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  • #995657
    jules4848
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    Hello

    Can anyone help with this question.

    I have a new skin care product which will retail for $17.95, wholesale will be $9, can anyone tell me what the distributor would expect to buy the product for?

    Thanks in advance.

    Julia

    #1203258
    Trent Tran
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    • Total posts: 166
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    Hi Julia
    As a distributor would distribute to wholesalers with a minimum of $$$$, it is more about volume driven.

    If your products move fast enough, usually it is around 25% off wholesale price.

    #1203259
    jules4848
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    Thank you for your help.

    That would mean I would take a $2 profit after all my costs on each product.

    Do you know what the usual markup would be on my end? Im not sure if that is enough money for me to end up with, I may have to increase the RRP.

    Any help is appreciated.

    #1203260
    Trent Tran
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    $2 is not that bad Jules if you have a good volume sale and I am serious about this. To illustrate my point, currently, one of my friend is selling baby formula and other supplement to oversea company. For each tin of product, he earns 20 cents only. He made money on volume as sold in 1 container worth (i.e 10,000 tins).

    The distributor will only take your product if it sells, price is the main key for distributor.

    Having say that, if your brand is strong enough, you could sell on your own side. I am sure you heard of the story of “beard brand oil”

    https://www.shopify.com.au/blog/12936581-how-to-build-a-120k-per-month-ecommerce-brand-in-less-than-a-year

    #1203261
    bb1
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    jules4848, post: 241130, member: 75790 wrote:
    Thank you for your help.

    That would mean I would take a $2 profit after all my costs on each product.

    Do you know what the usual markup would be on my end? Im not sure if that is enough money for me to end up with, I may have to increase the RRP.

    Any help is appreciated.

    How did you set the RRP in the first place, the first part of setting any Price (wholesale, retail) is to know all of your input costs, maybe you need to re evaluate all your pricing.

    #1203262
    jules4848
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    • Total posts: 9
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    bb1, post: 241174, member: 53375 wrote:
    How did you set the RRP in the first place, the first part of setting any Price (wholesale, retail) is to know all of your input costs, maybe you need to re evaluate all your pricing.

    Hi I set the RRP based on my competition, I have worked out my pricing and end up with a $2 profit on each product, I just wasn’t sure if that was enough of a profit for me to take. I make $2, the distributor makes $2 and the retailer would buy for $9 and sell for $17.95. I haven’t manufactured and sold anything before hence this site has been a great help.

    #1203263
    jules4848
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    Grandawood, post: 241151, member: 66994 wrote:
    $2 is not that bad Jules if you have a good volume sale and I am serious about this. To illustrate my point, currently, one of my friend is selling baby formula and other supplement to oversea company. For each tin of product, he earns 20 cents only. He made money on volume as sold in 1 container worth (i.e 10,000 tins).

    The distributor will only take your product if it sells, price is the main key for distributor.

    Having say that, if your brand is strong enough, you could sell on your own side. I am sure you heard of the story of “beard brand oil”

    https://www.shopify.com.au/blog/12936581-how-to-build-a-120k-per-month-ecommerce-brand-in-less-than-a-year

    Thank you, you are very helpful. The only other question i have is if I post the products to the distributors around the country, who pays for that postage?

    Thanks again.

    Julia

    #1203264
    MH08
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    As an ex distributor myself – the industry works in 2 ways.

    The first part, as a vendor (yourself) tends to provide the best price possible with the distributor to make it an unofficial mutually exclusive agreement, depending on how much the market is attracted to your product – then you can determine who will sell for you.

    The second, the distributor doesn’t really care what the product is, as long as its profitable and fast moving.

    The biggest issue with dealing with distributors is that they are natural born hustlers, because they are more exposed to the market then you are and they know what will work and what won’t, they tend to be off putting and this is usually the strategy used for them to buy your product for nothing. It’s wrong, but it does happen and I know from experience doing it myself but that’s businesses. Keep in mind distributors have it really hard competing, distributors still use the hypothetical “wharf deals” to this day to get ahead.

    Also, don’t try and compete with competitors on pricing you will find it difficult to compete on a price point in any market, especially if the distributor is already buying a product that’s similar but they acquired it cheaper because the other vendor may be well financed with it’s operations, so don’t think of competitors.

    $2.00 may seem like nothing, but if that’s per unit x 24 units in a carton with 80 cartons on a pallet, and your selling 5 pallets a week. Your doing fantastically well, wholesale is very a tricky market due to razor thin dollar margins. 10% on $1000 product is not the same as 10% on a $10 product obviously, because then you would need to work a lot harder selling greater volume. I would first have a few samples made, pitch it to distributors, sell it well to get their beaks wet and have a reserve on how low you will go, make it a big deal and tell them, if you want this price commit upfront of at least 2 pallets, minimum that manufacturers require is around 2 pallets odd anyway.

    With any event determining your pricing, adopt all your costs in a week and put them into each dollar to see what you need to make to survive. Turning over $10000 per week, but $9000 is expenses? That’s 90% of expenses eating into your revenue, i.e. $1.90. Same goes with any other value.

    Then after that discount the cashflows per month into the future to see if you can meet your obligations when forecasting growth, for instance, financing or credit card debts to buy more stock. Find out your compounding periods because the banks interest means nothing on paper without knowing compounding periods.

    Enjoy the ride.

    #1203265
    Paul – FS Concierge
    Keymaster
    • Total posts: 3,488
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    MH08, post: 241662, member: 37395 wrote:
    As an ex distributor myself – the industry works in 2 ways.

    The first part, as a vendor (yourself) tends to provide the best price possible with the distributor to make it an unofficial mutually exclusive agreement, depending on how much the market is attracted to your product – then you can determine who will sell for you.

    The second, the distributor doesn’t really care what the product is, as long as its profitable and fast moving.

    The biggest issue with dealing with distributors is that they are natural born hustlers, because they are more exposed to the market then you are and they know what will work and what won’t, they tend to be off putting and this is usually the strategy used for them to buy your product for nothing. It’s wrong, but it does happen and I know from experience doing it myself but that’s businesses. Keep in mind distributors have it really hard competing, distributors still use the hypothetical “wharf deals” to this day to get ahead.

    Also, don’t try and compete with competitors on pricing you will find it difficult to compete on a price point in any market, especially if the distributor is already buying a product that’s similar but they acquired it cheaper because the other vendor may be well financed with it’s operations, so don’t think of competitors.

    $2.00 may seem like nothing, but if that’s per unit x 24 units in a carton with 80 cartons on a pallet, and your selling 5 pallets a week. Your doing fantastically well, wholesale is very a tricky market due to razor thin dollar margins. 10% on $1000 product is not the same as 10% on a $10 product obviously, because then you would need to work a lot harder selling greater volume. I would first have a few samples made, pitch it to distributors, sell it well to get their beaks wet and have a reserve on how low you will go, make it a big deal and tell them, if you want this price commit upfront of at least 2 pallets, minimum that manufacturers require is around 2 pallets odd anyway.

    With any event determining your pricing, adopt all your costs in a week and put them into each dollar to see what you need to make to survive. Turning over $10000 per week, but $9000 is expenses? That’s 90% of expenses eating into your revenue, i.e. $1.90. Same goes with any other value.

    Then after that discount the cashflows per month into the future to see if you can meet your obligations when forecasting growth, for instance, financing or credit card debts to buy more stock. Find out your compounding periods because the banks interest means nothing on paper without knowing compounding periods.

    Enjoy the ride.
    Thank you for contributing such an insightful post.

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