Operating in the HoReCa equipment supply industry, you know one thing is true: pricing here is complex.
You must comply with the manufacturer-imposed restrictions, be it the varying minimum advertised price (MAP) or resale price maintenance (RPM).
Delivering cross-border, you must deal with currency exchanges, rate fluctuations, import duties, fees.
Then, contract-driven updates as well as adjustments per season and the ever-changing demand-supply curve draw your attention from strategic business operations.
This article is about eCommerce customized pricing that allows you to tackle these and other challenges and generate extra revenue streams. You’ll get to know:
- What custom pricing is and how exactly it can benefit your HoReCa equipment supply business
- How to balance between customized pricing strategy and the manufacturer-imposed as well as legal requirements
- What the exact cases of using custom pricing in the HoReCa supply industry are and how GoMage can help you implement those
Key Pricing Challenges for HoReCa Equipment Suppliers
Along with typical business struggles, HoReCa equipment suppliers often face the industry-specific ones when it comes down to pricing:
- Complex pricing & discounts management
HoReCa suppliers have to process bulk orders and manage discounts for them. Plus, you need to adjust to season-driven fluctuations, and manage pricing obligations under long-term contracts.
- Diverse customer needs
High-end restaurants and cozy family cafes have different needs. To keep everyone satisfied, you have to reflect these differences in pricing strategies.
- Changing market conditions
Dependence on manufacturers’ supply and fluctuating demand from the HoReCa industry calls for a customized pricing approach with real time updates.
- Product complexities
HoReCa businesses often need customized equipment which must be priced specifically. Additionally, equipment links to services like maintenance, training, or installation making total pricing complicated.
- Regulatory restrictions
New environmental or health laws in certain states can impact equipment prices, requiring constant price adjustments.
- Technological implementation
Large HoReCa chains often need to process payments through their enterprise planning systems (EPS), which adds tech challenges to payment processes.
- Need for flexible payment options
HoReCa businesses also expect multiple options for payment such as installment plans, leasing, or credit opportunities. Plus, suppliers should provide diverse payment options—from bank transfers and credit cards to mobile payments—to accommodate all businesses.
- Scalability challenges
Expanding geographically, you might need to adjust pricing to comply with the local laws as well as reflect customs fees and currency exchange rates.
How eCommerce Customized Pricing May Fix Them?
In a nutshell, customized pricing allows your eCommerce store to adjust prices based on certain factors you define. Prices may change depending on a client or changes in competitors’ pricing strategies. Manufacturers’ agreements as well as supply-demand changes, and many other factors often shape them to the core.
Here are just a few examples of how you can address HoReCa supply challenges with customized pricing:
- Flexible discounting
Adjust discounts based on the business type of your client (chain or local, for instance), customer loyalty, or quantity of equipment ordered.
- Real-time market response
Dynamically adapt prices to seasonal shifts, manage long-term contract obligations, and respond to competitor pricing updates.
- Localized pricing
Adjust prices according to customer location to comply with manufacturers’ restrictions and local environmental or health regulations.
- Service integration
Easily incorporate the cost of services like maintenance, installation, and training into the total product pricing.
- AI-driven product descriptions
Leverage AI to create rich product descriptions for premium items (or any others), educating customers on their value and boosting sales.
- Various payment options
Provide multiple payment methods (bank transfers, cards, mobile payments) and plans (credits, installment options).
- Predictive analytics
Leverage algorithms to anticipate demand and supply changes to proactively adjust pricing.
- Cross-border pricing automation
Automate cost calculations for international trade, including currency exchange rates, transaction fees, and delivery costs.
Manufacturers’ Policies, Agreements, and Laws that Impact Pricing in the HoReCa Supply Industry
Carrying on, the HoReCa equipment supply industry faces heavy regulation due to various manufacturer-imposed policies and legal requirements, including:
- Minimum Advertised Prices (MAPs) set by manufacturers to prevent advertising their products below a certain level. This encourages retailers to compete based on service, product knowledge, and added value rather than just price. Enforcing MAPs also helps brands maintain a premium image by avoiding overly discounted or “cheap” pricing.
- Resale Price Maintenance (RPM). Similar to MAPs, but here manufacturers impose a minimum or fixed price for selling, not just advertising, their products.
- Unilateral pricing policies (UPP) set a minimum price for sales, which is not binding for retailers. Yet, manufacturers may stop supplying products to retailers who don’t comply.
- Geographical restrictions: pricing may vary by location due to manufacturers’ policies and legal requirements. The rationale behind this is to adjust prices to regional differences, avoid price discrimination, and protect domestic markets.
- Service-level agreements (SLAs) that ensure the pricing covers the costs of meeting SLAs for delivery, maintenance, and support services.
- Anti-dumping laws that prevent retailers from pricing foreign-made equipment lower than domestic products. This keeps competition fair.
