping to these three makes any customer’s price on any product something you can work out, and explain, in a sentence.
Discount tiers
A percentage off list is the easiest arrangement to run, because it needs one number per customer instead of one per product. Most distributors settle on a few tiers, for example 5%, 10% and 15%, and move a customer between them as their volume changes.
On a case of 24 romaine hearts listed at $38.00, a customer at 10% off pays $34.20 and a customer at 15% off pays $32.30. Round to the cent once, on the unit price, and use that same unit price on the order and the bill. Rounding in different places is how a $0.01 difference per case turns into a call from the customer’s bookkeeper.
Base tiers on something you can point to: weekly spend, number of deliveries, or a commitment to order every week. A tier that was granted once and never reviewed becomes a discount you pay for forever.
Contract prices on a product
A contract price fixes one product’s price for one customer: the hotel pays $49.50 for a 35 lb jug of fryer oil listed at $54.00, for the next six months. Contract prices suit products a customer buys every week in volume, where they compare you with another supplier line by line.
Give every contract price an end or review date, and write it down where you will see it. The usual failure is not a bad price but a forgotten one: costs rise, the list price goes up, and the contract price from two years ago keeps going out at a loss.
Products whose cost moves
Produce, seafood and some meat cuts change cost from week to week. A fixed price on those either goes stale or loses money. For them, a percentage off list works better than a price of their own: you update the list price when your cost changes, and every customer’s price follows by their own percentage, without touching each account.
If a customer insists on a fixed price for a market-priced item, keep the period short — a week or a delivery — and tell them when it ends.
Specials on top
A weekly special — 15% off romaine this week — is for everyone, including customers who already have a better price. Apply the lower of the two, never both, and never the higher. With romaine at $38.00 list, a 15% special is $32.30: a customer at 10% off ($34.20) pays $32.30 this week, while a customer with a price of their own of $31.00 keeps $31.00. No one should pay more because a special started.
Stacking a special on top of a customer’s discount (15% off their already discounted price) is a pricing decision, not a default. Make it on purpose or not at all.
Products sold by weight
For catch-weight products, the customer’s discount applies to the price per pound, and the line is charged on the weight you actually packed. A striploin listed at $13.90 per lb is $12.51 per lb for a customer at 10% off; a piece that weighs 12.4 lb is $155.12. Quote the estimate at their price too, so the final charge does not surprise them. The catch weight pricing guide covers the packing and weighing side.
Showing customers their prices
A customer should see their own price before they order, in the same place they order. A price list sent by email in January is out of date by March, and a customer who orders from it is ordering at a price you no longer charge. Showing the price on the order itself — with your list price beside it, if they have a discount — removes the argument before it starts.
Each customer should see only their own prices. Two restaurants on the same street will compare notes eventually; they should not be able to do it from your ordering page.
Changing prices
Tell customers about a price change before the delivery it applies to, not on the bill after it. A change that takes effect from a named delivery day — “from Monday’s delivery” — is easy to check against. Orders already confirmed should keep the price they were confirmed at.
Common mistakes
- Too many tiers. Eight levels of discount are eight conversations about why one customer is in tier five and another in tier six. Three or four are enough.
- Changing prices at billing time. A price edited by hand on the bill no longer matches the order the customer saw, and nobody remembers why a month later.
- Contract prices with no end date. They outlive the cost they were set against.
- Discounting products sold near cost. A 15% tier applied to a product with a 12% margin sells it at a loss. Keep a product’s list price high enough for your tiers, or give that customer a price of their own on it.
- Different prices by channel. If phone orders, emailed orders and online orders are priced in different places, they will drift apart. One price per customer per product, wherever the order comes from.
Customer prices in Supligo
In Supligo every product has a list price, and each customer can have a percentage off it — from 0% to 90% — or a price of their own on any product, which wins over the percentage. The price is worked out to the nearest cent from the list price. A special on a product applies to a customer only where it is lower than their own price.
Customers order from your own ordering page, where each one sees only their own prices, with your list price struck through beside a discounted one. The price they ordered at stays with the order: on the order your office confirms and on the order summary Supligo builds from what was delivered. Supligo does not issue invoices, so you keep billing from your own system as you do today. More in online ordering for your customers.