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CH06-EX01. Cases Where Channel Structure Changes Price and Margin

  • Related Chapter: CH06 Designing Cost, Price, and Revenue Model
  • Related MN: MN06 Cost, Price, and Revenue Model
  • Related KM: KM048-channel-pricing-economics.md

What This Case Illustrates

These are three cases showing how, even under the same principle that “price does not move alone,” different channels — B2C direct/D2C, B2B bulk orders, and B2G public procurement — lead to different price and margin structures. All three cases show that price is a strategic variable continually revised by channel, volume, and transaction structure.

Case 1. B2C — Vegan Bean-to-Bar Chocolate: Sustaining a High Cost Structure Through D2C

Manufacturing cost was about 56% of the actual sale price, and SG&A was around 15% — a high cost structure. To secure an adequate margin, the company chose direct-to-consumer (D2C) online sales as its core channel, reducing distribution stages, and used part of the gap between the consumer price and the actual sale price for discounts, free gifts, and other customer relationship management.

Case 2. B2B — Cosmetics Containers: Volume Changes Price

The official supply price differed from the actual sale price based on large-volume orders. The company designed pricing so that the unit price fell while still maintaining a margin of about 25% once an order of around 200,000 units was secured, with economies of scale from mass production as the key premise. It cut intermediate distribution stages and pitched directly to cosmetics manufacturers to lower fees.

Case 3. B2G — Groundwater Level Measuring Equipment: Public Procurement’s Transaction Structure Enters the Price

The company set a price band between the consumer price and the actual sale price. This was to account for the discounts, commissions, consignment sales fees, and the possibility of future supply-price negotiations with distribution partners that arise in the public procurement process. At the same time, it set direct proposal sales to local governments as its basic channel.

Common Implication

What the three cases have in common is that price keeps being revised by other elements of the business model (customer, channel, production capacity, order volume, relationship cost, partners). It is appropriate to view price not as a fixed number but as a strategic variable to be examined as the business structure changes.