Forums: Discussions for entrepreneurs and small business.

 

I operate a “direct to the public” pricing regime for my products. This means that they are quite low prices with reasonably low profit margins. In some cases, this “direct to the public” pricing is cheaper than wholesale pricing for similar products that I have seen other businesses offer.

 

As I am considering starting a wholesale side to my business (whereby it is planned to sell the products to other stores for their re-sale), with each new product that arrives, I make sure there is enough profit margin so that I *might* be able to offer genuine wholesale pricing (50%) to re-sale customers.

 

But I just had this thought: Instead of pushing the prices of new products up and because much of the current products are priced quite low (as mentioned previously), what if I make all the current pricing the wholesale pricing and then make the retail pricing 50% on top of the wholesale pricing?

 

Does this seem sensible? If anyone has any views I’d appreciate it.

If you want to sell to other retails so they can re-sell your products, you MUST make sure that they can make money at it or they won`t bother ordering. If consumers can get the products at a lower price from you then from other retailers, then that doesn`t give the retailers much reason to buy your products, unless there is some other advantage the retailers can offer, such as convenience of purchase, add-on services, regional territories, etc. 

Any products that aren`t appropriately priced to retailers just won`t be purchased wholesale. So if you only raise cirect-to-consumer prices of new prods, then retailers will only buy your new prods wholesale.

You need to weigh the difference between what you might lose on your B2C (biz to consumer) side with higher prices against what you might gain by going B2B and having retailers sell for you. It`s tough to do both as retailers are less inclined to carry your product.

Doug

With the advent and massive use (numbers continue to go up) of the internet, there are two retail operations...

1. Best Price
2. Unique Product

If your product is not the best price (use the internet to decide) then you better have closely priced products with other built in value added. For example product guarentees or better customer service. Or something like that...

If your product is not unique, then you have no choice but to fight with a combination of retail price VS value added by the retailer.

I think you will find it difficult to sell your product to retailers at wholesale if you are selling it at retail too. Unless, you don`t add value and allow your retailers methods of adding value. Otherwise you need unique products.


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