Profit percentage.
Discussion
Just a quick one. I’m totally new to this.
I have started manufacturing a product and have a few vendors interested in stocking my item. The item will be in a 305x305x305mm box so not massive but not tiny. I would ideally be delivering them 15 units at a time and that is what I get out of one production run.
My question is, I have priced my product at £65 what percentage would be average for the vendors to take on something like this.
Would it be standard practice to ask them what percentage they want or say “ I have this product that will sell for £65 and I’d be willing to give you 10% per unit sold” .
As I said I’m new to this so any reply/ feedback would be much appreciated.
I have started manufacturing a product and have a few vendors interested in stocking my item. The item will be in a 305x305x305mm box so not massive but not tiny. I would ideally be delivering them 15 units at a time and that is what I get out of one production run.
My question is, I have priced my product at £65 what percentage would be average for the vendors to take on something like this.
Would it be standard practice to ask them what percentage they want or say “ I have this product that will sell for £65 and I’d be willing to give you 10% per unit sold” .
As I said I’m new to this so any reply/ feedback would be much appreciated.
Price is down to the balance of supply and demand. What do competing products retail for at the moment?
The retailer will be expecting a margin off that of course, which hopefully will leave you with an acceptable profit.
Ideally you should work it backwards: what will consumers pay and then take the retailer's margin out to identify any gross profit generated. Obviously that margin might need to include a budget for promoting your product in order for said consumers to want to buy it in the first place, unless it's a commodity.
The retailer will be expecting a margin off that of course, which hopefully will leave you with an acceptable profit.
Ideally you should work it backwards: what will consumers pay and then take the retailer's margin out to identify any gross profit generated. Obviously that margin might need to include a budget for promoting your product in order for said consumers to want to buy it in the first place, unless it's a commodity.
nickfrog said:
Price is down to the balance of supply and demand. What do competing products retail for at the moment?
The retailer will be expecting a margin off that of course, which hopefully will leave you with an acceptable profit.
Ideally you should work it backwards: what will consumers pay and then take the retailer's margin out to identify any gross profit generated. Obviously that margin might need to include a budget for promoting your product in order for said consumers to want to buy it in the first place, unless it's a commodity.
Thanks for the feedback and advice. It’s a product that is already sold in a few places including places like Amazon for as little as £20 but the reason I wanted to produce this is because from my experience and many others they probably only last a season or 2 before they start falling apart. My product is more expensive but is made fully out of 316 stainless steel and fully welded instead of riveted/ spot welded. The retailer will be expecting a margin off that of course, which hopefully will leave you with an acceptable profit.
Ideally you should work it backwards: what will consumers pay and then take the retailer's margin out to identify any gross profit generated. Obviously that margin might need to include a budget for promoting your product in order for said consumers to want to buy it in the first place, unless it's a commodity.
hotchy said:
I can only go by retail as i run a retail store but reps come in with the price i pay, and a recommended price to sell with the profit margin clearly shown. I can change the price etc and if I think it would sell I go for it. We work on 30-40% on most things.
Thanks for the advice. biggiles said:
What sort of shops are you selling to? Supermarket demands will be very different from farm shops etc.
BBQ supply shops. along the lines of places like this. https://bbqland.co.uk/?gad_source=1&gad_campai...
seabod91 said:
Just a quick one. I m totally new to this.
I have started manufacturing a product and have a few vendors interested in stocking my item. The item will be in a 305x305x305mm box so not massive but not tiny. I would ideally be delivering them 15 units at a time and that is what I get out of one production run.
My question is, I have priced my product at £65 what percentage would be average for the vendors to take on something like this.
Would it be standard practice to ask them what percentage they want or say I have this product that will sell for £65 and I d be willing to give you 10% per unit sold .
As I said I m new to this so any reply/ feedback would be much appreciated.
How about turning it around. Let them set the retail price, but you provide it at a fixed price that means you make some profit.I have started manufacturing a product and have a few vendors interested in stocking my item. The item will be in a 305x305x305mm box so not massive but not tiny. I would ideally be delivering them 15 units at a time and that is what I get out of one production run.
My question is, I have priced my product at £65 what percentage would be average for the vendors to take on something like this.
Would it be standard practice to ask them what percentage they want or say I have this product that will sell for £65 and I d be willing to give you 10% per unit sold .
As I said I m new to this so any reply/ feedback would be much appreciated.
Good on you for giving this a go!
I’m a bbq enthusiast so I’m probably in your target audience, the first thing I would say is have you posted this on CountryWoodSmoke bbq on Facebook? There are quite a few people on there who produce things like planchas, knives and so on. You’ll get great feedback on there too as they are a helpful bunch.
