AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |
Back to Blog
Selling candy bars for profit11/18/2023 ![]() ![]() Should you then price it to the retailer at $5, building in an allowance of $1.67 for a future distributor/broker? Assuming the retailer prices the bar at double their cost, the retail price will be $10. Would mind expanding on this? Say the wholesale cost of a bar, including profit, is $3.33. I will account for a distributor in my pricing structure in excess of the 100% on top of whole sale. Ok, sounds like a wise decision that can only be beneficial. Later on, when you decide you do need help distributing, you have the margin built in and don’t have to either raise prices or reduce your Butterbaugh From the start you can keep it, or offer it as an incentive discount for volume commitments. I urge you to reconsider only a 100% markup from wholesale and build in some distributor margin – at least one tier – into your pricing structure from the beginning. This explains why so many small scale chocolate makers have to sell bars for Gordon At this point I will assume a 100% markup on my wholesale price to retail stores to be safe. I’m in the process of leasing a place to set up a little factory. You’re right, I’m planning to sell bars to stores like Whole Foods and R Fields very soon. The difference is what you have to play with to offer distributors, and you get to keep the difference until, or if, distributors get involved.Ĭomment by: DiscoverChocPosted on: Aug 05, Butterbaugh One rule of thumb suggests that the wholesale cost of the bar, including ALL your profits, should be about one-third of the retail price, figuring in a 100% markup (double the wholesale price) for the retailer. 25% gross margin on that same $4 bar nets out at $1.32.Those thirty-two extra cents, when added up over thousands (perhaps tens of thousands) of bars, can be the difference between having a healthy business and going out of business.Īfter all those expenses are accounted for, what’s left over, if anything, is your net profit or (loss).25% markup on a bar with a COGS of $4 is $1.00, for a price of $5.This is the minimum gross profit you will make and out of this figure comes all your other costs – overhead, cost of sales and marketing. To this total COGs figure add a gross margin (not markup amount. The most important thing in all this is to have a very good handle on your total cost of goods – including the price on ingredients, labor, packaging – as the starting point for pricing the bar. And oh, by the way, if you want to sample in-store there will be a charge for that. They will also upcharge for giving you a good location on the shelf (called slotting fees), and they may want you to contribute free product for promotions. Some retailers, especially larger ones, will want to nickel and dime you, such as requiring free fill (basically, the first order for free). Keep in mind that most retailers are going to double the wholesale price they pay. You want to avoid this situation at all costs ( pun intended). I have seen many chocolate businesses fail because they did not account for middlemen in the distribution chain and there wasn’t any slack in their cost structure. By that I mean are you selling direct to the consumer, are you selling directly to retailers, and/or are you selling through a distributor and/or broker.īecause you might not always be selling directly to the consumer or retailer, you need to build at least one (and preferably two) layers of distribution into your model, a broker and a distributor. ![]() ![]() There are many things you need to consider when pricing your products, and some of the most important have to do with how you are selling them. I am assuming that you are making chocolate and looking to sell it to stores for retail? ![]()
0 Comments
Read More
Leave a Reply. |