Hello, I was contacted by a lady who I have spoke with and is interested in having my product in her store. She wanted me to get back to her with whole sale prices. How do I come up with this?? what do I need to do here?

What is the lowest amount you can sell your item for and still make a profit that you would be happy with?

Know that she will probably sell the item for double what you charge her. Will your item sell for double what you sell to her? The reason for that question is you want her to come back as a customer and she will only do that if people buy your items.

Hope that helps
Sara
www.namebrandscheap.com

The general rule is wholesale is 50% of retail. However, as was already mentioned, you need to determine what will work for your product so that you are fairly compensated for your work. Figure your costs and labor and the profit you feel is fair then work out the retail/wholesale pricing.

Sylvia
http://smallbusinessstartup.biz
Startup & Biz Plan Help
http://smallbusinessstartup.biz/blog

its funny that you say 50% because everyone else i have talked to has said 20-25%

They're each right, or probably more accurately, not wrong.
Most industries have a "customary" discount structure. It appears what you're attempting to do is back into a pricing structure, not having established one at the beginning.

Most retailers keystone (double cost) to arrive at their selling price.

The whole pricing structure has become so convoluted the last 20yrs that there is no single answer anymore. The channel of distribution used to be Mfgr, Distr, Retailer. During each past economic downturn as people scrambled for sales anyway they could get them, the lines became very blurred, then toss in the internet and you have even more chaos.

In my company (we manufacture) about 75% of our sales come from either distributors or retailers. A smaller % comes from the website...we use it primarily for a specialized product that our distr, and retailers don't usually handle. That way we're not competing with them. We first establish our cost. We keep a cost sheet for each product we manufacture...roughly 150. It covers virtually everything that goes into that product, raw materials, components, labor, packaging. We then take that total and keystone it to establish our wholesale price for distributors, that price is then keystoned again to establish the "Suggested List Price" (Retail)
For the Retailers we sell to we discount that Suggested List Price by 40%. We do this because if we come into conflict with one of our distributors we always back away and this allows them to sell them and still make a little money. Given they don't have the cost of pioneering that customer and it just becomes a case of clipping coupons for them they can take a smaller cut. It's not a perfect system but it's worked for us for 20 yrs now. In our case, we have a modest R&D budget that is priced into each products cost...probably not more than a penny or two per item.

The advantage of the cost sheet is that it's updated twice a year, usually May and November. We issue our new prices effective July 1st, and Jan 1st. Before we kept cost sheets we lost alot to price creep. You're costs go up a little on each item, and without even knowing it you're losing profit. When you've got 15 or 20 different cost components in a product, it doesn't take many going up to knock out a fair amount of profit.

This may not be the best way, but it's one way, and it's worked well for us for 20yrs.
Good luck
Denny

wow thats alot to read lol. Well for the most part i read some of it. I already have my req pricing figured out, i was told to give a disct and that sounds good to me :) hope it works out

They may say 25% but they're talking in quantity like one would expect to pay from someone like Walmart. I don't do less than 60% unless someone is seriously ordering product.

T

Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!

Well she said most ppl do 50% and so i said i will see what i can do i can always try it out and if it doesnt do good then stop...

>Well she said most ppl do 50% and so i said i will see what i
>can do i can always try it out and if it doesnt do good then
>stop...

The best advice I can give you is to start at the high end and work your way backwards. That way you can always lower your prices for quantity purchases, but if you start at the low end... there's nowhere to go.

The rarer your product, the higher your margin can afford to be.

T

Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!

I'm sure there is a formula, but we did the following...calculated the cost to us, and added what we felt was a fair "creating/handling" cost...so far so good; however, we are going to have to increase our "wholesale" cost due to recent price increases from our vendors. We also ask our retailers to not sell our products at a cost lower than what we sell the items for in our store...they can use our suggested price or a higher price, but we do not want to be undersold, etc. We're small and in many ways still trying to get out product out into the community, so taking a slight hit on profits is ok...we justify the hit as a way to market our product -- it's cheaper than advertising in the media.

>I'm sure there is a formula, but we did the
>following...calculated the cost to us, and added what we felt
>was a fair "creating/handling" cost...so far so
>good; however, we are going to have to increase our
>"wholesale" cost due to recent price increases from
>our vendors. We also ask our retailers to not sell our
>products at a cost lower than what we sell the items for in
>our store...they can use our suggested price or a higher
>price, but we do not want to be undersold, etc. We're small
>and in many ways still trying to get out product out into the
>community, so taking a slight hit on profits is ok...we
>justify the hit as a way to market our product -- it's cheaper
>than advertising in the media.

Here's the biggest concern I see you having...

Where is your "discount" off wholesale going to take you once you start talking volumes? You cannot sell your product to a single shop retailer for the same price you sell to WalMart.

Where is your retail margin set? Is your retail pricing where your wholesale pricing ought to be?

There is "taking a hit" on your product to market and then there is "giving it away".

If I come in tomorrow and tell you I want to buy $250,000 worth of your product, how much of a "hit" on profit margin are you going to have to take to keep me interested? Do you want to take that much of a hit? Are you strong enough in your positioning or at least think you are to say... Sorry, I don't care if you're ordering $10,000,000, I will not sell it to you for less than it costs me to make it. Your wholesale pricing to Joe, I'm buying for one store has to be justified when Joe, I'm buying for Walmart needs you to cut the price for quantity.

Which is why I suggest that your pricing should be on the higher end.

As for the stores carrying your products at prices HIGHER than yours... I think that's a mistake.

We tell our stores an MSRP which is the price WE sell at, but we highly expect them to sell for less than we do, not more. We want them doing the retail work... That's the point of going into wholesale, the quantity makes up for the profit loss.

HTH

T

Tina Brooks, VP Marketing
Brooks Pepperfire Foods, Inc.
Makers of Peppermaster Hot Sauces
http://www.peppermaster.com

Eat more peppers!