Pricing Strategy and Markup for Baby Product Retailers

[Positano]

Hi all. I have developed a new kind of baby product that I want to sell to retailers. It costs me about £5.70 to produce and have delivered to the UK and I need to allow an extra £1.10 for overheads. I think the product would support a RRP of £30. The question is:
1. What wholesale price would a large retailer like Mothercare or John Lewis expect to pay for such a product? and
2. Could I charge more with a small, independent High Street retailer?
Any advice would be gratefully received. Thanks...

 

[owas]

An example of a baby product I work with, manufacturing cost and import 0.90p distribution cost £1.70 min order 200. Wholesale cost £2.50, RRP, £4.99.
Really then you need to choose who you are going to sell to, the large retailers or the independents. If you go to the large retailers the positive side of this is good exposure for your product. The negative side, is long turn around on invoicing, and then more than likely the independents will not stock your product at a risk of being undercut.
If you did go to both, you could not charge the small retailers more, but you could offer discounts on bulk orders. I have some info you may find useful, I will drop you a pm.

 

[Positano]

Thanks Owas,
that's a pretty good markup you are getting there. I expected that most large retailers would only pay a wholesale price of 40 per cent of the RRP and I was wondering if you could get a wholesale price of around 50 percent of RRP with a small retailer, what with the P+P and admin costs being higher for small orders. One thing I didn't understand about your post though: if your manufacturing cost is 90p and you allow £1.70 for distribution how can you sell it for £2.50 wholesale? You'd be losing 10p per unit.

 

[Hex McGettigan]

Would this product be a possible line for a pharmacy?

 

[Positano]

Not really. It's nursery equipment, not a consumable.

 

[Dave.F]

1. What wholesale price would a large retailer like Mothercare or John Lewis expect to pay for such a product?

Around £7.00 to £7.50

 

[Positano]

Hi Dave,
Thanks for your reply. Do you mind me asking how you arrived at such a price. I was under the impression that retailers expect to pay a wholesale price of 40 per cent plus of the RRP. You have suggested a price of about 23 per cent of RRP, which is obviously very low. Have you had experience of this kind of price level with large retailers?
Thanks

 

[owas]

Hi Dave,
Thanks for your reply. Do you mind me asking how you arrived at such a price. I was under the impression that retailers expect to pay a wholesale price of 40 per cent plus of the RRP. You have suggested a price of about 23 per cent of RRP, which is obviously very low. Have you had experience of this kind of price level with large retailers?
Thanks

I think your right, not many retailers will look at anything with less than a 30% markup.

 

[Dave.F]

Hi Dave,
Thanks for your reply. Do you mind me asking how you arrived at such a price. I was under the impression that retailers expect to pay a wholesale price of 40 per cent plus of the RRP. You have suggested a price of about 23 per cent of RRP, which is obviously very low. Have you had experience of this kind of price level with large retailers?
Thanks

I have pitched personally to large retailers/brands like Woolworth, BHS, Tesco, Speedo, Spear & Jackson etc....