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  • #967245
    jands
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    Hi there!

    I’m looking for advice with respect to setting prices to sell as a wholesaler. I plan to initially sell directly (on ebay & website), but would like to obtain stockists in the near future.

    I’ve been told that stockists want a 100% mark up… is this true in your experience?

    E.g.
    product costs me $2.50
    I sell on Ebay for $10
    I sell wholesale for $5
    Retailer sells for $10

    Does that sound about right?

    Also a related question, am I likely to have problems obtaining stockists if I am selling on ebay? ie would it be best to sell on ebay to start with, then stop the ebay store when I approach stockists? Would love some advice on the ebay/wholesale issue.

    Thanks!

    #1024850
    John Debrincat
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    jands, post: 29434 wrote:
    Hi there!

    I’m looking for advice with respect to setting prices to sell as a wholesaler. I plan to initially sell directly (on ebay & website), but would like to obtain stockists in the near future.

    I’ve been told that stockists want a 100% mark up… is this true in your experience?

    E.g.
    product costs me $2.50
    I sell on Ebay for $10
    I sell wholesale for $5
    Retailer sells for $10

    Does that sound about right?

    Also a related question, am I likely to have problems obtaining stockists if I am selling on ebay? ie would it be best to sell on ebay to start with, then stop the ebay store when I approach stockists? Would love some advice on the ebay/wholesale issue.

    Thanks!

    You need to be careful selling on eBay and make allowance for the fees. The base inserting fee is $0.50 for every insert and that does not include any of the additional features like galleries etc. The FVF (Final Value Fee) for a product in your price range is 5.25% + PayPal fees (2.5% + $0.30) per sale.

    A lot of people underestimate the costs on eBay and end up making a loss and not a profit. If you have to list a product 5 times before it sells you just blew the whole profit margin on your example product. You can find the eBay fee information at http://pages.ebay.com.au/help/sell/fees.html.

    Do a simple spreadsheet that adds in all the costs:

    • ebay listing fee (add in features)
    • number of re-lists (total actual listing cost)
    • ebay FVF
    • PayPal
    • Shipping
    • cost price (product)
    • your time (i.e. cost)
    • storage and handling

    Once you have that you will be in a better position to estimate your sale price and therefore your profit.

    Good luck

    John

    #1024851
    jands
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    Hi John,

    Thanks for that great advice! I’ve got a very thorough spreadsheet with all those costs built in. Postage is extra, paid by buyer. The only one I haven’t really built in is the cost of items that don’t sell, as I’m not sure what proportion this will be, although with a store I think that’s cheaper but certainly still a consideration.

    #1024852
    Past-Member
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    Hi, you are correct in that retailers want a 100% markup. This is so that when they have a 50% off sale if something doesn’t sell they will still get their investment. Well, that’s the general idea.

    The Gift and Homewares Association has a lot of info about this. If you are in Sydney their Trade Fair is still on till Tuesday. See link Sydney Showground, Sydney Olympic Park

    Saturday 27th February – Tuesday 2nd March 2010
    http://www.homeandgiving.com/

    You have to have an ABN to attend.

    The AGHA main site is at

    http://www.agha.com.au/

    #1024853
    jands
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    Thanks for that info, Karen. I’ll check out the AGHA site.

    In terms of selling wholesale and retail simultaneously, will potential stockists be put off if I am selling on ebay?

    #1024854
    King
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    some retailers want more than 100%.

    I have one chain that we wanted to sell product into and they work on 300% – this in common also with supermarkets.

    Many places want 150% and free delivery to store

    #1024855
    jands
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    King – wow, big mark ups. Good to know. There is scope for 150% mark up while still keeping the product affordable. Should this affect how I price items on ebay though? ie sell for the price it would sell retail with a 150% mark up? I’d really like to sell wholesale so I don’t want to ruin that with ebay e.g. pricing too low and putting off stores!

    #1024856
    tlacey
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    Hi there,

    Its not necessarily true that retailers want a 100% mark up on goods. It depends on your goods. Clothing and accessories will need a larger mark up than a computer of camera for example which would only have 10%, on a good day!

    My advice for setting prices is to work out a break even analysis less your cost of goods sold. Once you have that factor you know exactly the amount of margin you need to make on each sale to make your business worth while. Whatever you choose to put on top of that is just bread and butter.

    You need to toe the line between retailer and wholesaler if you want to exist as one. As a wholesaler you often have more control and a more stable market but many resellers will not want you selling direct to the public. It undermines their business and undermines their ability to sell. Many, me included, will not support a vendor who also sells direct to the public.

    Start on Ebay first to get a grounding and iron out the kinks. Expand slowly into your local area but then I would drop the ebay business and focus directly on serving my resellers as best I possibly could. Remember as customers retailers look like big, ugly, profit hungry monsters. As a wholesaler you need to look at your resellers as being in a two way relationship, that is the richer they become (hopefully selling your product) the richer you become.

    Hope that helped,

    Regards,
    Tom

    #1024857
    jands
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    Hi Tom, thanks for your post and the great info. It does make sense to get started on ebay then shift gears to wholesale. Although part of me would like to get straight into the wholesale side! But then, I think it would be good to develop my product range a bit more before going wholesale.

    My products will likely be stocked by mum/baby online stores. Does anyone know what kind of mark up they will be looking for?

    #1024858
    Gordon Akman
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    Gee I like reading the posts on this forum. You can just feel the real life experience behind the comments. Working on your business just opens your mind up to so many things in the business world.

    All I would add to the previous posts is you cannot generalise with pricing. There are so many other factors that should be considered when setting prices. Remember, not all businesses have the same cost structures. Not all businesses have the same profit margins. Not all comparable products and services sell at the same price points.

    #1024859
    jands
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    Gordon, sounds like wise advice :) As an untrained (no business background) newbie, what can you suggest I do to find out what happens in my niche area?

    Jazs, On ebay or selling direct through the website, buyer will pay shipping on top of prices. But I’ve just heard earlier in this thread that perhaps a stockist (down the track) would want shipping included. That certainly isn’t factored into my spreadsheet for wholesale prices at the moment.

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