Mark Up / Where Next
Discussion
Hi All,
I am now into my second year of a new business venture. I worked a night job to fund the business and I stayed in that job until June 2019, I am now full time and looking to grow the business either with more locations, and / or get the product into high street retailers.
My mark up is around 550% per item. Is that good? The business has experienced excellent growth, even by taking into account Dec 2018 vs Dec 2019, for example, it's almost 5 times more.
Any suggestions on where to go from here would be greatly appreciated.
The details of the product are intentionally vague. it's not food or drink but it's all made by me.
Here's to 2020,
Andy
I am now into my second year of a new business venture. I worked a night job to fund the business and I stayed in that job until June 2019, I am now full time and looking to grow the business either with more locations, and / or get the product into high street retailers.
My mark up is around 550% per item. Is that good? The business has experienced excellent growth, even by taking into account Dec 2018 vs Dec 2019, for example, it's almost 5 times more.
Any suggestions on where to go from here would be greatly appreciated.
The details of the product are intentionally vague. it's not food or drink but it's all made by me.
Here's to 2020,
Andy
Sounds great.
Retailers tend to talk about margin (the % of the retail price that is profit). In your case, this sounds like around 82% - which is very good.
If you have managed to grow sales 5 fold in the last 12 months, I would suggest keep doing what you have done.
High street retailers can be hard to deal with unless you have a very unique product or are very lucky and get in with a buyer, you may need to go via the distributor. It might be worth seeing if you can find the appropriate buyer of your product category for the high street retailers using LinkedIn.
Between the distributor and retailer, they would expect to take between 30% and 50% of the retail price.
Something you made for £1.8 and sold direct for £10, they would pay between £5 and £7 for (and sell for £10). However, if it means you sell 100 times more units it really doesn't matter.
All of the above assumes your product is not vatable.
Where and how do you sell today ?
Retailers tend to talk about margin (the % of the retail price that is profit). In your case, this sounds like around 82% - which is very good.
If you have managed to grow sales 5 fold in the last 12 months, I would suggest keep doing what you have done.
High street retailers can be hard to deal with unless you have a very unique product or are very lucky and get in with a buyer, you may need to go via the distributor. It might be worth seeing if you can find the appropriate buyer of your product category for the high street retailers using LinkedIn.
Between the distributor and retailer, they would expect to take between 30% and 50% of the retail price.
Something you made for £1.8 and sold direct for £10, they would pay between £5 and £7 for (and sell for £10). However, if it means you sell 100 times more units it really doesn't matter.
All of the above assumes your product is not vatable.
Where and how do you sell today ?
)Andy your post and particularly this comment "My mark up is around 550% per item. Is that good?" says you would probably benefit from a mentor, local business hubs, possibly your bank all have mentor programmes with cash assistance, might be worth checking them out.
Happy to have a chat if you want to bounce stuff off a starnger
Happy to have a chat if you want to bounce stuff off a starnger
I Love Cake said:
My mark up is around 550% per item. Is that good?
I would suggest focusing on markup is not the correct aim, but instead consider how to maximise profit.In your case would decreasing the markup increase sales by a greater factor than the reduction, so increasing profits, or would increasing the markup not reduce sales but increase profits.
You know the market you are operating within, and if you don't you need to find out its limits.
Dont like rolls said:
Simpo Two said:
DSLiverpool said:
Andy your post and particularly this comment "My mark up is around 550% per item. Is that good?" says you would probably benefit from a mentor...
I'd suggest he seems to be doing pretty well without one I Love Cake said:
Hi All,
I am now into my second year of a new business venture. I worked a night job to fund the business and I stayed in that job until June 2019, I am now full time and looking to grow the business either with more locations, and / or get the product into high street retailers.
My mark up is around 550% per item. Is that good? The business has experienced excellent growth, even by taking into account Dec 2018 vs Dec 2019, for example, it's almost 5 times more.
Any suggestions on where to go from here would be greatly appreciated.
The details of the product are intentionally vague. it's not food or drink but it's all made by me.
Here's to 2020,
Andy
If this is "all made by me" then are you pricing labour & premises into any growth? Without knowing any details, it could be that your growth is constrained by the inability to make everything yourself, sell everything yourself, etc.I am now into my second year of a new business venture. I worked a night job to fund the business and I stayed in that job until June 2019, I am now full time and looking to grow the business either with more locations, and / or get the product into high street retailers.
My mark up is around 550% per item. Is that good? The business has experienced excellent growth, even by taking into account Dec 2018 vs Dec 2019, for example, it's almost 5 times more.
Any suggestions on where to go from here would be greatly appreciated.
The details of the product are intentionally vague. it's not food or drink but it's all made by me.
Here's to 2020,
Andy
In terms of margin, if this is gross margin (sale price less cost of materials, your labour free etc.) then your figure isn't necessarily exceptional - you've neatly defined "added value"
Do you have a business plan?
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