Forums: Discussions for entrepreneurs and small business.

Hey Krissy-

I don`t have any direct experience with cosmetics but I do have a lot of experience in the health/beauty care (HBC) products industry. When you`re talking about large retailers, on the whole, HBC margins tend to be a bit lower than other categories (but not always). At the low end some might go for a 33-35% margin with the majority probably falling in the mid-40s. There are no set percentages that work in every case though (but lots of variables that determine the lowest margin a retailer will take). Distributors generally look for a 30-35% margin. As an example, you might sell something to the distributor for $1. He might sell it to the retailer for $1.35 who might in turn sell it for $2.25 (a 45% gross margin).

I`d be careful about looking at your pricing strategy from the perspective of taking a percentage off retail pricing though-you need to be sure that your fixed and variable costs are covered and that you`re generating a decent profit margin for your company.

As far as offering volume discounts, in my experience they`re usually (but not always) only going to be effective when dealing with smaller retailers and (maybe) distributors. Any of the large chains and distributors are going to demand your lowest price regardless of volume.

Hope this helps a bit-let me know if you have any other questions.

Ron