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Thread: Retail / Wholesale Price - Please help!

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    Exclamation Retail / Wholesale Price - Please help!

    This is a dummy question and it might sound stupid, but since I am not South African and have no experience in the retail market I REALLY need your help.

    MSRP of my product: R174,56 + VAT = R199
    Wholesale price: R117 + VAT = 133,38

    Huge suppliers like UPD get 15-20% discount on the wholesale price depending on the quantity.

    My question: Is the wholesale price of 117 + VAT acceptable? Too high? Too low?

    Is R57,56 profit / 49,20% Markup / 32,98% Gross Margine acceptable for a retailer?

    Please help me out. I have no clue how retailers calculate.

    Thanks
    Last edited by Wolf; 02-Apr-08 at 02:24 PM.

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    just me duncan drennan's Avatar
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    Is that your price to the distributors, or the price the retailer pays?
    [SIGPIC]Engineer Simplicity[/SIGPIC]
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    117 + VAT is the price for the retailer.

    A distributor get's another 15-20% discount.
    The merchandise manager of a big distribution company told me they are working on a 15-20% discount base.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by ExoPacific View Post
    Is R57,56 profit / 49,20% Markup / 32,98% Gross Margine acceptable for a retailer?
    I'm not in retail, but I do know that one of the issues in retail is the cost of the shelf space. The turnover rate of a shelf of product is an important factor in determining an acceptable mark-up.

    I'm not sure the percentage mark-up is the ultimate factor. It's a case of how many Rands each square metre of shelf is producing per month.
    The trouble with opportunity is it normally comes dressed up as work.

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    Makes sense Dave.

    Even better for me because one item just takes about 4cm² on the shelve.

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    Site Caretaker Dave A's Avatar
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    As long as it doesn't stay there for too long - don't forget that. It's time and space.
    The trouble with opportunity is it normally comes dressed up as work.

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    I am convinced with the right eye catcher it wouldn't stay there for long. Once the people get to know that there is a product like this available they will go for it - and use it for the rest of their lives

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    i am guessing you're talking about cosmetics, because i read & replied to your other thread. mark-ups are very different depending on the product category. for branded cosmetics the mark-ups are actually quite low, between 33% and 37% should be on target.

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    Platinum Member Marq's Avatar
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    For pricing you must also bring into account your fixed costs - determine your breakevens and from there look at the volumes that you must do/ can do to make what you want in the bank - and from there look at the markups again and so on until you feel you can make the max while not losing out to the bigger guys.

    Its not easy but as you get into your own market, the numbers will come.

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    Quote Originally Posted by Dave A View Post
    As long as it doesn't stay there for too long - don't forget that. It's time and space.
    Hi Dave. I couldn't agree with you more on the time issue. We try to mark down an article after a said time of standing still. Even untouched stock get dammaged, stale or old. We try to apply a FIFO and would eventually sell it at cost if we have to as long as the stock moves.

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