Small Business Ideas Forum

Small Business Ideas Forum (http://www.smallbusinessbrief.com/forum/index.php)
-   General Small Business Issues (http://www.smallbusinessbrief.com/forum/forumdisplay.php?f=15)
-   -   Pricing For Wholesale & Distributers? (http://www.smallbusinessbrief.com/forum/showthread.php?t=34940)

Red Paul 11th August 2010 10:54 AM

Pricing For Wholesale & Distributers?
 
Hi all,

I've been selling various things direct online (retail) for some time, but am now looking at selling my own products to distributers and/or to high street retailers.

So, the obvious question... what is considered as reasonable price breaks?

I believe wholesale to retailer is generally around 50% RRP?

But what about selling to a distributer, who will then sell wholesale to the retail... how much will a distributer expect to earn? For example, should I be selling to distributer for 40% RRP? Less? And should I specify a wholesale price that must be charged to retailers, or should I leave the distributer to negotiate this himself?

It's a new area for me, so any advice appreciated.

btw, I'm taling about 5-10 each items, so thinking of specifying MOQ of 10 selling to retailers. Would it be reasonable to expect larger qty (say MOQ 50) when selling to a distributer?

Many thanks,
Paul

Hugha 14th August 2010 10:15 PM

I am a distributor. The discounts I get vary from each manufacturer.

I get anywhere from as little as 20% off list up to 60% off list.

I find that some manufacturers who offer higher discounts also seem to have slightly higher list prices.

My wife is in the bridal gown business. The mark up there is 200-500%.

Sounds great but when you consider the units moved, it is not all that high.

cfoservices 14th August 2010 10:20 PM

My distributor clients are happy with maintained gross profit margins of 20 to 30%

BeTheBest 16th August 2010 06:45 PM

Do it all the real simple way. Start all discounts from your RETAIL price. Now, that means you have to maintain that retail price. You can't sell something for $50 and then tell me (a wholesaler) that the retail is $60 and I get XX% discount. Follow??

Therefore, create your price list. I would start with what I would consider a basic discount of 30% off list. Then you can create different levels or discounts for quantity. Maybe show your distributor that if he buys $250.00 at a time, he gets an additional 5%?? 10%?? You also have to have the ROOM to discount. So that's why it's CRITICAL you understand this before you set retail and start blowing it out!

Now... here's the $64.00 question. How well do you understand discounts and percentages?? I am not being goofy.

Look... $100.00 less 30% = $70.00
Now, $100.00 less 35% = $65.00 BUT.....
$100.00 less 30% PLUS Additional 5% for Big Order is NOT THE SAME
$100.00 less 30% = $70.00 less ADDITIONAL 5% = $66.50.

So LESS 35% is $65.00
LESS 30% less 5% is $66.50.

IT MAKES A DIFFERENCE!

You MUST know where your costs are, what you can afford and (I would suggest you investigate) what the standards are in your industry. By that, I mean in some cases, you will get distributors who (because of everyone else selling them) will just expect 40% discount. You could sell them all day long at 30%... and never get a sale. So you have to also know your market.

With respect to retail.... DON'T TOUCH IT! It should always be SUGGESTED RETAIL. If you even think about attempting to force a specific price, you are price fixing. That will get you 100% discount from life as you know it.

Hope this helps! Good luck!


All times are GMT -5. The time now is 12:12 PM.

Powered by vBulletin® Version 3.7.3
Copyright ©2000 - 2020, Jelsoft Enterprises Ltd.
Copyright 2004 - 2018 - Privacy