Selling Price/ Import from Abroad

[Haan]

Hi all, I am just wondering, how to set the selling price. Obviously I got the product from abroad with a good price. It's 0 VAT import tax to the UK, from what i last checked on gov.uk. Apart from all the costs: delivery, storage, handling etc, is there anything else I should consider in setting up the selling price? Thank you!

The product i am distributing is Seaweed, i sent out samples, 2 of them has came back and ask me for the price so they can place an order. I'll be using EMS for delivery 7 days to UK, 9£/kg of good, i think.

 

[Mr D]

Add up all your costs, figure how much profit you want, then divide by what you expect to sell in a year. That is your price.

Or you could multiply your purchase costs by a figure.

May want to factor in something for the time your money is tied up in stock too.

 

[MOIC]

I'll be using EMS for delivery 7 days to UK, 9£/kg of good, i think.

What does that mean??

You are obviously new to importing and business. My advice is to do thorough research in all aspects of the the business model you are getting involved with and this will include the following:

1. Due diligence on your suppliers.

2. Understanding the regulations for importing food products including all taxes to be paid. (Seaweed is subject to 20% VAT, you'll need to check the Import Duty).

3. Understanding the payment system to suppliers abroad including exchange rates and transfer costs.

4. Understanding the import process and full costs.

5. Product liability insurance.

These are just a few aspects and there are many more points to research and understand before you start your business.

 

[CHUKTC]

Another very important area to consider is market prices. You should do you market research and find out how much your competitors are selling similar products for. That will give you a good starting point. You then need to decide whether you wish to match them, undercut them or charge a premium price. You need to be honest with yourself in order to justify the reason for choosing from the above options. If you then compare that price to your total costs (including wages) you will then know whether you have a viable product to sell going forward.

 

[Haan]

What does that mean??

You are obviously new to importing and business. My advice is to do thorough research in all aspects of the the business model you are getting involved with and this will include the following:

1. Due diligence on your suppliers.

2. Understanding the regulations for importing food products including all taxes to be paid. (Seaweed is subject to 20% VAT, you'll need to check the Import Duty).

3. Understanding the payment system to suppliers abroad including exchange rates and transfer costs.

4. Understanding the import process and full costs.

5. Product liability insurance.

These are just a few aspects and there are many more points to research and understand before you start your business.

Thank you for all those points, about the shipping. The service i used do door to door, and 9£/kg is the all inclusive price, he charged.
Yes, i am new to the importing business. Sorry i just checked again, it's 0 for the duty custom, and 20% VAT, as based on the trade tariff between UK and the country i import from.

I have bank account in both country, so guessing payment wouldnt matter too much.
Sure, i'll definitely look more into this process, but im not good at complicated things, so probably gonna pay all inclusive price for the shipment service

 

[Haan]

Another very important area to consider is market prices. You should do you market research and find out how much your competitors are selling similar products for. That will give you a good starting point. You then need to decide whether you wish to match them, undercut them or charge a premium price. You need to be honest with yourself in order to justify the reason for choosing from the above options. If you then compare that price to your total costs (including wages) you will then know whether you have a viable product to sell going forward.

Thank you for your comment, i have done my research, unfortunately, this particular product, there is only 1 company in t UK that supplies it, at a "lobster" price. So that put me in a very difficult price mark, but i suppose i shouldnt sell it too cheap either?

 

[Haan]

Add up all your costs, figure how much profit you want, then divide by what you expect to sell in a year. That is your price.

Or you could multiply your purchase costs by a figure.

May want to factor in something for the time your money is tied up in stock too.

That's very good point i think, "how much i expect to sell per month" (x12)
Thank you!

 

[Mr D]

Thank you for all those points, about the shipping. The service i used do door to door, and 9£/kg is the all inclusive price, he charged.
Yes, i am new to the importing business. Sorry i just checked again, it's 0 for the duty custom, and 20% VAT, as based on the trade tariff between UK and the country i import from.

I have bank account in both country, so guessing payment wouldnt matter too much.
Sure, i'll definitely look more into this process, but im not good at complicated things, so probably gonna pay all inclusive price for the shipment service

Who is paying the VAT? Factor that into calculations too. And into what you tell customers.

 

[CHUKTC]

It's good news if only one other company is selling similar and at inflated prices provided there is a market for it. As you have alluded don't sell too cheap there will be a reason why they charge what they do you need to cover all your costs and more to allow for un expected costs such as damaged goods, customer returns etc. It's surprising how what starts off as a healthy profit can dwindle under real operating conditions so don't undersell yourself.

