Which industries use velocity pricing?
Velocity pricing relies on knowing, or being able to make a very educated guess about the total volume of sales that a given product does across an industry. For this reason, it is a strategy that works best for companies that sell high-volume products which can be reasonably grouped into categories for evaluation. It is used mostly by companies that sell thousands of products or more, though some companies with a smaller product portfolio have adopted it as well. Companies with a small number of products, or with a one-off or very niche products will not have as much success with the method.
Because of these realities, the companies that do the best with velocity pricing tend to be distributors. They have a catalog of high-volume products that are all easily classifiable. They also have their own in-house data on how all of these various product categories sell. Although the primary users of velocity pricing are distributors, the model has seen some adoption among manufacturers as well. It works equally well for firms that manufacture intangible items as it does for those that manufacture tangible items.
Below is just a small sampling of the types of industry that use velocity pricing
These are large distributors that make parts for OEMs and repair shops that operate on a variety of different products around the country.
Office supply distributors
In addition to office supply stores, these distributors sell directly to large companies that are outfitting huge office complexes and various contractors that are hired to do the same.
There are only a few semiconductor fabricators in the world. These companies handle a massive amount of products that represent the bulk of semiconductors used by the world's largest technology companies.