Manufacturing Pricing Strategies: What Retailers Should Know to Maximize Sales

When a manufacturer sets strict pricing limits, it may seem like retailers have little room to adjust prices. However, even in such conditions, online stores can still get the most out of a brand’s pricing policy — maximizing both sales and profit margins. The key lies in understanding which specific pricing strategy the manufacturer is using.

In this article, we explore the most common manufacturing pricing strategies and offer actionable advice on how retailers can adapt to each one.

Contents:

• Common Manufacturing Pricing Strategies: What Retailers Should Do
• Cost-Plus Pricing
• Competitive Pricing
• Price Skimming Strategy
• Penetration Pricing
• Value-Based Pricing
• Differentiated or Tiered Pricing
• How Online Stores Can Adapt to Different Manufacturer Pricing Strategies

Common Manufacturing Pricing Strategies: What Retailers Should Do

For manufacturers, pricing is a tool for positioning, competitive strategy, and profit management. For online retailers, on the other hand, it’s a constant balancing act between procurement, customer acquisition, and profitability.

To boost sales while maintaining healthy margins, retailers need to understand the manufacturer’s pricing strategy. This knowledge allows them to adjust their own pricing and marketing in line with market dynamics.

Let’s take a closer look at the key pricing strategies manufacturers use — and what they mean for online stores.

Cost-Plus Pricing

Cost-plus pricing is one of the simplest approaches to pricing: the product’s cost is calculated, and a fixed markup is added. This strategy allows manufacturers to secure a stable profit margin on each unit sold.

Brands with large FMCG portfolios — such as Procter & Gamble and Unilever — often rely on this pricing model.

It is typically used for product categories with a predictable and stable cost structure, such as:

• household chemicals;
• spare parts;
• office supplies;
• kitchenware and home goods.

With this pricing strategy, competitive landscape and demand levels are not considered when setting the price. That means all online retailers receive the product at the same base price, regardless of market conditions or consumer demand. As a result, retailers have little room to adjust prices, so their focus should shift to service quality — making ordering easy, ensuring fast delivery, offering responsive customer support, and maintaining stock availability — as well as to efficient logistics.

Tips for Retailers

• In your niche, there will likely be many sellers offering similar products — and with little room for price flexibility. That’s why it makes sense to invest in improving your website’s usability, implementing chatbots and automation, maintaining high service standards, making the ordering process as smooth as possible, and ensuring fast delivery.
• Try negotiating a wholesale discount with the manufacturer. Even a small percentage can give you greater pricing flexibility and a competitive edge.
• Keep a close eye on your margins. It’s essential for online stores to understand how much they earn from each product sold. Even if all retailers receive the same purchase price, costs like shipping, packaging, and marketing can vary significantly.
• Make sure key products are always in stock. Regularly monitor your competitors’ assortments to avoid situations where popular items are available elsewhere but missing from your own store. The Assortment Analysis report in the Pricer24 platform can help — allowing you to track competitor shelf content in real time and respond quickly to assortment changes.

Competitive Pricing

In this strategy, manufacturers set prices based on competitor pricing — not just product cost, but also market conditions are factored in.

For example, if a competitor lowers their price, the manufacturer or retailer is often forced to respond with their own promotional campaign. A classic example is the smartphone market, where Samsung frequently adjusts its prices in reaction to Xiaomi. Coca-Cola and Pepsi also continually revise pricing in response to each other’s moves.

This strategy is common in the mass market and in categories where consumers are used to comparing prices to find the best deal:

• electronics;
• cosmetics;
• mass-market clothing and footwear, etc.

In such cases, the retailer’s main objective is to stay “in the market” — to offer the kind of price customers expect to see on digital shelves and are willing to pay. Achieving this requires constant monitoring of competitor prices and fast reactions to pricing changes.

Tips for Retailers

Use Pricer24 to price intelligence. The platform enables automatic tracking of thousands of SKUs without the need for manual comparison. All critical points that retailers should focus on are clearly highlighted in intuitive reports and dashboards.

Implement flexible price management and dynamic pricing to quickly respond to changes in competitor pricing on digital shelves. Dynamic pricing tools allow you to adjust prices in real time based on various market factors such as demand, competitor actions, buyer behavior, location, and more.

If you can’t compete on price, compensate with bonuses — free shipping, gifts, or other perks. This creates a sense of value and advantage for the customer.

Price Skimming Strategy

The price skimming strategy involves launching new products at a high price targeted at early adopters, then gradually lowering the price to reach the mass market. Simply put, the manufacturer “skims” the cream off brand fans first, then expands to the rest of the target audience.

The most famous example is Apple, which releases new iPhones at premium prices and gradually reduces them alongside new product launches. Sony uses a similar approach with its PlayStation gaming consoles.

This pricing strategy is not effective for all product groups. It works best for categories such as:

• innovative electronics (smartwatches, smartphones, gadgets for work and home);
• new technologies just entering the market (smart rings for health tracking);
• premium products and limited edition lines;
• products with very high consumer expectations, fueled by viral marketing on Instagram and TikTok (collectible video game editions, beauty products from celebrities like Hailey Bieber, sneakers designed in collaboration with famous influencers, etc.).