With that in mind if you can show a high level of craftsmanship or possibly personalisation you would be able to justify your price point more.
Good luck and keep us posted with how you get on. Warts and all, bringing a product to market isn’t for the faint hearted so do expect some(lots) of bumps on the way.
I’m a bbq enthusiast so I’m probably in your target audience, the first thing I would say is have you posted this on CountryWoodSmoke bbq on Facebook? There are quite a few people on there who produce things like planchas, knives and so on. You’ll get great feedback on there too as they are a helpful bunch.
With that in mind if you can show a high level of craftsmanship or possibly personalisation you would be able to justify your price point more.
Good luck and keep us posted with how you get on. Warts and all, bringing a product to market isn’t for the faint hearted so do expect some(lots) of bumps on the way.
My experience having worked with some of the big UK outfits.
Margins demanded will vary a huge amount and depend on a large number of factors including, if the product is branded and promoted by the manufacturer, if the retailer has to hold stock (or if it’s drop shipped), when the retailer pays the manufacturer, who deals with returns etc.
This is a very simple example
Sale price £65
VAT £13
Cost price to retailer £30 (plus vat)
Giving the retailer circa 40% margin (for unbranded goods this is around the minimum a retailer will want, as an example for direct Chinese stock, this can be as high as 60%).
B&Q operate on an average 38% margin.
Margins demanded will vary a huge amount and depend on a large number of factors including, if the product is branded and promoted by the manufacturer, if the retailer has to hold stock (or if it’s drop shipped), when the retailer pays the manufacturer, who deals with returns etc.
This is a very simple example
Sale price £65
VAT £13
Cost price to retailer £30 (plus vat)
Giving the retailer circa 40% margin (for unbranded goods this is around the minimum a retailer will want, as an example for direct Chinese stock, this can be as high as 60%).
B&Q operate on an average 38% margin.
seabod91 said:
DSLiverpool said:
Have you done a competitor analysis?
No. This is in a way a side hustle / passion adventure. It s basically a charcoal starter for people who bbq. Due to my experience and many others I wanted to build something that lasts and not fail after a year. Badda said:
seabod91 said:
I d be interested to see that after 20 uses. seabod91 said:
Badda said:
seabod91 said:
I d be interested to see that after 20 uses. Wilmslowboy said:
My experience having worked with some of the big UK outfits.
Margins demanded will vary a huge amount and depend on a large number of factors including, if the product is branded and promoted by the manufacturer, if the retailer has to hold stock (or if it s drop shipped), when the retailer pays the manufacturer, who deals with returns etc.
This is a very simple example
Sale price £65
VAT £13
Cost price to retailer £30 (plus vat)
Giving the retailer circa 40% margin (for unbranded goods this is around the minimum a retailer will want, as an example for direct Chinese stock, this can be as high as 60%).
B&Q operate on an average 38% margin.
I probably haven't had enough coffee yet this morning, but I can't get those figures to work.Margins demanded will vary a huge amount and depend on a large number of factors including, if the product is branded and promoted by the manufacturer, if the retailer has to hold stock (or if it s drop shipped), when the retailer pays the manufacturer, who deals with returns etc.
This is a very simple example
Sale price £65
VAT £13
Cost price to retailer £30 (plus vat)
Giving the retailer circa 40% margin (for unbranded goods this is around the minimum a retailer will want, as an example for direct Chinese stock, this can be as high as 60%).
B&Q operate on an average 38% margin.
£65 (plus VAT) with a 40% margin implies a cost price of 65-26 = £39.
If the £65 includes VAT then cost price is about £54 so the margin is 45% but the VAT is just under £11.
This will be easier to sell direct on TikTok, plenty of dropshipping, 3PL companies that can do the fulfilment for you.
Lot's of demo videos on all sorts of different types of BBQ's with different fuel types. Show them at 1 use, 10 uses, 100 uses to show quality. Leave one outside all year round with a webcam pointing at it to show how long term resilient it is to those that don't' take care of stuff and so on and so forth.
Stamp the steel (emboss?) with a "Brand"
Lot's of demo videos on all sorts of different types of BBQ's with different fuel types. Show them at 1 use, 10 uses, 100 uses to show quality. Leave one outside all year round with a webcam pointing at it to show how long term resilient it is to those that don't' take care of stuff and so on and so forth.
Stamp the steel (emboss?) with a "Brand"
seabod91 said:
DSLiverpool said:
Have you done a competitor analysis?
No. This is in a way a side hustle / passion adventure. It s basically a charcoal starter for people who bbq. Due to my experience and many others I wanted to build something that lasts and not fail after a year. Gassing Station | Business | Top of Page | What's New | My Stuff