Wholesale Pricing Question

[kiwi21]

Hi Everyone,

I have a brand new pet product I've designed, and am trying to determine what a fair/appropriate wholesale price structure would be. I am having a website built to sell the product, and will also be selling to retail pet stores.

I am new to selling products through retail channels, so would appreciate whatever insight you would be willing to share.

Basic info is as follows:

My suggested retail price of the product is $19.95.

My total production costs, including packaging, for the first run of 2,600 came out to $6.00 per piece. (this includes some one-time setup charges.)

Future runs for the product will cost approximately $3.25 per piece.

I've had many different people give me all kinds of advice on my wholesale price structure. Everything from just giving pet stores a direct 25% discount, all the way up to a 60% discount if I am selling to a distributor. At this point I am honestly not sure what to do, and obviously don't want to make a mistake right out of the gate.

Can anybody suggest what might be an appropriate price structure for me, and/or advise any website that has good information on this.

Also, would people suggest avoiding selling through a distributor at first?

Thank you so much!

Tania

[Deejay]

Hey! A kiwi

Lemme know when the sites up an ill check it out

(cant help with the pricing sorry)

[Mad Muppet]

I would recommend if selling to shops chargin around $12 mark, if you choose to sell to distrubitors i would say around the $10 mark, what you need to remeber is everyone wants to make profit and they wont buy if the profit isnt there. i dont know what the product is but have you tried approaching some major companies buying departments? i assume ur american there may be a particular store of supermarket that may be interested in buying a large amount.

[kiwi21]

Thanks very much...I haven't actually approached any distributors or shops yet because I really wanted to have my pricing sorted out beforehand.

What you suggest sounds reasonable - one more question, if I am selling to a retail store and they ask for a bigger discount for buying larger quantity, can you suggest what would be a logical quantity to designate as the next discount percentage level?

Thanks again!


Tania

[Mad Muppet]

it would depend on the store but i would think 1-5k one price 5k-15k another and work it out along those lines, retailers who buying in bulk are just trying to get a few dollars of to increase their profit margins but to be honest if you got to that stage of talking figures than they will probaly still buy even wihtout discount. If you dont offer discount however they will be less inclines to buy in large quantity.

So i would think the logical step for discount would be around the 5k units mark maybe 3-4k really up to you but make sure you stick to a number and dont get bullied down and down.

[kiwi21]

Great info Mad Muppet - thank you! Very much appreciated...

[Mad Muppet]

Great info Mad Muppet - thank you! Very much appreciated...

your welcome. Do let us know when you got a site up interested to know what the product is.

[impressive]

Sounds to me like your selling shirts, if not you should be,, I do this alot.
I have a line out called Cost Alot, basically making fun of lacost shirts and other over priced garments. Our shirts reatil for $19.99 we wholesale them to a distributor for simply $6.00 per and they sell to the stores for $12.00 per which sells to the customers for $19.99. One thing you have to realize is once you start in the wholesale business you can never retail them your self for less than the original retail price. This way you will earn respect through out the distributors and more and more of them will pick up your line (or product).I currently have just one distributor but they keep us busy, which is good for us. i hope this helps a bit. Also you should always make about 38%-50% on anything you wholesale (only if your the manufacture) if your out sourcing then its about a 10%-20%...good luck

[kiwi21]

Thanks very much -- actually I am considering doing t-shirts as well!

I've been debating about selling through distributors vs. just selling to stores directly. Do you have any general advice/experiences you could share about one vs. the other?

Sorry if this is a very basic question - all of this is so new to me, and I'm trying to avoid making any giant mistakes right out of the gate!

[Eamonn]

I would give distributers 65-70% less

[kiwi21]

I would give distributers 65-70% less

Can you please clarify on the 65-70% less? I'm not completely sure what that refers to...

Thanks Eamonn!