Wholesale pricing

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pjfan74

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At my first (sort of) craft show and have been approached about wholesale. How do you price your wholesale vs retail?
 

eshell

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I'm so glad you asked this question, as I'm working to develop my policies for wholesaling. I've completed the pricing, but I'm not sure if this is how everyone does it.

I do the following:

Cost of goods = $1.50
Wholesale Cost = $3.00 (Cost of goods X2)
Retail Cost (what I sale for) = $6.00 (retail cost X2)

I plan on always figuring my wholesale cost the same way. On some of the more expensive soaps I make (depending on the soap and its purpose), I either raise the price or lower my profit margin. The wholesaler, per what policy I have written, cannot sell my products lower than what I am selling them.

I hope this is helpful. There is probably someone out there with a lot more experience than me with a better answer.

Best of luck!
 

houseofwool

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When I have sold things before, I always figured wholesale as 35% less than retail.

I've also sold on commission and 35% tends to be a pretty average take for a shop, at least around here.
 

Badger

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My suggestion would be talk to the person who made the offer, go in with a 35% less the retail and say that you are willing to talk about the price, especially depending on how much they are interested in buying from you and how regularly.
 

DeeAnna

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That rule of thumb of 35% off the retail price may work for a normal retail shop situation, but it may not be right for a handcrafted product not sold in a brick and mortar store.

The advice I have been given and what has worked well for my small custom/retail/wholesale manufacturing business (not soap, by the way) is pretty much what Eshell wrote:

Cost X 2 = Wholesale
and
Wholesale X 2 = Retail

If I choose to reduce my wholesale or retail markup for a particular situation, I can choose to do so, but these rules of thumb work pretty well most of the time. We've been in business for 12 years now, so I'd say something is working right.

I want to add that the "Cost" is not just my out-of-pocket material costs -- it also includes labor at a fair wage and including US social security and medicare costs and overhead such as taxes, insurance, utilities, etc.

If you don't want to include those fees, that's your choice, but keep in mind if you go wholesale, you need to be asking a truly fair price for your product, because it's not just a hobby business anymore. I can tell you it gets old dealing with all the headaches and working long hours if all you're getting back out of the deal is minimum wage and just breaking even on your other expenses.

--DeeAnna
 
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