How much to mark up for wholesale?

BlackSpider · 11-03-08

Hi Guys,

I fell into wholesaling a couple of years ago and just played along and things have developed quite well.

One aspect I have never been 100% sure about is how to price to wholesale customers and whether to offer different tiered pricing based on monthly purchase amounts.

What is the typical mark up to wholesale customer?

I suppose it would be determined largely by the market you are in and how competitive it is. Also would assume that higher valued items or large volumes of the same item would have lower markups.

We also sell retail and sometimes it is difficult to allow the wholesaler much mark up as we may only have a 80-100% retail markup on some items.
The problem there is that the retail market can smetimes be competitive, so we have to find a balance in between where we can still make money and the wholesaler can still achieve good profits. I suppose for some items, it's just not possible for both parties to win.

It just seems like a balancing act to remain competitive in the market and still keep all parties happy with profits.

Does anybody have any advice on pricing wholesale markets?

Thanks

Spider

yasmin · 12-03-08

Hello Spider,
What you would do is make 3 wholesale pricelists:

Non Stockist (They do not have any of your gear in stock), Stockist (They stock some of your gear), Large Scale stockist (Stock alot of your gear).

I would have a structure like the following:

Nonstockist - 40% Increase
Stockist - 30% Increase
Large stockist - 20% Increase

Regards Yas

BlackSpider · 12-03-08

Hi Yasmin,

Thanks for your reply.
Your idea is good.

I'm not sure what you mean by these percentages though:

Nonstockist - 40% Increase
Stockist - 30% Increase
Large stockist - 20% Increase

Could you explain more?

I had a meeting with my business coach this morning and brought up the point about what direction we should take our business, retail or wholesale and we discussed pricing a little.

We will run a new line of commercial equipment which we will be introduced in the next couple of months, and it will be aimed to target the wholesale/reseller market. Our existing home/light commercial products will still be aimed at retail by selling direct to public ourselves. If resellers want to buy it then they will just have to take lower margins on it compared to the new line, which will have a high retail price allowing the resellers more margin.

It will be a great way to get great exposure, primarily marketing our product through our reseller network, something I had not thought about before.

Thanks

Spider

amp · 12-03-08

I think yasmin means add 40% ontop of your cost, add 30% and so on.
How much were you thinking spider?

BlackSpider · 13-03-08

Hi Amp,

That makes total sense.

For some reason I was always working backwards from retail prices and was thinking in terms of discount off retail price, the higher discounts being for large stockists.

We'll probably be working around 60% for stockist and maybe 100% for non-stockists.

Thanks

Spider