A new stockist wants to increase the prices to more than what I am selling for..

[smithster1]

I have launched a new range of products in the food space, they are shelf ready products that you buy and take home to use.
Let's just say I am selling them for £7.... The rertailer wants to sell them for £7.95.. This retailer is relatively small but strong in the independent niche they are in.
Their main reason is becaus they don't feel they are making enough margin.
But as far as I am aware this would be bad business practice, not only for other stockist but mainly for my customers (and theirs) as well as just making the brand look disjointed.
Should I stick to a strict RRP for all retailers?

 

[fisicx]

The retailer sets the price they feel is right for them. If it doesn’t sell it’s not your problem. Unless it’s sale or return.

 

[Mark T Jones]

Legally you are walking a line (at best) with price fixing

Practically - why are you even worrying - your job is to sell to retail, theirs is to sell to the public. They know their customer better than you do.

Your brand won't suffer from a retailer selling it for more than you hope

 

[WaveJumper]

Several questions spring to mind like how many do they sell, they obviously know their market, if they need a bigger margin are you asking to much for the item in the first place, how many are your other retailers selling and are they making enough margin to keep returning for more ?

Personally I would be more worried if they were discounting that could bring the whole brand down

 

[DontAsk]

It's a no brainer. Let them do it. If they are successful then take that as a hint on your own pricing.

I have seen my products being sold on eBay for more than you could buy them new.

 

[Gecko001]

So you are producing this product and supplying it wholesale to retailers as well as retailing it yourself. Is that correct?

 

[Paul Carmen]

Good, why on earth would you not want to do that?

Anything that takes pricing and margin up, rather than eroding it, is to be applauded.

 

[tony84]

Why would it be bad business practice for other stockists?
If one company wants to see at 7.95 let them. If the others want to sell at 7, then its better for them.

I have no idea why you are making a meal out of it (no pun intended). As above, unless it is sale or return, in which case remove the return option from the deal and its up to them then isnt it.

 

[smithster1]

So you are producing this product and supplying it wholesale to retailers as well as retailing it yourself. Is that correct?

That is correct.
Does that seem odd?

 

[smithster1]

Why would it be bad business practice for other stockists?
If one company wants to see at 7.95 let them. If the others want to sell at 7, then its better for them.

I have no idea why you are making a meal out of it (no pun intended). As above, unless it is sale or return, in which case remove the return option from the deal and its up to them then isnt it.

Agreed thanks.
I just assumed that pricing was something that had to be somewhat universal (taking geographical locations out of the mix)... What is to stop a retailer selling my product for £29.95.... And then skewing the perception of my brand as being ridiculous... And then as a brand owner I am most likely to get keen if things start to sell at £29.95 and then increase my wholesale prices... Where does it end?

 

[fisicx]

It works the other way as well. Someone could dump everything at a low price and devalue the brand. Nothing you can do to stop them.

 

[serendipitybusiness]

You should really read the law on this before discussing anything further. A retailer that values their margin are a good partner to have given the risks.

 

[smithster1]

You should really read the law on this before discussing anything further. A retailer that values their margin are a good partner to have given the risks.

Where does the law come into this? As the owner of my own brand I set my own prices, RRP and WSP. If a retailer wants to sell for 5x my RRP that's their call... Where does the law come into this at all?

 

[fisicx]

The law about price fixing: you can’t.

 

[Nathanto]

Should I stick to a strict RRP for all retailers?

Where does the law come into this at all?

The Competition Act 1998. It's illegal for you to force the retailer to sell at a particular price.

 

[serendipitybusiness]

I would highly recommend you look into this further before making your next move or say anything you can't take back. There are very strict laws governing this that can directly and irrevocably effect your business if you choose the wrong trading partners. I am not qualified or authorised to offer legal advice so I will leave it here. Best of luck.

 

[Mark T Jones]

Where does the law come into this? As the owner of my own brand I set my own prices, RRP and WSP. If a retailer wants to sell for 5x my RRP that's their call... Where does the law come into this at all?

Have we misunderstood your post?

My reading was that you are looking to dictate what your reseller sells for - this appears to say the opposite?

 

[Porky]

Sorry - not getting your problem here: your job is to shift as much of your product as possible for best price for you - nothing else matters.

Why should you care if one retailer wants to charge a bit more or even five times as much to make it more viable for them. If they don't sell it or buyers go elsewhere for lower prices that's their problem not yours.

