Prospects sometimes simply ask, “What is the price of your coconut oil?” The answer is not easy. It is not just the sum of raw material cost, processing cost, and profit margin. It is a lot more complex, too. In addition to coconut oil cost, it involves supplying cost, even if it is bought directly from our oil mill. Supplying cost depends on packing, order quantity, delivery place, delivery channel, and Taxes.
MRP (Maximum Retail Price)
This is the maximum price at which consumers should get the product. We face a lot of pressure from our retailers and distributors to keep MRP high so that they can sell at a high price or sometimes sell at a slight discount to MRP even after keeping a high margin. However, we tend to keep MRP low despite the adversities of not getting their cooperation. Cocoguru, being a brand, looks to satisfy the consumers; intermediates are a means to satisfy our consumers.
Wholesale Price
This is the price at which a wholesaler/retailer gets the products delivered to his godown through Van Sales or Distributors. This is the main price at which competition happens as retailers threaten to pick brands based on the lowest price here. However, it is quite amateurish to take it too seriously as retailers are forced to sell the brand preferred by consumers.
The company divides the general trade market into 2 regions
Coastal Karnataka
This includes Udupi, Dakshina Kannada and Kasaragod districts. They are characterised by the following
- Coconut Oil is fast moving
- Used as edible oil
- Flexible Pouches find major demand
- There are many local oil mills
- Cost of marketing and distribution is low
Rest of India
- Coconut Oil is used only as hair oil
- Per capita consumption of coconut oil is low
- HDPE Bottles and Cans find more demand
- Cost of marketing and distribution is higher
- Accordingly, different wholesale and retail prices are set there.
eCommerce Portals
Coconut oil sold through e-commerce portals involves payment gateway charges, marketplace fees/commissions, additional packaging, courier shipping costs and associated taxes. So, the price here will be much higher than that in offline retail sales. But consumers get more assortment, all time availability, more information and door delivery. The prices drop drastically for higher quantities like 2 litres, 5 kg and 10 litres packs.
Price Variation
The price of Cocoguru coconut oil depends mainly on the milling copra market price. The milling copra market price changes multiple times a day. However, our prices are changed weekly. So, any price quoted is valid for a week only. Once changed, a new price list is released. The wholesale price of coconut oil was as low as ₹100 per litre in 2016 and as high as ₹240 in 2018. So, that gives the range of price fluctuation.
Taxes
Coconut Oil is taxed at 5% GST. It is included in the pricing given for the Cocoguru brand but excluded or charged extra for others.
Business Pricing
Coconut oil is ultimately consumed by consumers; however, many businesses play a role in delivering it to consumers. The various businesses are oil mills, repackers, copackers, distributors, wholesalers, retailers, hotels, caterers, soap manufacturers, value-added oil makers, and so on. Out of these Distributors, Wholesalers and Retailers are part of the Cocoguru brand’s supply chain. Others have business-to-business pricing where the price of loose oil, ex-factory, is offered, and all other costs like packing, forwarding, transport and taxes are extra. Tax on oil is at 5% GST, and other components are at 18% GST.
Competition
Generally, the price of a product depends on competition. However, Cocoguru coconut oil prices don’t depend on competition. There are many competing parameters, and the price is just one among them, depending on the others. The different competitive parameters are the raw material used, processing method, packing, supply, service, speed of delivery and trust. The tactic of saying your competitor has offered to me at this price won’t work with us. If price is the only factor in your buying decision, we probably won’t be able to satisfy you. However, if all the aspects are considered, we can offer a very good
