Help with pricing - retail mark up?

[Paddymac]

I need to find out what a typical retail mark up is. I realise it differs from industry to industry.
I have the chance to import some gadget protection products that for example I would sell to surf shops/sport shops.
I have seen some info stating 2.4 of cost is typical but this seems to be the benchmark from about 2007. My RRP would be £29.95 so this formula means I would need to sell at £12.50 which TBH is not worth it.
Can anyone advise as to expected mark up in this sector? on a £29.95 sale?

Thanks

 

[OohMissBeads]

Duh, misread, sorry!

 

[owas]

from what I have gathered and this may be wrong, but from manufacture to wholesaler/distributor there should be a 50% mark up then wholesale to shops, the shops usually make around 30%

 

[Silky]

Most industries I've been involved in have seen a margin of between 30-45% for the retailer, obviously the latter proving a more attractive proposition to the buying teams who are often targeted on margin as well as or instead of turnover. 45% would give a selling price of £13.72, a little better than suggested.

That said, the margin can be affected by a number of factors. If the product is something unique that the buyer simply can't do without, you've more chance of squeezing their margin. Alternatively if it's supported with a promotional plan, that will help too (and is an essential with some of the major high street retailers).

Many retailers already buy direct from China and the Far East and have teams of agents out there to build ranges. It's highly likely that if the product has been bought off the shelf rather than developed to your own design and spec, the retailers can get it direct anyway.

 

[VSpy1]

I say this based on no direct experience, but the retailer would need to make a healthy profit.. If your product generates a higher profit than the next product, then you are likelier to get a bigger space on the shelf...IMHO...

 

[mrchips]

You're looking at about the right markup for general retail. Most of my customers work on AT LEAST x2.5 which is around 2x plus vat. After all, these people have rent/rates and salary to pay.

This also assumes that you're VAT registered, selling to other VAT registered companies. If you're not VAT registered then you're going to struggle further as your customers cannot then reclaim the VAT on their purchases.

Mr Chips

 

[diviachi]

A lot of retailers have markups based on the ex-VAT cost of the product. e.g. under £5 = 100%, under £10 = 50%, over 10% = 30%. I know that electricals have one of the lowest margins (20-25%) and clothes/furniture some of the highest (300%+). I have no idea about surf equipment, but I'd imagine on your sale it would probably be about 30-45%, depending on how much competition your product has.

 

[richkid09]

You have to consider competition before putting any mark-up on a product. A 1-5% discount for retailers could develop a healthier relationship with the retailers for longterm ventures.

But i would suggest you account first all of your variable and fixed expenses (i.e cost of goods, estimated fuel costs etc) and see whether 2.5x would be enough to generate an acceptable net profit