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Thread: Mark up

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    Mark up

    Hi all, I am new in here and need advice.
    I am the distributor for a international company new in South Africa.

    What i need to know, what is the average mark up an importer/distributor charges and how? Do you include transport costs or does the buyer pay.

    What is average retail mark up ie: health store, sports store, online retailer and major stores ie: Dischem


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    Transport to your premises before you sell is seen as part of the cost of sales.

    Transport from your premises is seen as an expense, sometimes recoved as an income by the customer paying for it specifically.

    If you plan on leaving stock where it is and only work on an order as needed basis, it is seen as from your premises.

    Percentage markups are not the way to go anymore with online retailers. Compare what others are charging.

    From importer to retailer large differences can be found from industry to industry. Clothing can be 300% easily and IT from 20%. Computer wholesalers and stores usually do 10%, but they dont enjoy the buying power disounts retailers do, so the prices arent that much lower. (esp when specials come about)

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    Thanks. Now lets say. The health, nutrition supplement industry?(sports supplements) What is the mark up usually?

    Why does one not use percentage anymore?
    How would i work it out. What should my profit be? I know there is GP and net profit, then there is also vat etc..

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    Surely your international supplier has given you an idea of what mark up you can expect, based on their experience to date?

    I suppose someone in the industry might post and give you mark ups they are currently achieving, however somthing like that is normally a bit of a secret.

    Essentially your job is to get as high a price as possible. Either by providing a superior product or negotiating clever deals. Similar competitor products and customers will try to drive the price lower.

    There is not usually a specific percentage answer to your question. Instead mark up will vary, depending on customer type, quantities ordered, product popularity, availability and other factors. This can change on a regular basis.

    Perhaps you need to work this back wards a bit. First calculate how much money you need to make each month from this product to comfortably cover expenses and make a decent profit (total gross profit). Take a couple of possible selling prices and work out your profit per item for each selling price.

    Now divide your gross profit by your item profit to work out how many items you need to sell each month to make your profit at each possible selling price. Now when you start negotiating with customers you know what your lowest price can be.

    All these calculations are done excluding VAT.

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    Quote Originally Posted by Chaz View Post
    Hi all, I am new in here and need advice.
    I am the distributor for a international company new in South Africa.

    What i need to know, what is the average mark up an importer/distributor charges and how? Do you include transport costs or does the buyer pay.

    What is average retail mark up ie: health store, sports store, online retailer and major stores ie: Dischem

    There is no average mark up. Quicker moving items (tennis balls) have alot lower mark up than tennis raquets. Items that have a lower cost like mouth gaurds have a higher mark up than high end hockey sticks. Products that have a shelf life would probably have a lower margins than items without.

    Roughly, from what can understand. The importer, after getting it to the wharehouse, puts on around 30 - 35%. The shop then puts on 40% - 70%. As a very rough guide.

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    Dave A (09-Jun-10)

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    Bronze Member Butch Hannan's Avatar
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    There is a very basic rule as far as selling is concerned. Your price should be determined by what the market will pay for a specific item.

    Decide what you would like to make on an item and pitch your selling price a lot higher than this. By doing this you will be able to offer a bit of discount to clinch a sale. Human nature likes to think it is getting something off a price.

    Butch Hannan

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