OEM - Supplier discount
Discussion
Negotiating with a foreign company to set up the only UK agency servicing/repairing their kit.
They reckon there's about 150k sales of parts in the UK, they're offering me 10% discount on the UK market price (set by them). To me that's not enough to even cover the costs & time of handling (booking in, stocking, booking out, invoicing, payment chasing).
From past experience mark up is set by an exchange rate linked equation, lowest I've seen is 100% and 200% on some items.
Thoughts?
They reckon there's about 150k sales of parts in the UK, they're offering me 10% discount on the UK market price (set by them). To me that's not enough to even cover the costs & time of handling (booking in, stocking, booking out, invoicing, payment chasing).
From past experience mark up is set by an exchange rate linked equation, lowest I've seen is 100% and 200% on some items.
Thoughts?
dfen5 said:
From past experience mark up is set by an exchange rate linked equation, lowest I've seen is 100% and 200% on some items.
No, size of mark up is an individual commercial figure dependant on 100s of variables, including type of market, competition, actual cost etc, etc.Chinese suppliers quite often think you're being greedy going for 15%.
Presumably you would make your money from the servicing aspect?
Ean218 said:
No, size of mark up is an individual commercial figure dependant on 100s of variables, including type of market, competition, actual cost etc, etc.
Chinese suppliers quite often think you're being greedy going for 15%.
Presumably you would make your money from the servicing aspect?
Yes. Spares - a second income stream. Chinese suppliers quite often think you're being greedy going for 15%.
Presumably you would make your money from the servicing aspect?
Tonight I've had a revised pricing structure through. I am surprised by the low mark up people are working with these days but assumptions and all that..
Mark up seems an odd term in this context - we (fairly specialised industrial parts) always talk about GPM - gross profit margin. 100% mark up is 50% GPM.
In your example of getting 10% discount on the sell price, that equates to 10% GPM, it's not 10% mark up.
Our distributors will do back-to-back orders at 10% if we lean on them, but they don't like it. And they're looking for 20% to carry stock. Times have changed though - years ago 30%+ was common.
In your example of getting 10% discount on the sell price, that equates to 10% GPM, it's not 10% mark up.
Our distributors will do back-to-back orders at 10% if we lean on them, but they don't like it. And they're looking for 20% to carry stock. Times have changed though - years ago 30%+ was common.
It depends on the market price as well.
I'm about to import a product from the USA. The pricing I've been given in dollars isn't a great discount from their USA RRP's. If I was in the USA I'd probably ignore it.
However we'll be selling it over here at the USA RRP but in GBP. So it's $129.99 in the USA and we'll sell it for £129.99 here, means the margins are improved enough for it to be worthwhile.
It's tougher if you have a set UK price to stick to already. Don't forget VAT, import costs, storage etc.
I'm about to import a product from the USA. The pricing I've been given in dollars isn't a great discount from their USA RRP's. If I was in the USA I'd probably ignore it.
However we'll be selling it over here at the USA RRP but in GBP. So it's $129.99 in the USA and we'll sell it for £129.99 here, means the margins are improved enough for it to be worthwhile.
It's tougher if you have a set UK price to stick to already. Don't forget VAT, import costs, storage etc.
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