Product Pricing

jayboi

Has anyone any advice on pricing a product?

At the moment im considering selling a product to shops at €1.45 sale or return,
now what I was considering is should I be offering to shops a different price for buying the product up front i.e. them buying 100 units from me outright at maybe €1.25

My thinking is that shops will make no loss if they dont sell the product at sale or return so therefore should the margins be different from some one who buys outright.

TheInquisitor

Do not under any circumstance tell them 2 different prices like that. Either decide one side or the other. The selling price is E2.99 yes? I think you should do it at €1.35 and if someone buys enough quantity do them a deal at €1.25. Tell them if they spend over €500 or something they get this discount. I suppose it would help if your willing to say the product

jayboi

Yea 2.99 would be my ideal selling price was also considering €2.50 rrp as well and was considering at €1 to shops for those. Have a few items i hope to sell all around the same price bracket but initially going to try pins with shamrocks and tricolours.

When you say on purchases over €500 i assume you dont include invoices for €500 worth of sale or return goods just the outright purchases?

91011

Unless its a non vatable item, your selling price will exclude VAT whereas the retail price will include vat.

Do NOT offer sale or return. - The product will not be cared for the same way as a product already purchased..

€2.99 = €2.47 + vat.

Depending on the market you are targeting, the store will want from 30% to 50% margin (percentage of the net selling price - NOT mark-up)

If its confectionery, 30% (75c) profit may be acceptable, whereas if its a low price gift line, they'll want 50% margin (€1.24)

jayboi

Sorry yea when i said ideal selling price i meant selling on the stands so retail price.

Any thoughts about a €2.50 retail price, which would be a €2.06 selling price, a 40% margin for the shop equaling €0.82 for them which would mean selling to them at €1.24 and leaving the option for a discount of 10% on orders overs a certain number.

Voltex

Store Margin + LTA+ VAT. Dont forget, that the selling price is what the market decides. No point trying to retail at 2.50 if the max the market will take is 1.99.
SOR is a nightmare, and really is a business in itself. Try and avoid if you can.
Your selling price strategy depends on what you are. Good way to help strategise is to use an Ansoff Matrix.

jayboi

From talking to a few people I get the impression that a lot of smaller shops are reluctant to take on more stock from smaller suppliers unless it on a sale or return basis maybe I'm wrong its just vibe I'm getting. Sale or return is certainly not something I'm aiming for but might have to face.

I definitely think from taking to few people sales reps and business managers at the a retail price of 2.50 would be very achievable, 2.99 might be achievable as well but would be on the edges of what people would be willing to pay

DubTony

If you're willing to state what the product is, and it's generally sold in small shops / convenience stores, I can tell you almost exactly what margin a retailer will want. It all depends on how much stock he has to buy and how quickly he can expect it to move. The longer it warms the shelf, the higher the margin that's needed to justify it taking up the space.

As for SOR, I wouldn't knock it. It allows you to reduce the retailer margin as he has nothing to lose, and if the product is something that hangs on a rack (or similar) there shouldn't be too much "looking after" of it, so you shouldn't be getting back damaged goods.