Worksheet · B2C via trade: Brand Pricing Health Check
Write the shelf-back sum for your top ten products
Cost-plus builds a price up from the factory and hopes the shelf price lands somewhere sensible. Shelf-back starts at the price the shopper sees and works back to the list. This sheet writes that sum for your top ten products, then uses it to test the next terms request. It builds the Competent step of the check:
List price is worked back from the target shelf price, with the retailer's margin, trade terms and our margin each stated.
Step 1. The sum for each product
Take GST out where the product carries it. The net-net price is what the retailer pays after all terms.
- Net-net price = shelf price before GST × (1 − retailer margin)
- List price = net-net price ÷ (1 − trade terms as a share of list)
- Our margin = (net-net price − our cost) ÷ net-net price
| Product | Target shelf price | Before GST | Retailer margin (%) | Net-net price | Trade terms (% of list) | List price | Our cost per unit | Our margin (%) |
|---|---|---|---|---|---|---|---|---|
| e.g. Sauce, 500g | $5.50 | $5.00 | 35% | $3.25 | 20% | $4.06 | $2.20 | 32% |
The target shelf price comes from the shelf, not from cost. The consumer-price-points sheet sets it.
Step 2. Test the next terms request
Run each request through the sum before you answer it.
| Request | Product | Extra terms (% of list) | Net-net price after | Retailer margin if the shelf price holds | Shelf price if the retailer passes it all on | Our margin after | Accept, trade or decline |
|---|---|---|---|---|---|---|---|
| e.g. 2% more for growth | Sauce, 500g | 2% | $3.17 | 37% | $5.36 | 31% | Trade for an extra facing |
Most terms requests either lift the retailer's margin or lower the shelf price. Know which before you agree.
Step 3. What the recommended retail price can and cannot do
- Each recommended retail price matches the target shelf price in Step 1.
- Our papers call it a recommendation, never a required price.
- No one on our side asks a retailer to sell at or above a set price.
Australian law lets a supplier recommend a retail price but bars it from enforcing one. Ask a lawyer where a case is unclear.
Done when: each of your top ten products has a list price worked back from its target shelf price. The retailer's margin, trade terms and your margin are each written down.
Adapted from our own pricing diagnostic (PSP, 2011).
From the B2C via trade: Brand Pricing Health Check. Your report links the sheet for each of its moves.