A Guide To Determining Wholesale Prices For Your Goods

In the hierarchy of product distribution, wholesaling is the middle point. It’s a bridge between a supplier and a retailer that entails a critical analysis of the pricing. One thing is for sure, you also ask yourself this question: how do I know what wholesale prices look like? With all the formulas and computations in many business blogs, it’s just hard to come up with a solid picture. Many factors play here to avoid overcharging a retailer and to keep them buying your products in bulk.

Many sellers find it hard to directly market their goods to the targeted buyers so they decided to be a supplier for the retailers. If you make your own products, you’ll enjoy the benefit of letting smaller businesses take part in selling it. With that, you’ll have a widespread, free promotional campaign even while you sleep.

The only difficult thing here is the risk that your brand is exposed to. Marketing messages can sometimes make a dent in your sales but if you get used to the isolated downsides, you’re going to do well.

But before you accomplish all these, you have to know one thing: pricing your products.

Set a tier price

By setting a tier price, you can have an easy, go-to matrix once your wholesaling is in full operation. This is sometimes called as advanced wholesale price where you get to push your retailers to buy more to save more money. So how do I know what wholesale prices look like? Check this out:

50 shirts = $22 per piece

150 shirts = $21 per piece

300 shirts = $20 per piece

This is just a simple representation of the possible price you’re going to impose. Setting a minimum order for the retailers will level up the ante of your sale but it will help a lot if you’ll let first-time retailers have the grace period from the minimum order rule. After that, stick to your business and make them follow your pricing. Discounts and further exemptions should be evaluated well to avoid the negative impact it may bring to your biz.

how do I know what wholesale prices look like

Never compete with your own retailers

Sometimes, wholesalers also act as retailers of their products. If you’re selling your fancy shirts for $40 per pair to your direct consumers, you should price the retailers a lower cost. This is to prevent competing with your own sellers since you’re the one offering the lowest price in the market. Such thing will defeat the purpose of letting retailers market your own goods. This isn’t a good move to funnel the consumers to your platform either.

If your t-shirt has a total production cost of $15, sell it to the retailers for $20. With that, you’re going to make five dollars for each t-shirt that the retailers would likely sell for $40. This way, you will not upset any retailers and a supply of your products will stay on their shelves.

Look for the usual market price

Keeping in line with the usual market price will ensure that your products will be purchased. A very high price will easily divert a possible customer to look for the same version with a smaller price tag. That’s equal to a sale and lots of possible referrals from the buyer. It’s not the answer to “how do I know what wholesale prices look like?”

If a typical t-shirt sells for $40 in the market, your unique tee stands a chance at $50. This is where you’ll base wholesale price to your retailers with the consideration of the production costs. If you produced the top for $15, you can give it to your retailers for a price of $20 or $22. You’ll already have $5 or $7 there which isn’t that bad at all.

One thing that will allow you to increase your price beyond the general market pricing is the features of the goods. If your shirts have unique designs, you can sell it for a higher price.

how do I know what wholesale prices look like

Calculate the production and indirect cost

After determining the general cost in the market, it’s important that you take into consideration the total production and indirect cost you spent for the creation of the product. This includes the cost of material per unit, cost of labor per hour, and the cost of operating the business.

If the fabric, thread, and prints cost $10, that would be the material cost of your t-shirt product. You’re going to add here the cost of labor per hour divided by how many shirts are produced in the said a timeframe. If you pay yourself $15 per hour and you can finish five shirts, that’s additional $3 on your end. This is the answer to how do I know what wholesale prices look like.

Another thing to think of is the overhead cost. T-shirt production will include electricity, needles, machines, air-conditioning, printing machine, etc. You can calculate this on a monthly basis vis-à-vis the number of shirts you can sell at the same time. That could be a safe $1 or $2 addition to the price.

Overall, you the production cost of your t-shirt will be about $14-$15 per piece.

Consider the profit margin

As a wholesaler, you should respect the profit margin. Retailers would likely sell your products double than the price they bought it from you. This is normal and common practice, as they would have to market the goods. They would also have to gamble with the possibility of not selling the products they bought. Some goods might also take time before a buyer would purchase, say a bike or a car.

To get the profit margin, you should divide your profit to the total cost you charge from the retailer. It could be 25-31% on your shirts!

So how do I know what wholesale prices look like? All these points above will give you practical tips to do the math on your product. It’s important to always consider your retailers for them to continue marketing your goods.

Leave a reply:

Your email address will not be published.

A Guide To Determining Wholesale Prices For Your Goods

time to read: 4 min