PPN #28: Multichannel pricing 101: How to maximize profitability across channels

Hey there 👋

This week at Product & Prosper, we’ve been having tons of client conversations around pricing—and it’s reminded us: pricing is complicated. What once worked on a hand-drawn label at a farmer’s market simply won’t cut it as you evolve your channel strategy...and though it’s tempting to just look to competitor pricing, what works for someone else will rarely work for you.

So, how should you be thinking about pricing across channels? Today, we’re diving in →

The Multi-Channel Pricing Puzzle

I see this all the time: brands gain awesome traction direct-to-consumer, start making headway on Amazon, and suddenly retail opportunities start knocking. Exciting, right?

But then come the tough questions:

• Should you maintain the same price across all channels?

• How do you account for different costs in each channel?

• What happens when a marketplace undercuts your retail price?

• How do you protect your margins with distributors involved?

This is where many brands can often costly mistakes that damage both their margins and their channel relationships. Let's break down how to avoid those pitfalls.

The Problems with Inconsistent Pricing

Before we jump into solutions, let's understand why channel pricing gets so messy:

The retailer-brand tension: Retailers want the lowest possible price point for their customers (while maintaining their margin), but you need to make money too.

The dreaded price war: When your product is priced differently across channels, you risk triggering a downward spiral that erodes your margins.

The pricing policy challenge: Without clear pricing guidelines for your retail partners, you risk inconsistent consumer experiences and channel conflict.

The distribution dilemma: Each added middleman (distributors, brokers, etc.) takes a cut, making it harder to maintain consistent end pricing.

3 Principles for Multi-Channel Pricing Success

Here's my framework for pricing that keeps your channels, customers, and margins happy:

1. Start with COGS + Desired Margins

This might sound obvious, but many brands work backwards from "what competitors charge" rather than what they need to be profitable.

Your Multi-Channel Pricing Formula should be:

Step 1: Calculate your true COGS (including packaging, labor, overhead)
Step 2: Add your desired profit margin (aim for 50%+ gross margin)
Step 3: Factor in channel-specific costs (fulfillment, commission, trade spend)
Step 4: Test market sensitivity

When you understand your true costs and build pricing from there, you create a solid foundation for profitability across all channels.

FREE RESOURCE ALERT! Not sure how to calculate your COGS or proper retail pricing? We have a free Retail Pricing Calculator that helps you check if your current wholesale, retail, and distributor prices make sense. It shows you how to set them up for healthy profits across all your sales channels.

2. Maintain Price Integrity Across Channels

Here's the golden rule: Your DTC price should be the anchor, and it should never be lower than your retail price.

Why? Because undercutting your retail partners is the fastest way to lose them. They're investing in your product, giving you valuable shelf space, and they expect you not to compete against them on price.

The ideal channel pricing hierarchy:

• DTC price: Highest (or equal to retail MSRP)

• Marketplace price: Equal to or slightly below DTC

• Retail MSRP: At or slightly below DTC price

• Wholesale price: ~50% of MSRP

• Distributor price: ~30% below wholesale price

This structure incentivizes retail partners while protecting your margins.

3. Build Channel-Specific Value Instead of Competing on Price

Rather than price-cutting across channels, add channel-specific value:

For DTC:

• Exclusive product bundles

• Subscription options with added benefits

• Early access to new products

• Brand community perks

For Marketplaces:

• Multi-packs optimized for the platform

• Platform-specific promotions

• Strategic use of coupons vs. permanent price drops

For Retail:

• In-store sampling and promotion support

• Retail-exclusive sizes

• Strong merchandising support

By building unique value instead of competing on price, you can maintain your margins while still offering compelling reasons to buy on each channel.

The Truth About Price Inconsistency

Inconsistent pricing doesn't just annoy your retail partners—it can seriously impact your overall sales performance.

When your price fluctuates wildly from channel to channel, you train your customers to hunt for the best deal rather than paying your intended price. This leads to lower full-price conversion rates and makes it harder to build sustainable margins.

Plus, marketplace algorithms and retail buyers both tend to reward stability and consistency. Brands with wild price swings often find themselves struggling with visibility and losing retailer confidence.

Your Multi-Channel Pricing Audit

Ready to strengthen your pricing strategy? Ask yourself these questions:

1. Do you have a clear MSRP that works across all channels?

2. Is your pricing structure based on proper margin calculations?

3. Have you mapped out channel-specific costs?

4. Do you have formal pricing guidelines for retail partners?

5. Are you monitoring price consistency across channels?

6. Do you have a strategy for dealing with pricing challenges?

7. Are you creating channel-specific value beyond price?

If you answered "no" to any of these, it's time to revisit your pricing strategy.

The Bottom Line

Price consistency across channels isn't just about keeping retailers happy—it's about building a sustainable business. Each channel should reinforce your brand's value proposition rather than undermining it through price conflicts.

Remember: The strongest brands don't compete on price; they compete on value. When your pricing strategy aligns across channels, you create a foundation for long-term growth without sacrificing profitability.

Until next time,

Caroline

P.S. Have a specific pricing challenge in your business? Hit reply and let me know—we might feature it in an upcoming newsletter!

Looking for feedback on your pricing? Product & Prosper’s Sampling Program is the perfect place to start. Get candid, actionable feedback from up to 400 industry vets on your pricing, packaging, product, and so much more.