To successfully sell such products, retailers must convey novelty, exclusivity, and uniqueness. This is when you appeal to emotions, create hype and excitement, build high expectations, and sell the feeling of “be one of the first owners.”

Tips for Retailers

• Prepare well in advance for new product launches. If the manufacturer announces a release date, the retailer’s active work should start long before it. Leverage the manufacturer’s marketing support: email campaigns, pre-orders, expectation lists, and active social media marketing (SMM).
• Focus on emotional benefits, using psychological triggers such as status, emotion, uniqueness, and innovation to justify the high price.
• Avoid ordering large batches if you don’t know when the manufacturer will lower the price. It’s better to ship goods on demand or in smaller batches.
• As soon as the manufacturer lowers the price, shift your sales strategy to “Now X is available for everyone.” Ramp up product promotion and run promotional campaigns to reach a wider audience and avoid losing sales.

Penetration Pricing

The low-price or penetration strategy involves launching new products at an attractive low price to quickly capture market share and maximize profit at the start. Over time, as the manufacturer attracts the core target segments, the price is increased.

This is one of the most common pricing strategies used by Chinese brands like Xiaomi and Realme, as well as FMCG companies (Unilever, Procter & Gamble) when launching new product lines. It allows market entry through low prices and consumer appeal.

This approach is often applied to products such as:

• Electronics and household appliances in the budget segment;
• Products with low differentiation (entering niches where strong competitors with similar features already exist);
• FMCG products imported into the local market.

Retailers gain a significant advantage — low purchase prices. Usually, there is also high demand at the initial sales stage, so the online store can secure profitability during the “promotional” phase. The risk lies in the fact that after the manufacturer raises the price, sales and profits may decline.

Tips for Retailers

• Turn the launch of a new product, line, or brand into a strong promotional event. Use all available marketing channels to attract customers to your digital shelves and generate interest in the new product offered at a great price.
• If possible, clarify with the manufacturer when the price is expected to increase so you can plan sales volume and sell the batch at the most profitable time for your business.
• Try using a low-cost product as a hook: create bundles, launch promo campaigns, and use this approach to upsell more expensive products.

Value-Based Pricing

This pricing strategy sets the product price not based on costs or market conditions, but on the value the product delivers to the consumer. Unique features, status, emotions, comfort, experience, and a sense of belonging — all these become key arguments in value-based pricing. It’s these feelings that make customers willing to pay a premium.

Brands like Dyson, Tiffany, Patagonia, and others actively use this approach. It is especially relevant for premium products, beauty segment items, unique or craft goods, as well as products that communicate a strong mission (for example, Patagonia’s commitment to protecting the planet).

To successfully implement this sales strategy, online retailers should focus not on the product’s basic characteristics, but on creating an emotional connection — telling stories, building trust, and demonstrating how the product satisfies specific needs and delivers benefits.

Tips for Retailers

• Work with content on your website. Value-based pricing is all about emotions and storytelling. A simple description of a product’s functions or features won’t work. Tell stories about how the product solves problems, meets needs, and improves life — create rich content.
• Study your target audience. To understand the potential value of a product for customers, you first need to know who your customers are. What emotional needs do they want to satisfy? This way, you can create the right brand and product positioning and attract the maximum number of buyers.
• Train your sales team. Managers need to understand how to communicate value. Rational arguments won’t work for products in this category — it’s necessary to quickly read the client’s needs and demonstrate how the product meets them. Therefore, traditional sales scripts will need to be adjusted for successful sales.

Differentiated or Tiered Pricing

This is a pricing strategy used by manufacturers where the same product has different prices depending on various factors: order volume, geography, sales channel, customer category (distributors, retailers, end consumers), as well as additional conditions such as delivery time or availability of cash on delivery.

This pricing policy is common in FMCG, where manufacturers offer different prices for retailers, supermarkets, restaurants, and hotels. Another example is Canon, which sets different prices for printers, copiers, and other equipment depending on whether the buyer is a retail customer or a dealer. This approach is also relevant for software manufacturers, subscription services, and SaaS products.

For retailers, it is important to understand which customer segment visits their online store and how this correlates with their purchase price — whether it is wholesale sales to small or medium-sized businesses or single sales to end consumers.

Tips for Retailers

• Ensure transparent terms of cooperation with the manufacturer. A clear price matrix specifying volumes, prices, and other conditions will help you set the right markup and maintain profitability.
• If your online store handles both wholesale and single-item sales, visually separate prices on the website.
• Consider how pricing will be structured based on order quantities. For example, “from 10 units” — wholesale price, “from 100 units” — individual pricing.

How Online Stores Can Adapt to Different Manufacturer Pricing Strategies

When working with manufacturer pricing strategies, retailers have limited room to maneuver—especially when dealing with large brands that enforce strict pricing policies.

