One of the most difficult challenges dispensaries have to deal with is deciding exactly how to price their various cannabis products. Marijuana pricing strategy is influenced by a huge variety of factors; local population and demographics, competition of both black and white market cannabis providers, the relative potency and appeal of the various locally available strains, and the value your specific dispensary is able to add to the customer experience are all hugely important factors in determining overall pricing.
The situation is further complicated by the growing importance of edibles and concentrates in the legal cannabis market, many of which are basically brand new products from a retail perspective, with little to no track record to help evaluate potential future performance or prices.Below are a few steps to help you successfully navigate the challenge of maximizing cannabis retail profit with a pricing strategy.
1. Understand Your Competition & Key Demographic
A great place to start when deciding your marijuana pricing strategy is a thorough analysis of the local competition. The basic laws of supply and demand should largely hold true in most markets; if your product is the most expensive choice, and competing substitutes are easily or cheaply available, expect low sales until you adjust your pricing accordingly.
Location can also play a huge part in the prices you charge, due to simple demographic variance between different locations – high end concentrates, edibles, and potent flower strains should command higher pricing, and sell better in more affluent areas.
2. Develop Unique Selling Propositions (USPs) & Add Value
Another important consideration when deciding how to price your marijuana product is the value you add to the transaction for the customer. Do all you can to develop specific USPs (unique selling propositions), and you expect to raise prices as a result.
Perhaps you invest in special budtender training that helps them identify the best strains for individual clients, providing them superior treatment, a lower out of pocket cost, or both. Alternatively, explore expanded hours of operation, delivery service, or a wider product and strain selection – every characteristic that differentiates you.
3. Build Your Brand & Improve Customer Experience
Marijuana pricing strategy can also be influenced by the customer experience you provide to your clients. For example, doing all you can to make the purchase easy for them – by investing in a high quality cannabis dispensary POS system for your dispensary, for example – will result in happy repeat customers.
Create a cannabis loyalty program that encourages people to try different product so you can create new markets for edibles and concentrates which may not currently exist in your area. We also suggest providing an aesthetic and array of products that best appeals to the target audience in your area. Any of these techniques can assist in maximizing cannabis retail profit with a pricing strategy.
Finally, you may be surprised at the volume and quality of information available online related to cannabis pricing. Here's an example with detailed specifics about price per gram data in Washington state, during spring of 2017. Similar reports should be available that cover your area and provide pricing data specific to your geographic location.
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