How do I determine retail price?

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How do I determine retail price?

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minimegeology

posts: 143

Feb 01, 2008 1:38 AM ET Quote Report Abuse

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Hello Everyone,

I have developed a line of rock and mineral kits for kids. They are targeted toward elementary-aged children so I`ve gone to great lengths to find and use USA-made boxes, foam, etc. in the kits. So far, they have been well received on our website. My problem is that we are hoping to start selling these wholesale and if I sell the kits wholesale at 50% of my website cost, I`ll go broke. They are expensive to produce but we have had so many inquiries from parents who are concerned with foreign items that we want to stick with our current suppliers.

How do I determine a wholesale price that will work for me and for the market place?

Thanks!

-------------------------

Tracy Barnhart, Owner
Giverny, Inc. / Mini Me Geology
http://www.GivernyOnline.com
http://www.MiniMeGeology.com

EngineersCanSell

posts: 163

Feb 01, 2008 7:44 AM ET Quote Report Abuse

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Hi Tracy,

First off - very cool products!

I recommend attacking this backwards of what you are proposing. You have a great set of data in your Web site records. You should know exactly what price the market will pay, and I have to assume that you are comfortable with the margin you are making right now.

Have you tested higher prices or lower prices to try to determine how elastic the product is? In other words, do you know how price affects your demand? Let`s assume for now that you know the maximum price you could charge on your Web site and still have adequate demand.

All I would do for a quick start is determine what cut all the middle men will take out of your product. In your industry a manufacturing rep should get about 5-9% the real hit will come at the retailer who could demand as much as a 70% margin for a product like this - at least initially. Note that they talk in margins and not simple markups.

Knowing that data, back out what you could charge the rep and see if it is acceptable from a profitability point of view. If not, you have work to do in distribution, packaging, etc. to cut costs - or find other avenues of selling your products - or add a bit more value and charge more. Perhaps an exclusive members only forum on your Web site would be a nice value for kids that buy your products.

Best of luck!

SmallBusinessPRExpert

posts: 149

Feb 02, 2008 8:23 PM ET Quote Report Abuse

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Hi,

I agree with Eric. When starting a product-oriented business, where wholesale is a potential, you need to consider it up front before you get started to help determine what your actual selling price will be. The idea is to be able to sell wholesale and allow retailers to sell it at the same price you are on your site, because you never want to undercut your retailers. I think you need to sit down and really determine your pricing schedule.

Now, not all products are sold at 50% off for wholesale rates. That is actually A LOT! Obviously you want to price it so that you make money (if they look to become long-term customers you will make up profit in the long-term, but the exposure alone is worth it), this should be the bottom basement price where you still make a profit. Then see how far you can bump it up so that when they mark it up it will equal what your charging online.

I`m more than happy to check in with one of my clients to see what their percentages are. Contact me if you`re interested!

Best,

Jennifer

cdbartwork

posts: 210

Feb 02, 2008 10:29 PM ET Quote Report Abuse

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Tracy:

I tried viewing your website but I got a message that said it did not exist?? Can you send the link?

Colleen

-------------------------

Colleen Dougherty Bronstein Designs
Sun Safe Designer Clothing
http://www.sunsafedesignerclothing.com
http://www.bronsteinartwork.com

minimegeology

posts: 143

Feb 05, 2008 4:32 PM ET Quote Report Abuse

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Thank you for your comments. Your ideas are very helpful. Our site is www.MiniMeGeology.com. The kits and individual samples are the items we plan to wholesale.

Determining a price seems to be quite an artform!

-------------------------

Tracy Barnhart, Owner
Giverny, Inc. / Mini Me Geology
http://www.GivernyOnline.com
http://www.MiniMeGeology.com

scout

posts: 1

Mar 04, 2008 1:56 PM ET Quote Report Abuse

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Hello,

I have another idea for you; cut your overhead cost to help improve your wholesale pricing.

I`m with a handicap workshop, we have 75 clients that excell in repacking and mailing.

Plus we also have 6,000 sq. ft. for storage.

We may help you cut cost.

Dan

dfowler@concernedinc.com

ProfessionalLists

posts: 34

Mar 05, 2008 3:04 PM ET Quote Report Abuse

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You know... the above post makes a good point; can you cut overhead in your operations? Do you have any sales goals or projections that would help you to calculate projected sales volume? If so, use that along with your operating costs and overhead figures to project annual profit.

Further, do some research, find if there is interest wholesale from vendors at the pricing you foresee. When working with projections above you could offer further (deeper) bulk pricing to encourage higher orders from retailers.

I hope this helps!

-------------------------

Tom Ryan
866-507-9089
Direct Marketing Services
Sales Leads, Direct Marketing Data

wehavepromotionalideas

posts: 136

Mar 07, 2008 10:03 AM ET Quote Report Abuse

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Why do you have to sell them at a 50% discount? If there`s no profit in this equation, the percentage is not right.

I would source, source and then source again to find the right costs.

Jack

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