In such cases, there are several possible approaches:

1. Sell at MSRP or higher. Selling at the Manufacturer’s Suggested Retail Price (MSRP) is a safe tactic for online stores and often what the manufacturer expects. This works well in niches where the brand tightly controls positioning and expects all partners to adhere to a unified pricing policy. In return, retailers can usually count on better supply terms and marketing support. In this situation, it’s important to monitor competitors’ compliance with MSRP. Tools like the MAP/MSRP monitoring feature on the Pricer24 platform help quickly detect violations and notify the manufacturer.
2. Engage in dumping. Dumping (selling below cost or market price) is a tempting tactic for fast sales, especially if margin allows lowering prices without losses. However, experience shows dumping is a short-term strategy with long-lasting negative consequences. Sellers may achieve quick results but risk damaging brand relationships, lowering margins, and triggering a price war—one that favors the player with the deepest financial reserves.

Dumping isn’t a pricing strategy but rather a sign that other approaches have failed. If a retailer is forced to dump, it signals serious gaps in brand positioning, service, sales channels, product promotion, and marketing campaigns.

Let’s now explore “legal” and effective ways to collaborate with manufacturers and adjust your pricing policy.

Encouraging Manufacturers to Enforce MSRP

Retailers can maintain competitiveness while strictly adhering to the MSRP by adopting the following approaches:

• Build strategic partnerships with brands: Leverage manufacturer support such as co-branded marketing initiatives, joint promotional campaigns, exclusive offers, and favorable procurement terms.
• Implement continuous market and price monitoring: Keep a close watch on competitors for any signs of price dumping or deviations from the agreed MSRP.
• Take swift action on violations: Report any breaches of the MSRP to the manufacturer or distributor promptly to maintain a level playing field.
• Back your position with robust data analytics: Use detailed market insights to substantiate your pricing strategy and negotiations with partners.

Key recommendation:

Maintain ongoing market surveillance to identify and address any unfair pricing practices, such as dumping or price undercutting, which could undermine brand positioning and market stability.

How the Pricer24 platform helps:

• The Price Comparison Report allows you to see who, when, and how violated the MSRP. If you detect a violation, notify the manufacturer, supporting your claim with a report from Pricer24.
• Automatic email alerts listing offenders and a detailed price change history report serve as strong evidence of unfair competition. This enhances your online store’s reputation as a reliable partner and enables the brand to respond effectively — by contacting the violator, stabilizing the market, and so on.
• If you were forced to lower your price in response to dumping, you will have the best evidence — a price history report. You can prove to the brand that your price reduction was a reaction to the actions of its other partners.

Here is what the dumping report looks like in Pricer24:

How to Balance Brand Requirements and Market Realities

In an ideal world, everyone strictly follows the MSRP. But in reality, there is always someone who drops the price first. What should others do then: stick to the MSRP and lose sales, or actively monitor the pricing policy and track violators?

Recommended Approach

To stay competitive without damaging partnerships with manufacturers, retailers can set a maximum allowable deviation from the MSRP.

This is not dumping, but a defensive strategy to remain competitive if someone lowers the price first in the market. After all, it is the category manager’s responsibility to act in the business’s best interest while maintaining partnership principles with the brand.

This approach allows you to:

• Consider market dynamics — prices are reduced only after detecting a violation of the MSRP by a competitor;
• Control the pricing policy and quickly respond to competitors’ actions within the allowable deviation limits;
• Stay within the brand partnership terms — a transparent pricing logic can be clearly communicated both to the brand and your team.

How Pricer24 Helps

Pricer24 enables you to:

• Set individual repricing rules for each category, brand, or SKU;
• Take into account competitor prices in e-commerce, MSRP, and predefined deviation limits;
• Automatically update prices based on competitor data and configured rules.

Example Rule:

“If at least two prices on the market are below MSRP, set the lowest price within the maximum allowable deviation from MSRP. Otherwise, set the MSRP.”

You can set different deviation limits for each product category.

For the brand, this approach is logical and well-founded. You do not lower prices first — so you are not the initiator of a violation. You control the process without reducing margins beyond acceptable levels. Every price change can be justified with objective market data from Pricer24 analytics.

How to Quickly Adjust Prices to Avoid Margin Loss

One of the key tasks for retailers is automating the price adjustment process to avoid margin losses when other online stores start raising their prices. This allows timely response to market changes and ensures stable profitability.

Doing this manually is inefficient: it’s difficult to cover all assortment items, there is a risk of human error, and the process is time-consuming as prices constantly change. Automate this process with Pricer24. You can set rules that ensure timely price increases when competitors raise theirs.

Here’s how Pricer24 addresses this issue:

• The platform continuously monitors the e-commerce market and tracks competitors’ prices in real time.
• When a competitor’s product price increases, Pricer24 automatically raises your price according to predefined rules.

This approach helps avoid margin losses by keeping prices at recommended levels without the need for constant manual monitoring and adjustments.