Setting the right price point for your wholesale distribution products is not an exact science. You will want to set a price point that yields profit while also paying for your time, labor and expenses. You also need to keep in mind that setting the right price also means doing good business with both consumers and retailers, by sticking to the prices you set.
When setting price points for your wholesale distribution items, you first will want to take into account the market context and what is and isn’t working within that market. Then, you set your price point, taking into account all the necessary considerations — labor, goods and overhead — and then doubling that money to account for profit.
1. Assess the market
Look at sales data from your retail and niche markets over the last few years. What trends do you notice? What are consumers willing to pay, and for what?
Looking at this data and more will help you to assess what direction you should take with determining the right price for your product.
2. Account for profit
Take into account what you paid the distributor, as well as any additional fees you must make back. If you manufactured your product and you are the one distributing it, consider the costs for labor, goods, materials and overhead (rent, utilities, supplies). Add all those up, then double that to create your wholesale price. This is a common formula used to figure out wholesale pricing, but there are others out there that distributors are using.
3. Don’t forget about labor
As a wholesale distributor, when you are determining the price for your item, don’t forget to include labor, even if you’re the one making your items for now. Set an amount per hour and stick to it.
If your wholesale business is on the ground and it takes off, already having labor costs accounted for will make it easier to transition, and if not, you could increase your efficiency and make some money off your labor costs.
4. Adjust your price according to your customer
If you’re selling to retailers, you’re going to want to set a fair price point, while offering ways to incentivize them to buy in bulk at a lower price per item. Offering pricing tiers for retailers is a way to encourage larger orders and make more revenue. For example, you can pay $10 per item on an order of 100 items, or you can order 500 items and pay $9 per order.
In the end, the retailer saves money per item, money they will make back in the end. When selling directly to consumers, you’re going to want to sell your item at its full retail price — that is, double your wholesale price. In doing this, you will ensure you are doing fair business to the retailers you sell to by ensuring retailers pay the same or a similar amount of money to you that they would to the retailer.