I could really use a bit of advice please. It’s looking like I may have the opportunity for a wholesale account in the near future. When I pricing my products I’d used a formula that puts retail at twice wholesale price, but I’ve recently read that it should be 2.4 times, as a lot of businesses pay VAT so will expect to pay less that half retail price for a product.
This will mean putting my products up by another 20%, so my £10 bookmarks (which were pretty popular this Christmas) will have to go up to £12. Do you think this is too big a price jump?
I’m still pretty new in the grand scheme of things, so although there may be a few returning customers who may become disgruntled at the increase, I kinda think I’d rather do it now before signing up to a contract then having to change everything in the future because I’m not making enough from selling wholesale.
Thanks so much in advance for any advice,
Oh, I should have said, It’s only a couple of my products which will have to be changed, bookmarks and miniatures (and I’m planning on making the miniatures even smaller so that I can send them as large letter, reducing the postage by way more than the price increase would be anyhow). Other items aren’t likely to be sold wholesale, and those made in 2015 have been priced using the revised formula.
It’s very hard pricing for wholesale but ultimately, you have to charge enough at a wholesale price to be making a profit, otherwise don’t bother for that particular item/ line. You could always make your wholesale items slightly different from your regular stuff, and that could account for the difference. So for example I sell my framed prints wholesale, because the RRP is £49 and therefore I can make enough of a profit to justify that. But as my unframed prints are between 29-35, I can’t sell them at wholesale because I wouldn’t be making enough, so I only sell them face to face or online. You could always offer a discount to returning customers of say 10%, to sweeten any perceived unhappiness at price rises for your old customers. Good luck!
Ooh, a discount to returning customers is a very good idea. It shouldn’t matter too much about the miniatures, because they’ll actually work out cheaper once the reduction in postage is accounted for, and it’s the miniatures that people tend to collect and come back for. Most people that bought the bookmarks got them as Christmas gifts, so probably won’t be coming back anytime too soon.
Thanks so much for the advice Heidi