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Questions & Answers

Posted by Ryan Mulligan on 2014-05-11 09:00:58
Title: What percentage of your products profit do retailers ask for before they will consider putting your ...
Category: Money

What percentage of your products profit do retailers ask for before they will consider putting your product on their shelf?

Answer:

Sunil Godse
2014-06-03 11:21:12

The questions you propose on retail versus wholesale are those that you need to answer as being a wholesaler means convincing retailers that they need to carry your product at a reasonable profit margin whereas being a retailer means convincing potential customers that you have something that appeals to them.

The retail margins all depend upon the type, size and reputation of the wholesaler, and in the retail case, what price point you want to have to entice customers based on uniqueness, value, and competitive landscape.

Clothing versus sporting goods may have two different margins, and this is something you will need to research.

The price point you specifically need to look at is at what margin do you need to have at a certain volume level allows you to run a business with all costs in and make a healthy profit. The profit level depends upon your definition of success. Are you only looking to pay your bills, or are you looking to make a ton of money? Both are valid.

If you have a slim margin, you need lots of volume, and so you need to have a product that will appeal to the masses very quickly. If you have a large margin, you need lower volume in sales, but you will need to justify why a customer would pay quite a bit more than a similar item to have your product.

In your costs, don't forget the marketing costs as these will be much larger if going the retail route, and if going the wholesale route, have a good story for the retailers as they have to choose your product over the other pitches they get that will make them money.

Lots to think about. Good luck.

Sunil Godse, President
Radical Solutions Group