You’ve decided to get visibility to your brand by getting on the shelves of established businesses.  It’s a fab strategy to implement but before you start knocking on doors it’s important that your numbers are robust.

Looking at your numbers gives you the foundation to a robust wholesale strategy in your business.

The Numbers for an up and running business

Your retail prices should have been set based on where you’ve positioned your brand in the market as well as your competitions pricing structure.  You will have also worked out your product profit margins within your business. Most brands will x by 2.5% or work on an average of 50% to 60% profit margins.

It can be tricky to make wholesale work when you are already up and running with your retail prices which is why it’s important to understand the reason for wanting to offer wholesale.

If you want visibility, traffic that the retailers have got that you don’t then making 20% on your products is more profitable than  50% profit of no sales!

To get your wholesale price you need to take into account overheads too not just the cost of the product.  The last thing you want is to be selling for nothing. Longterm this is not a good strategy, nor sustainable.

Cost price x 2… How does that look?

So let’s assume your cost price is £5, your retail price is £15.    x 2 – 2.5% from your cost price would give you a wholesale price of £10.  Now you may need to negotiate as the retailers stocking your band will want to make enough profit themselves to make it worthwhile.    £8 in this scenario would be the minimum you could go to to seal the deal but always go in with the x2  / x2.5% to ensure you have your overheads and all costs covered.

If you’re margins are too tight to introduce wholesale into your strategy, instead of risking your sales with your customer base by putting up your retail prices, my recommendation would be to create a new product range that doesn’t compete with your current offering and can be built with the wholesalee model in place.

New Businesses implementing a wholesale strategy.

The key here is to not out price yourself with RRP’s that have been set based on profit numbers you want to make and profit numbers the retailers you are stocking in want to make.  Customers are savvy..  Think about it, you’re a customer, I’m guessing you know when a product is over priced.

It’s important you set your retail prices based on the criteria of knowing your market.  Understanding your competition and what value they offer in their products so that you can match or offer a higher amount.

Last but not least..

IF you are making your own products it’s vital you put the cost of your time/labour into the cost price. To only factor materials means you are under pricing your work.  It will stop you being able to grow and scale your business in the future.  Trust me, lower prices does not mean more sales.  There’s so many more contributing factors than this..

So you’ve got your prices, the next stage is How To Get Your Products Stocked In Stores..

Watch out for my next blog where I’ll cover this from a buyers perspective so you have the advantage!



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