Finished formulations prices should be high enough to cover all costs with profits and low enough to increase sale volumes.
Finished formulation pricing challenge
Every formulating manufacturer faces their own challenges when it comes to pricing their products: competition, overall raw ingredients costs, entirety of production costs, evolving market demand, biological resistance in end consumers etc. make it difficult to estimate a fair market price for combination products.
I truly feel that considering the complexity and the nature of commodities that every Nutra or Pharma manufacturer deals in, the end commercial value should be to maximize margins and gain higher profits from each manufactured batch, some of my industry colleagues feel that increased sales volume ensures increased profits, however I beg to differ at times depending upon factors such as demand & supply along with perishability and shelf life constrains. What I do believe regarding higher margins in finished formulations is the combination of the following and only their proper proportions with respect to each other will achieve maximum desired gains, and these are:
- Final manufacturing costs.
- Selling price.
- Unit sale volumes.
Finishes formulations trends differ from region to region
There can be many variables associated with deducing the final cost of the product, manufacturers must understand how they behave. Remember what sells in Chennai for 100/- rupees might be criminally insane for New Delhi market.
Formulating Manufacturing companies should understand that their manufacturing units are making profit if their product selling prices cover all their costs and leave them with enough profits in capital to kick start their next batch of production and that their product selling prices should also be low enough to maintain their market share, their competitors have trouble in meeting such prices and that it should attract customers and build sales volumes year after year.
Finished formulations and their core relationship with end consumer
With nutraceutical and pharmaceutical or Ayurveda & herbal commodities there is always a psychological factor associated with the brand, if an end consumer instantly FEELS good after consuming the product, that specific consumer will remember then the name of the brand rather that go on a hunt to decipher more potent similar ingredient in the market, that consumer will stick to your product and will not necessarily factor in price while purchasing, hence in such a case price is driven by the efficacy and high quality of the finished formulation.
Finished formulation directly deliver your product promise and consumer care aspiration
However your profit margins in such case should not attract ruthless competitors to enter the market within the time frame it needs to build on your market share.
If you are a supplement manufacturer your market survey should be precise by considering demographics of where you supply your commodity at, for instance every 200-300 kilometers traditional nutritional diet changes and hence your target consumers should be evaluated accurately, not gaining recurring supplement sales in certain areas which are diet rich for your supplied supplement is very common and directly impacts your profits as returning sales might be low.
Finished formulation and predictive pricing strategy
Predictive pricing strategy can be used to effectively optimize prices for your formulation on the basis of what is likely to happen in the future, for example if you are a diabetics solution provider in form of medication then you know that be sheer volume of number of patients in india selling in India will generate sales due to the volume of the market in itself.
Manufacturer can also predict the age bracket of their potential consumers and build their brand accordingly, hence profits could be analyzed before they are physically realized in your books.
Does your supplier understand and takes this into consideration? Or the company that you purchase and source your ingredients from is just another TRADER?
Finished formulation third party manufacturing
At Rass Biosolution Private Limited we profile and understand these criteria’s when a buyer is procuring a raw ingredient or finished formulation from us (We think like our manufacturer).
We understand the value of the finished formulation that our buyer will prepare in the near future there by understanding the true VALUE of the product upfront which traditional suppliers cannot understand, as a supplier we totally understand the procuring price for a manufacturer will bring about an increased efficiency and end stability interns of recurring demand from their customer.
For discussing pricing strategies & procuring all types of Nutraceutical and Pharmaceutical Ingredients you can Watsapp me at – 8090113353.
Ruchi Khanna
Head – Sales and Procurement
Rass Biosolution Private Limited
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