Cannabis industry reports

Price Matters: a Look at Average Item Price Data

January 17, 2020

Executive Summary

While no store can ever sell a product for less than it paid at wholesale, there aren’t many rules or regulations governing retail prices beyond that. Thus, prices vary quite a bit between stores, which provides some very interesting data. Consumers are clearly shopping around.

This report looks at price variance data and compares it across segments and categories, giving us a good idea of what types of things perform best for promotions and specials, as well as what consumers might be willing to pay a premium for. We’ve also compared current year data with data from 2016, to give you an idea of how price variance has evolved over time. As might be suspected, given the market’s continued maturation, the percentage of items sold outside of the average price range (99-101% of average price), has increased from 2016 to 2017. Finally, we’ve pulled out snapshots of four individual products, to provide a more specific example of price variation.

This data should prove useful for those looking to understand how much consumers are willing to pay for various products in the cannabis market, and will be especially useful to retailers looking to craft precisely targeted promotions. However, it should also be interesting to anyone curious about what’s going on with the cannabis market, as it provides proof that, contrary to popular belief, potency numbers aren’t the only things consumers base their purchasing decisions on. Clearly, if price can vary so much across a single item, factors far beyond just simple “bang for your buck” are coming into play.

Methodology

Data for this report comes from real-time sales reporting by participating Washington State cannabis retailers via their point-of-sale systems, which are linked up with Headset’s business analytics software. This report is based on data collected in the state of Washington from June 2017 and June 2016. That data is cross-referenced with our catalog of over 50,000 products to provide detailed information on market trends.

Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

Categories

Different categories have different amounts of price variance. The graph below shows Edibles, Capsules, and Beverages with just over 50% of the units sold inside a range of +/- 10% of the average price, while Concentrates, Flower, and Pre-Roll seem to have the least price variance with only about ¾ of their unit sales within +/- 10% of the average price. This could be because extracted oils and flower products are more popular, and are less likely to be offered as specials, whereas consumables like Edibles, Capsules, and Beverages might require more price breaks to get customers interested. Indeed, Edibles and Capsules each have 6% of their products sold at over 25% less than their average price.

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