So, I'm working on my pitch for distributors, and before I reach out to anyone, I'm trying to wrap my head around pricing. I'll round the numbers to keep it simple.
My current per-unit set-up, with no distributor
If I add a distributor in the mix, should I try to keep the retail store at keystone pricing, and split the $5 profit with the distributor, so they are earning 25% of retail price?
So like this:
My average wholesale order is $300. So on a typical order, this would yield these profits:
50% of stores choose to re-order, and do so about every 3 months. These accounts would be $25/mo profit for me and the distributor.
So questions:
Any other tips or experience the forum can share about working with distributors?
My current per-unit set-up, with no distributor
- COGS - $5
- Wholesale - $10
- Retail - $20
If I add a distributor in the mix, should I try to keep the retail store at keystone pricing, and split the $5 profit with the distributor, so they are earning 25% of retail price?
So like this:
- COGS - $5
- Distributor buys at - $7.50
- Wholesale buys at - $10
- Retail Customer buys at - $20
My average wholesale order is $300. So on a typical order, this would yield these profits:
- Me - $75
- Distributor - $75
- Store - $150
50% of stores choose to re-order, and do so about every 3 months. These accounts would be $25/mo profit for me and the distributor.
So questions:
- Does that pricing make sense? Would that be a good deal for the distributor?
- Would it be worth increasing the stores' buy price to beef up my and/or the distributors profit?
- Are distributors going to want more than 25%?
- What are your current pricing arrangements, and what else have other distributors you've talked to asked for?
Any other tips or experience the forum can share about working with distributors?
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