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    3 Replies Latest reply on Feb 11, 2008 9:26 AM by puzzleman

    Mark-Up of Merchandise

    frazzle Wayfarer
      Just wanted to know if there was a general rule of thumb as to how much a product should be marked up. I'm importing some items and it will cost me about $10 per item by the time it reaches my inventory (cost to manufacture, frieght, customs, etc.). What is the typical mark-up? 200%? 300%?
      Also, if I have a unique product on the market not found elsewhere, does that grant me the luxery of charging a little more? Or would that be considered unethical?
        • Re: Mark-Up of Merchandise
          LUCKIEST Guide
          frazzle, good question. Mark-Up of Merchandise.
          There is nothing UNETHICAL about what you charge.
          There is the Law of Supply and Demand
          In economics, supply and demand describe market relations between prospective sellers and buyers of a goods.
          The supply and demand model determines price and quantity sold in the market.
          The model predicts that in a competitive market, price will function to equalize the quantity demanded by
          consumers and the quantity supplied by producers, resulting in an economic equilibrium
          of price and quantity.
          Hope this helps, LUCKIEST

           


          • Re: Mark-Up of Merchandise
            Lighthouse24 Ranger

            There is no general rule of thumb for product mark-ups. It depends on the product itself (and what similar products sell for), your overall product mix (and whether you can afford to sell some products below cost in order to draw customers to your unique products with higher mark-ups), your sales volume (in general, the more you can sell, the cheaper you can afford to sell it), and your operating margin (the amount you have to make in order to pay the bills and clear a suitable profit).

            The ethical question is trickier. For a purely discretionary item, there is generally no ethical question involved. But for an item that might be considered "necessary" for someone in your customer base, it could be. For instance, what would you be willing to pay for the one unique drug that could heal your child if he or she were sick? If it cost the pharmaceutical company $10 to make it, would it ethical for them to charge you $30 to buy it -- or $300, or $3,000 . . . just because they could?

            There was an old TV show called Green Acres. In it, one of the running gags was this country peddler (Mr. Haney) who would arrive just minutes after the city farmer (Oliver Douglas) realized that a product or part was needed for something he was working on -- and Haney would just happen to be selling exactly that product or part (even if it was something odd) at an outrageous price. Oliver once asked, "How come you always show up with exactly what I need?" Haney replied, "How come you always need exactly what I show up with?" So was Haney unethical or just a good entrepreneur? Probably some of both.

            • Re: Mark-Up of Merchandise
              puzzleman Tracker
              Frazzle, I wholesale my products and most of customers double the price i sell to them and then add the shipping. Each of my items are personalized, so I ship one at a time. I do have a few customers that sell it for less than double and one who sells it for about 2.5 times cost. It depends on the market.

              My opinion is to investigate other places and see what they are selling similar products for. Adjust your price for where you want to be in the market (low end and sell more units at lower profit or high end and sell less units at a higher profit). Ensure that whatever price you sell it for that you are getting enough return to cover your cost of goods plus your time to process the order plus a little more for profit.

              Jim