Distributor and retailer price markup questions.

Hunter21

I have found a product that I would like to import and start selling but I am wondering about what markup to charge.

For arguments sake lets say I am buying a product for €200 and it costs roughly €7 to import it by courier and the recommended retail price is €300

Also take add ons for the product I buy them at €20 and recommended retail price is €40

What price would you be selling it to shops at?
And on orders of 5/10/20 items what percentage discount would you offer?

If this is very vague please ask me a question and I will try to answer it for you.
(Obviously I won't discuss the exact type of product it is)

Peterdalkey

Have you factored in import duty and VAT? If not there does not even appear to be a retail margin available, let alone a wholesale one!

Cheers

Peter

DubTony

This depends on the product, and what type of retail environment it will be sold in. You need to find out the expected margin of the type of retailer you'll be selling into.

If your cost is 200 and the RRP is 300, there isn't a lot of room for any kind of margin at all. As Peter says, there's a VAT element as well. Assuming it will be 23% this is an effective retail price of just under €244. A retailer seeking a 20% margin would pay no more than €195 + VAT for that item.

It looks to me like you're contemplating buying from a wholesaler of some description. The wholesale margin has already been added on leaving nothing for anyone else. Contact the manufacturer or worldwide distributor for best prices. It's also possible that the RRP you're considering is too low.

Hunter21

Thanks for the replies so far.

The items are outdoor- camping, hunting, fishing, adventure activities.

All items I'd be purchasing are maximum of 50% of the RRP

As for being charged VAT the items would be coming from the UK and I have been informed by the wholesaler I would be buying off that once I have a vat number here in Ireland they will not charge me vat.

If the margin for retailers was too small could I advertise the product in their shops and once they refer customers onto me the retailer would receive commission from me once a sale has been confirmed.

cfeeneyinterior

Remove thinking of something else

Hunter21

cfeeneyinterior wrote: »

Remove thinking of something else

You saying that the idea I have is no good and I should think of something else?

Or do you mean something else?

DubTony

Hunter21 wrote: »

Thanks for the replies so far.

The items are outdoor- camping, hunting, fishing, adventure activities.

All items I'd be purchasing are maximum of 50% of the RRP

As for being charged VAT the items would be coming from the UK and I have been informed by the wholesaler I would be buying off that once I have a vat number here in Ireland they will not charge me vat.

If the margin for retailers was too small could I advertise the product in their shops and once they refer customers onto me the retailer would receive commission from me once a sale has been confirmed.

Activities or products? You're not making this easy for us.

Hunter21

DubTony wrote: »

Activities or products? You're not making this easy for us.

Products.
The items/products can be used in outdoor activities.

Sakinah

Honestly I can't say I know the answer to your question, but my opinion would be make sure the margin the retailer is getting is not less than 30% to be attractive. Learnt this from some retailers and boardsie members myself. But I'm looking at a totally different product. So in essence my opinion could be worthless

My real advice: Go into an outdoor adventure shop and ask the manager!

DubTony

Ok. Probably the best way is to work backwards from retail.
If you've got a RRP, deduct vat at 23%
€RRP / 1.23 gives you the ex vat price. (€300 / 1.23 = €243.90)
Find out the average retailers margin for that type of product.
(Remember this is the margin a retailer wants on the selling price, as opposed to the markup he'll put on the wholesale price.)
So, for example, 30% of €243.90 is €73.17, so your wholesale price would be €170.73.
Based on that you can determine what margin you need, and that will give you the price you can afford to pay to buy the product including shipping and handling charges.

sandin

How big is the product - will it take up much shelf space.

Is it a quick seller, does it date / expire.

A retailer will probably need 35-40% margin for a good moving high value object, so lets say €400 retail = €325 net of vat. less 40% and you are at €200.

You will need about 25-30% margin for your costs (delivery, returns, marketing, sales person, warehosue etc), so you need to be landing at approx €140-€150 to get to basic figures.


And, if its a large item taking up large amount of retail space and is a slow burner, then retailers will need more margin.

But the big question is - if its in the UK, why does the extra layer of dictribution cost need to be added for Ireland. Act as an agent - get 10% - 15% commission and let the compnay send the goods direct to the retailer.

Also, as its in the UK, if the product was any good, the good retailers would already have it in stock.