ForumsInternet/eCommerce

You can attack numbers a few ways, I'm hoping there is another way before I have to solve it through P&L fidigiting. I know we could calculate it based on hours to create product, or you can use your monthly/yearly P&L to build your products #'s all assumptions, is there a way to reverse it from the retail and cost to create the right margins for wholesale. I feel I can solve it this way but I just lack the technical expertise to do so. I'll refine my P&L projections and see if I can't wedge in a wholesale projection to equate the needs of the business owner and if another idea surfaces I'll take all the information and wrangle it again.

Thanks for the commentary Lighthouse, it at least got me thinking on that track again.

-andy

You asked, "Is there a way to reverse it from the retail and cost to create the right margins for wholesale?" Maybe I'm misunderstanding the problem (if so, I apologize) -- but for a confectionary type product that the market is already familiar with, yes, there are established retail price points for low end, mainstream, and gourmet -- and the wholesale price is typically in the range of 35 to 50 percent of retail. The more margin you can afford to give the retailer, the better placement and promotion you normally get. Of course the less margin you give them, the more money you make -- so that's why I suggested "playing" with various scenarios in a spreadsheet (to see what production numbers and pricing strategies worked best after factoring in all the projected sales figures, manufacturing costs, overhead, distribution, returns, etc.). Discounts below wholesale are normally be tied directly to the volume/quantity purchased, and calculated on the basis of how much you save on shipping/handling/delivering the larger order (it's cheaper for you to deliver two cases one time than one case two times, so you pass that along -- provided the product doesn't have any unusual storage requirements, transportation restrictions, or shelf life limitations that could increase your cost and/or returns).

Again, not sure any of that will help you, but maybe . . .

The very first step is to break down all your costs into direct or indirect (variable and fixed). For the direct or variable cost you should identify each product you product and the amount of labor and materials that go in it and the resulting costs associated with each. For the fixed or indirect costs just identify them and the annual spend. Once you have broken out these two categories you can extract a lot of valuable information. After this is done you can deterine the margin by three ways - the current market price ( what the market cas support), the expected return for the investors and/or the volume that can reasonably be acheived given the resourced.

Hope this helps.