Distribution mark up?

[fashiongirl]

Hi everyone, is there a good material/book to read on how to sell products for distribution by other stores? For instance, when offering an x amount of items to a store what is the pricing formula used so that both parties make money? Assuming, that the store is interested to sell the product and doesn't need to spend on a specific brand marketing since they carry a number of dif. brands.

[huggytree]

my suppliers make in the 10% or less range

[tmerrill]

Here is a book I found at my local library: Distribution, retailing, and wholesaling, by Hephaestus Books, 2011. If you can't find this one in particular, just search for distribution or retailing and you should be able to find something.

[SteveM]

The wholesale pricing formula depends on the industry and exclusivity of the product. As Huggy mentioned, most distributors have a flat 5-20% over production cost mark-up on their wholesale products. Some wholesale distributors will use an "X" amount off retail list-price strategy. Wholesalers don't typically make much per-unit; their goal is moving LOTS of unit volume.

In your case where you may be moving small amounts of product, perhaps the best approach would be to split the profit between you and the retailer; i.e. if there is a 50% mark-up over production cost on your product, sell it to the retailer for 25% under MSRP.

[rshughes]

You probably shouldn't be depending on a book to figure out the discounts that other retailers expect. As SteveM stated, it will depend on the industry and the product in question. Are there friendly retailers (who don't have a vested interest and are not your competitors) who might tell you what their markups or expectations are for your specific type of product? In a retail situation I'm slightly familiar with (auto parts), their markups can be 70-100%. So they'd expect to buy an item for $.50-.60 from the wholesaler and sell it for $1.00. Generally speaking, retailers have a lot of overhead - rent for the retail space, employees, investment in inventory which may not turn very quickly, etc. - so they need to have a relatively high markup to recover these costs.