B2B Sales Jan 23, 2019

4 Helpful Pricing Strategies To Maximize Profit for Your Cannabis Brand

One strategy does not fit all. Find what’s best for your cannabis business.

One of the biggest questions cannabis brands face is how to price their products. There are a variety of different pricing strategies for wholesale businesses, and finding what works for you can take time, trial, and error.

The goal of pricing strategies is simple: optimize your margins and grow your business. When determining a pricing strategy for your cannabis brand, consider how much revenue you need to generate to cover your operation costs, but still profit and grow your business.

How do you determine your price point?

Start with the industry average. LeafLink released the first Wholesale Cannabis Pricing Guide in December 2018, which breaks down the average wholesale price for five of the most popular product categories in the cannabis industry across eight states. Once you understand the industry average, you can use that as a jumping off point to price intelligently.

Pricing below average doesn’t have to mean missing out on profit

You may be apprehensive to price your products below the industry average. If your price is too low, you could risk losing out on profit. However, there are some tactics that could actually help grow your customer base and generate higher profits overall.

Bundle pricing:

Sell multiple products at a lower rate than buyers would face if they purchased every item individually. Bundling can be an effective way of moving unsold inventory with a shorter shelf life, and increase your brand’s value in the eyes of retailers. Bundle pricing makes retailers feel like they’re getting more bang for their buck. It can also be an effective way to introduce a new line or product to existing buyers.


Start your prices low and gain market share before competitors can catch up. Penetration pricing can encourage buyers to try new products and expand your market share. It can also help establish loyal buyers who will stick with your product despite price fluctuations, as long as the quality stays consistent.

In Washington, based on findings from the 2018 Wholesale Cannabis Pricing Guide, purchasing managers preferred affordable edible products. Seventy-eight percent of edibles sold were priced below average, indicating that a low price is necessary to maintain market share and attract loyal buyers. Successful Washington brands make up for lower prices with overall volume sold.

Pricing above average doesn’t always drive buyers away

Pricing above the industry average can set you apart from the competition and enhance your brand’s perception. There are, of course, some risks if you don’t have an effective strategy. If your prices are too high you may deter buyers, leading them to explore competitors’ offerings. But high prices can help you establish prestige for your brand and set yourself apart from competitors crowding the lower end of the market. Here are two common strategies that can be effective when executed correctly.


Set prices high when introducing a new, unique product and gradually decrease rates as competitors appear on the market. This tactic is the opposite of penetration. Skimming you maximize on early adopters before lowering rates to account for more price-sensitive buyers.

Premium Pricing:

Price above the competition and indicate your product has an added value, is better quality, or is more exclusive than other products on the market. Higher prices can flag to buyers that your product has a certain value to warrant the price tag. In order for premium pricing to work, your product and brand must maintain the standard your buyer is expecting.

Contrary to edible pricing trends in Washington mentioned above, in California, Edibles were one product category where premium-priced products garnered 79% of orders. This purchasing pattern reveals California purchasing managers are willing to pay a premium price to get a high-value product, likely indicating consumer demand for superior edibles.

4 key factors to consider when setting your pricing strategy

Don’t forget to consider these things when determining your brand’s price point.

Know your customer:

Are you targeting budget-sensitive buyers? How important is exclusivity? Understanding who you are selling to can help you determine which tactic to deploy. It can take time and observation to find a price that captures your audience, so be prepared to measure and adjust when needed.

Know your costs:

In order to keep your doors open, you need to generate enough revenue to cover your production and overhead costs. Keep track of these expenses and factor in the desired profit. This exercise will tell you how much you need to sell at what price to hit your target. It’s important to revisit these costs on a regular cadence as your team and operations expand to make sure your price point is still serving you.

Know your competition:

Keep your finger on what the competition is doing, including both direct and indirect competitors. Even if your brand only produces edibles, it’s important to have a sense of pricing in other product categories and the industry at large. If prices for other products are rising, buyers may begin looking at other product categories to provide cheaper alternatives.

Additionally, if you’re looking to expand to a new state, it’s important to be aware of that state’s industry average. For example, the average price for concentrates in California is $24.94, but in Maryland, the average price for concentrates is $37.67. If a California brand was looking to expand into Maryland, this distinction is essential to understand in order to avoid under-valuing your product in a new market.

Know where the market is headed:

Keep your eye out for new brands entering the market. As more companies are expanding into multi-state operations, a new brand with a national following can enter your state at any moment. Stay on top of industry news to anticipate changes that may have an effect on your sales.

It’s also important to stay on top of your own sales performance. On LeafLink, you can see sales volume over time broken down by each product on your Sales Dashboard. Use this data see how customers are responding to your price and determine if there is an opportunity to adjust.

How do you know if your pricing strategy is working for you?

It can be easy to set a fixed price for your products and just let things run. However one of the best ways to find a pricing strategy that works for you is through trial and error. Experiment with your price point, and observe sales volume immediately after the change. If the price is too high, buyers will react pretty quickly, and you may need to change your strategy. However, you may find that the quality and value of your product is enough to keep driving sales, even at a higher price tag.

Learn more about product pricing in your state by downloading the 2018 Wholesale Cannabis Pricing Guide here, and take the first step toward finding a pricing strategy that works for your business.

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