Post a new topic
    6 Replies Latest reply on Jul 17, 2012 2:14 PM by Enricoludo

    Profit Margin

    sooner Wayfarer
      I manufacture a product and sell wholesale to retail stores. What would be the general rule of thumb of a profit margin for a manufacturer of products? Should it be higher than a retailer margin of profit? I am a new business owner who is pondering a price increase to keep up with my increases in cost of goods. However, I don't want to run off my customers. I do find that after one year of $100,000 gross sales, that my profit margin seems to be slow. I did increase gross sales by 32% in the first year and if I could replicate that for the new year I might consider not raising prices.
        • Re: Profit Margin
          LUCKIEST Guide
          Sooner, You ask a great question. Everybody in business asks that question.
          There is NO general rule of thumb for a profit margin for a manufacturer.
          General Motors, G E and all other manufacturers talk in about profit margins.
          Suggestion. Put your numbers on a "spread sheet" Play "WHAT IF"
          Do you have an Accountant. I am a Quickbooks Consultant, but Quickbooks only records the
          Income and expenses. You can export numbers to excel and play.
          Hope you can increase gross sales by another 32% or more this year.
          Good luck, LUCKIEST
          1 of 1 people found this helpful
          • Re: Profit Margin
            Ed O'Gee Adventurer
            The retailers profit shouldn't matter - your concern is your manufacturers profit. You need to take your total cost per unit (that cost should include manufacturing, packaging, insurance, and shipping). Take that costs and mark it up by at least 50% and that is what you charge retailers. The 50% gross profit on goods sold should cover your overhead taxes, salary, and ultimately your net profit.
            1 of 1 people found this helpful
            • Re: Profit Margin
              LUCKIEST Guide
              sooner, As a new business owner, you should know about SCORE. SCORE helps people (FREE) succeed.
              You can visit SCORE online (take 26 free seminars) or in person and talk to a Counselor.
              • Re: Profit Margin
                Lighthouse24 Ranger
                I can think of a lot of "right" answers for this depending on the scenario. If you could explain what product you manufacture and which retailers sell it, it would really help. Thanks!