 

[xoxo0421]

This is how they teach in Uni:

If you do wholesale or wholesale and retail:
Cost of making (including delivery to your warehouse) x 2 = your wholesale price
Wholesale Price x 2.5 = your retail price.

If you do retail only:
Cost of making (including delivery to your warehouse) x 3 = your retail price.

 

[Mr D]

This is how they teach in Uni:

If you do wholesale or wholesale and retail:
Cost of making (including delivery to your warehouse) x 2 = your wholesale price
Wholesale Price x 2.5 = your retail price.

If you do retail only:
Cost of making (including delivery to your warehouse) x 3 = your retail price.

Luckily the teachers in Uni do not run a business.

 

[xoxo0421]

Luckily the teachers in Uni do not run a business.

Would you please justify? What is wrong with it?

If one sells wholesale, retailers multiply wholesale price to 2.5-3. So, if you sell from your own marketplace or b-a-m cheaper, you become their competitor and they will not buy from you.

 

[Mr D]

Would you please justify? What is wrong with it?

If one sells wholesale, retailers multiply wholesale price to 2.5-3. So, if you sell from your own marketplace or b-a-m cheaper, you become their competitor and they will not buy from you.

Nothing wrong with it except it can cause a business to fail.

Say I buy an item wholesale at 20p (I'm rounding up) - sell for 50p? Take off 22p for paypal, take off call it 50p for postage, take off 5p for selling fees, take off 5p for advertising. Never mind any factoring of the use of capital... some stuff can sell but is slow while others is relatively quick.
OK do postage and packaging separately, so just take off 32p leaving 18p. Worth selling goods for 18p?
Or worth selling for £1.25 - £1.50 profit?

Or take a nice clock I saw at my wholesalers a few years back - £1099 wholesale, call it £2600 wholesale - and may take a year or two to sell. Tying up capital.

Fathers day is coming up I see, how many of the places making or retailing products for that day will be selling off cheap later next month after the event or putting in storage until next May?
Tying up capital.

There are multiple factors and no one all encompassing rule applying to all products. Retailers have to take account of things when pricing or risk pricing too low or too high.

 

[xoxo0421]

Nothing wrong with it except it can cause a business to fail.

Say I buy an item wholesale at 20p (I'm rounding up) - sell for 50p? Take off 22p for paypal, take off call it 50p for postage, take off 5p for selling fees, take off 5p for advertising. Never mind any factoring of the use of capital... some stuff can sell but is slow while others is relatively quick.
OK do postage and packaging separately, so just take off 32p leaving 18p. Worth selling goods for 18p?
Or worth selling for £1.25 - £1.50 profit?

Or take a nice clock I saw at my wholesalers a few years back - £1099 wholesale, call it £2600 wholesale - and may take a year or two to sell. Tying up capital.

Fathers day is coming up I see, how many of the places making or retailing products for that day will be selling off cheap later next month after the event or putting in storage until next May?
Tying up capital.

There are multiple factors and no one all encompassing rule applying to all products. Retailers have to take account of things when pricing or risk pricing too low or too high.

Oh, well, you are right. I did not think about super cheap products. See, my products are 100-260 retail and for me it works as they are 30-55 to make.

I am not sure about expensive items, because they could be 3 categories:
- High technology, high skilled labour and lot of handmade work, very expensive materials, or combination of factors;
- High brands. Cost of selling the product 4-6 times higher than cost of making it;
- Uniqueness of the item. For example antiques, or bespoke made according to complex specifications.

As far as I know, in fashion all high street brands (M&S, Topshop, H&M etc) follow "making price x 3" rule. But into making price they include marketing too. But do not include cost of retail.

 

[Mr D]

Oh, well, you are right. I did not think about super cheap products. See, my products are 100-260 retail and for me it works as they are 30-55 to make.

I am not sure about expensive items, because they could be 3 categories:
- High technology, high skilled labour and lot of handmade work, very expensive materials, or combination of factors;
- High brands. Cost of selling the product 4-6 times higher than cost of making it;
- Uniqueness of the item. For example antiques, or bespoke made according to complex specifications.

As far as I know, in fashion all high street brands (M&S, Topshop, H&M etc) follow "making price x 3" rule. But into making price they include marketing too. But do not include cost of retail.

Yes some stuff will meet a method of calculating. Some stuff won't.

I do some handmade stuff occasionally, massive variance in pricing methods there with some selling below cost to make it price, some selling commercially (like you would for buying it in from someone) and some charging a premium because its handmade and takes hours... so want to be paid for the time taken.

Ultimately the pricing should reflect the costs the business has - not enough money to cover costs means eventually problems.

I do some competitor research in a few areas, even with similar sized shops in similar footfall areas the range of pricing on the same products can be considerable.

 

[dwight10]

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