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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?
 

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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