Insights — Channel Creation & New Revenue Streams — 3 min read
How to Set Trade Pricing Without Destroying Your Margin
The biggest risk in B2B is the 'volume trap': selling more units than ever but making less profit because of aggressive discounting and hidden costs.
In short
To set trade pricing without destroying margin, you must first strip out the D2C-specific costs (like individual customer acquisition and retail packaging) to find your 'true' product cost. Then, apply a tiered discount structure based on Minimum Order Quantities (MOQs) that reflect the logistics savings of bulk shipping. Crucially, you must account for B2B-specific costs like trade credit, sales commissions, and bespoke support, ensuring the net margin remains within your required range.
When a business moves into the trade or wholesale market, the first question is always: 'How much of a discount do we need to give?' This is the wrong starting point. If you start with the discount, you are negotiating against yourself. The right starting point is your own margin requirement. You need to know exactly how much it costs to fulfill a B2B order versus a D2C order, and where your 'floor' price really is.
Setting trade pricing is a defensive act as much as an offensive one. You are defending the long-term viability of your business against the lure of easy volume. A disciplined approach ensures that every new B2B sale actually adds to the bottom line, rather than just increasing the complexity of your operations for no real gain.
The 'Invisible' costs of B2B
Many businesses think that because they aren't spending money on Facebook ads for a B2B sale, the margin is 'free'. It isn't. B2B has its own set of costs that can quickly erode a poorly calculated discount.
| D2C Cost (Avoided) | B2B Cost (Added) |
|---|---|
| Meta/Google Ad Spend | Sales time and outbound prospecting |
| Pick & Pack for 100 boxes | Palletisation and heavy logistics |
| Retail payment fees (3%) | Cost of capital for 30-day credit |
| High return rate | Bulk return risk and quality claims |
| Direct support | Trade account management and training |
Don't discount; Tier
A flat 'trade discount' is a margin killer. It treats the person buying one item for a project the same as the person buying a hundred items for stock. A tiered system protects your margin by ensuring that deep discounts are only unlocked when the operational efficiencies of scale are actually realised.
Protecting the RRP
If you give a trade discount that is too deep, your trade customers may start selling the product at a price lower than your own D2C site. This creates 'channel conflict'. Your trade pricing must be set with a clear understanding of the final retail price, ensuring that even after their margin, they aren't forced to undercut you to make a sale.
Evans' Channel Creation Programme (£1,995 + VAT/month) focuses on this exact economic modelling. We help you find the 'margin floor' so you can negotiate with B2B buyers from a position of data-backed strength.
Could your business support another route to revenue?
Evans Channel Creation identifies, validates and builds additional revenue channels from capabilities a business already has — B2B to D2C, D2C to B2B, product to service, recurring revenue or partners — and says so plainly when a channel should not be built. Programme from £1,995 + VAT per month over six months.
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