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Let's Talk About Wholesaling through Distributors

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amp0193

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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
  • 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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SYK

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Where'd you land with this, man? It's been 8 months (this is most recent thread that came up for the search 'distributor!) so I'm guessing you figured something out.

I'm in a similar place that you were. Getting lots of distributor requests, just trying to figure out the best way to play it.
 

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