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English wholesaler, working out retail price????

  • 29-04-2010 2:41pm
    #1
    pejay
    Registered Users, Registered Users 2 Posts: 274 ✭✭


    Hi there,

    I have a question which is probably very easy for most, but as I am new to this I need a hand    .

    We are starting a company and the wholesaler is in England (before anyone says anything there is no wholesaler in Ireland who sells the stuff we need!!!!).
    My problem is I have no experience of dealing with exchange rates and calculating vat and stuff like that.

    ie.
    If I place an order when i go to put a retail price on the items how do i work out the price to euros when the items will be going into a catalog so will stay the same for at least 6 months but how do i allow for the changes in the exchange rates. The price I pay in January may be different than i pay in May or June, but catalog price stays same.

    Also how do i work in both English and Irish VAT when working out retail price.
    I wont be registering for VAT yet.

    As you can tell this is my first business venture so any advice would be great.

    Many Thanks.


Comments

  • #2
    antoinolachtnai
    Registered Users, Registered Users 2 Posts: 9,817 ✭✭✭antoinolachtnai


    First, print catalogues - an expensive thing to do well for a start-up. The web is here. If you have a catalogue, why put in prices?

    The way the big companies hedge the currency in a situation like this is through purchasing a financial product called an option. This gives the company the right (but not the obligation) to buy sterling at a certain price at a certain time in the future.

    However, this may not be worth your while.

    Re VAT - you really need to go and find out how to calculate VAT, as well as doing the rest of the bookkeeping. I am guessing that if you don't know much about VAT, you don't know a lot about the rest of it either. But don't worry, you can learn this stuff. Check out any larger bookshop for basic bookkeeping books.

    If you aren't registering for VAT, it really isn't too complicated. The VAT basically takes care of itself. You pay VAT on the products you buy and then you don't charge any extra VAT on what you sell.

    As a general rule, you determine the selling price by reference to what's in the market, not what price you are paying for the stuff. If it turns out the gross margin (difference between purchase and sale price) is too small, you just stop selling it, or find some way to increase the margin.


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