I have a product, it doesn’t really have much competition - other companies are producing indirect alternatives that are either performance-wise very poor, or require much higher technical abilities from the user to be usable. I’ve already tested the market and the product sells well.
So, in light of the above, when you don’t really have any direct competitors, how do you decide on wholesale pricing, both quantity and percentage-wise? I feel like the suppliers I’ve spoken to, who are asking for 40-50% are asking too much (it is affordable, I just feel like it’s not fair really. The product will be priced around $125-175). This is my first venture so please excuse me if it’s an amateur question or if my expectations are way too high.
Thanks!
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Ok, say $150. Now how much does it cost to produce and ship?
Assume it cost $50 or margin of $100.
Wholesale wants $75 or margin of $25.
Thus, you need to sell four units at wholesale to equal the margin of one retail sale.
So, to answer your initial question, metrics are required.
How much demand is there? How much does it cost to produce and ship? How many can be produced and in what time period?
If you can produce enough, it might not make financial sense to sell at wholesale.
Why wholesale at all? What do they offer that you can’t do yourself?
Well they have a lot more traffic to their site, they also spend a lot more on marketing so they can acquire customers for my product I suppose. Considering my website is relatively new and only gets a few thousand visits a month, do you think it’s worth it?
“…doesn’t really have much competition…”
“…other companies are producing….indirect alternatives……that are….very poor, or require much higher technical abilities…” to use.
So you do have competition.
If you believe 40 percent is too much, retail price is probably to low.
Also, around $125 to $175 is pretty vague. That’s $50 spread.
“I’ve already tested the market and the product sells well.”
If so, what price did you get?