As for competitors, they won't care if a competitor is selling at a higher price to them - if anything they will be happy about it

Have to say this is the sort of problem I would like

 

[Gecko001]

That is correct.
Does that seem odd?

No, it does not seem odd. I suppose I was just not very familiar with the word "stockist". It is obviously a word that is well-known in distribution sector and those selling wholesale.. Not used much on this forum.

Do you think it is a bit odd? Do other businesses in your sector direct sell as well as selling wholesale (to stockists) or are they mostly either totally direct selling or totally wholesale?

 

[FreddyG]

I have launched a new range of products in the food space, they are shelf ready products that you buy and take home to use.
Let's just say I am selling them for £7.... The rertailer wants to sell them for £7.95.. This retailer is relatively small but strong in the independent niche they are in.
Their main reason is becaus they don't feel they are making enough margin.
But as far as I am aware this would be bad business practice, not only for other stockist but mainly for my customers (and theirs) as well as just making the brand look disjointed.
Should I stick to a strict RRP for all retailers?

You really need to bone-up on the theory and practice of market price structures, so I have a list of the books you need to read on the subject. They are in what IMO is their order of sophistication, the easiest at the top. Amazon reviews tend to give one a good indication of suitability for your situation.

Pricing Strategies for Small Business
Author: Andrew Gregson

How to Price Effectively: A Guide for Managers and Entrepreneurs
Author: Utpal Dholakia

The 1% Windfall: How Successful Companies Use Price to Profit and Grow
Author: Rafi Mohammed

Pricing Strategies
Author: Robert M. Schindler

The Expert Guide to Retail Pricing: An Analytics-Based Approach to Maximise Margins
Author: Kiran Gange

Enjoy! But given what is potentially at stake here, i would be crazy not to formalise your knowledge and just hope for the best. That is NEVER a good strategy in any field!

 

[Paul Kelly ICHYB]

Let's just say I am selling them for £7.... The rertailer wants to sell them for £7.95

Are they both inc VAT or ex VAT or a mix?

Any retailer selling at that margin would be stupid - you must be lucky in having some very poor (business) clients.

Sell for the price you want and let the retailer sell for the price they want.

 

[FreddyG]

Sell for the price you want and let the retailer sell for the price they want.

I disagree! Totally!

That means to be handing over control of the market pricing structure to your customer. That is NOT a good place to be in!

Your price has to reflect the real cost of the customer's order and at the same time, prevent a handful of powerful customers from discounting to such an extent that the smaller retail outlet is totally discouraged from ordering anything!

 

[Paul Kelly ICHYB]

So what happens when clients want the product but are not prepared to work on margins offered (based on RRP/MSRP)? You potentially lose orders.

Sometimes, retailers know more than suppliers, especially about the ability for the market support pricing.

The OP may actually be underselling the product.

 

[DontAsk]

Are they both inc VAT or ex VAT or a mix?

Any retailer selling at that margin would be stupid - you must be lucky in having some very poor (business) clients.

Sell for the price you want and let the retailer sell for the price they want.

They are both retail. OP retails at £7, the other one wants to retail at £7.95.

Neither costs, nor wholesale price have been disclosed.

 

[Paul Kelly ICHYB]

Ahhh - I read that they were selling them to the retailer for £7!

In the big picture of business, this issue would be so far down the list I wouldn't even write it down.

 

[fisicx]

That means to be handing over control of the market pricing structure to your customer. That is NOT a good place to be in!

You can’t stop a retailer selling at whatever price they want. You can refuse to supply but you can’t dictate the price they set in the store.

 

[FreddyG]

That is why, instead of trying to wing-it, I asked the OP to read those books and learn about retail market structures. The correct pricing structure with the correct end-of-year rebates and/or credit notes should allow the OP to give a big client the incentive to move oodles of product and simultaneously give the local corner shop sufficient margin to carry his product and do so profitably.

We cannot give him the correct advice because we do not know what kind of margins and price elasticity and cross-price elasticity he is dealing with.

(And there are definite legal constraints on a manufacturer refusing to supply someone who complies with all contractual requirements such as MOQ, etc.)

 

[Paul Kelly ICHYB]

And there are definite legal constraints on a manufacturer refusing to supply someone who complies with all contractual requirements such as MOQ, etc

There are, but small businesses tend not to go that route and, m,ore importantly, it is not that difficult to dodge.