How to Find Your Wholesale Pricing Sweet Spot
So these are your production costs this is what it cost you to make that one item before you then determine your whole sound retail pricing so any I wanted to give you a real life example and these are these this is my own product this is one of my greeting cards I print digitally printed greeting cards I outsourced that so I have a printer do everything for me I typically run my cards in quantities of thousand cards so each skew I run a thousand so my materials include the paper, the printing, the envelopes the selo sleeve that it sold in if there's any extra ticketing or stickers that go on to that's included now a couple things I want to explain here is to if someone were to run two hundred fifty cars for example their price per piece would be higher than mine. If somebody were to do their own printing like tiffany here just screen printing or keira she does letter press printing they're doing their own their labor costs will likely be higher but their material costs will likely be ...
lower. So again these numbers are variable and everyone's going to be different everyone in the audience right now like look next you their product, their production costs going to be very different than yours because the way you create these products are very different so again going back to my example here the materials for my cards, or thirty three cents the labor is six cents on dh that includes people to stuff my cars because my cards come flat, they have to be full. Did they have to be sleeved? S oh, that's what I factored in and that was factoring in about two hundred fifty cards and our being stuffed. So you really got to drill down to the time line of like, how long does this take for somebody to do? And what am I going to pay them on an hourly basis overhead? I've always just kind of used around fifteen cents I work out of my home, you know, and then growth my cards wholesale that that's that's about twenty percent allocated sales right fees and then also some additional room for growth there. So the forty five cents so total it's in ninety nine cent it's per card is my production costs. If I sell this car for anything below ninety nine cents, I'm losing money on the deal, and so I don't want to do that. So that's the bottom up calculation now let's, look at the top down. So for the greeting card world, the average retail price for the kind of cards that I'm selling our four dollars to four, fifty although for the digital itt's typically forty four, twenty five, so the average wholesale price is half of that and we'll get into some of these terms later and how this all works, but just for this example, so that means that my range I have to price me things higher than ninety nine cents, and I want to get them as close to that. The, um, the top down the market value is possible so I can have the largest profit margin in there, right? So I know I'm good, I know I can charge the is the industry standard of two dollars or two twenty five for my cards, I'll make a good margin and everything will be good now the problem comes into place. If this market value this top down number is too close to your ninety nine is too close to your bottom up number, then you need to rework some things and that's where you need to try to drive down the cost does not make sense, everybody okay, so you're pricing is going to fall somewhere in this middle zone, but really it's going to be more in line with top down, you just need to make sure you're getting your bottom up numbers as low as possible, so again, going back to everybody's numbers will very greatly, it really depends on the volume using your production methods, if you're outsourcing or not, you want to streamline those production costs as much as possible to maximize your profit margins. So get those numbers down. And if your product, if your production cause, exceed those market rates, you need to lower your expenses or else you're not ready. You're not ready for a wholesale. You won't be making any money, so you don't want to spend your wheels.