>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!