Following all these policies and regulations is critical for preserving brand health, promoting competition, protecting the domestic market and benefiting the customer. In case of non-compliance the consequences may include all kinds of penalties, including purchase or sale freezes, fines, or lawsuits.
Cases for Balancing Restrictions and Customized Pricing in HoReCa
The mentioned restrictions and regulations place a huge load on HoReCa equipment suppliers. The good news is that there are solutions to tackle these limitations and succeed. Many of them are tech-powered, helping enable customized pricing and address MAPs, RPMs, UPP policies, legal, and geo-based or contractual restrictions. They do balance customization with the need to stay compliant with all the policies and regulations.
Here are these solutions along with the relevant cases GoMage has addressed first-hand:
- Prices reveal upon login. Ask customers to log in to see discounted prices. This Magento 2 extension encourages registration and expands your customer base. For non-registered users, you can enable a “Contact for Quote” button. It can be customized to request customer information before displaying prices.
We helped one of the largest restaurant equipment suppliers in the US meet various manufacturers’ requirements. Each of them had unique, constantly changing pricing rules. We created a separate module integrated with Magento’s native pricing functionality. Outcome: the client now can adjust products according to each vendor’s requirements and update the front end on both desktop and mobile versions.
- Revealing discounts after clicking Add-to-Cart. This strategy works well as it doesn’t require a login, which might distract some customers. Magento 2 supports configurable products. It allows customers to select options like size and color after adding the base product to the cart, encouraging them to complete this step.
- Hide prices or restrict price view. It’s great for managing price visibility for different customer groups. It also works for encouraging registration before viewing prices. While it may seem counterintuitive, this approach is normal for HoReCa where buyers often send a request for detailed pricing. For example, you can develop a solution to show different prices based on location. Wherever a customer from a specific state clicks a “click for info” or “chat for info” link, a chat window opens instead of a price. This both prevents bots from detecting price differences and ensures compliance with MAP policies.
- Offer exclusive products or services to registered users. Use Magento 2 Private Sales and Events feature to create secret sales or product releases available only to certain customer groups.
- Automated pricing updates following changes in MAP policies and laws. Detected changes will automatically appear in your listed prices allowing you to reduce the risk of non-compliance.
- Geo-based pricing strategies to adjust prices per users’ locations. We implemented this solution for the client who operated in various locations and needed complex customized pricing functionality. The challenge also involved dealing with Cloudflare’s cache. It initially cached the results of the first user and displayed the same results to all, regardless of location. We stepped in and developed a dynamic pricing system that adjusted based on geo differences. Now, every user sees accurate, location-specific prices, ensuring fairness and compliance.
- Flexible pricing strategies for integrating services or related equipment into the total payment. We’ve enabled it for IceMachinesPlus, a large kitchen equipment website, who needed a flexible price-output system to comply with MAPs. We developed a customized module that displayed prices based on factors like user type, output method, and product brand. Then we integrated this functionality with Magento’s native features, ensuring no conflicts and smooth front-end display changes.
All these methods, beyond the clear benefits of increasing conversions, sales, and income, help you both stay competitive and comply with regulations. Using them will make your underneath prices undetectable for competitors’ price-monitoring software. Similarly, manufacturers’ bots won’t identify any violations since you’ll be advertising products according to MAP policies.
Overall, customized pricing is an essential tool for HoReCa equipment suppliers to address pricing challenges while following manufacturer policies and legal requirements. By using it, they can streamline operations, enhance customer relationships, boost sales, and increase revenue in this highly regulated industry.
Partnering with experienced providers can help you effectively implement custom pricing to meet their unique business needs. If you are willing to get more info on how custom pricing can enhance your business – jump on a quick call with us. Or – drop a note if you have a particular question. We’ll delicately approach your case and develop a roadmap letting you project how you can use this technology and what your gains might be.
eCommerce Customized Pricing for HoReCa Suppliers: Key takeaways
Summing up, custom pricing benefits HoReCa businesses in 5 key areas:
- Addressing industry-specific challenges, including over-regulation. Customized pricing solutions help HoReCa equipment suppliers stay compliant while having all the freedom and flexibility in pricing.
- Enhanced customer experience. Offering discounts, extra services, and competitive pricing caters to the diverse needs of HoReCa businesses. This personalized approach boosts customer loyalty.
- Pricing adaptation algorithms. Custom pricing allows for real-time adaptation of price as seasons change or supply-demand curve alters.
- Managing product complexities. Some equipment needs extra services or a richer explanation of its value. Custom pricing allows to incorporate those, making equipment presentation more attractive and engaging.
- Geo-based adjustments. With custom pricing, you can modify prices based on users’ locations, ensuring compliance with local laws, MAPs, and cross-border trade regulations.
