What mark up?

Spice Girl

Hi,
I'm importing speciality papers from India and reselling - mostly to the UK. I'm only in the first stages and just wondering what the normal mark up is. My mentor said that wholesale should be 40% - does this sound reasonable? There is an Australian company which does the same product, in Oz, and their mark up would be in the region of 100% or more However the economy in Oz is booming and their market may support these prices. There isn't currently another company in Europe selling the same papers as me but I can't be complacent about that.
Is 40% usual?

Gloomtastic!

Spice Girl wrote: »

Hi,
I'm importing speciality papers from India and reselling - mostly to the UK. I'm only in the first stages and just wondering what the normal mark up is. My mentor said that wholesale should be 40% - does this sound reasonable? There is an Australian company which does the same product, in Oz, and their mark up would be in the region of 100% or more However the economy in Oz is booming and their market may support these prices. There isn't currently another company in Europe selling the same papers as me but I can't be complacent about that.
Is 40% usual?

As someone who used to buy a lot of paper and dealt with paper merchants on a daily basis, I would assume the mark up was significant and 100% would not be far off. As you say, your USP is that you're the only source in Europe for your product. How much would your customer have to pay to import your paper from India directly?

Having said that, paper is a commodity and if your customer can find a similar stock to yours that's cheaper, they'll go with that one.

I believe you'll need to find out what your competitors are charging and base your margin on that.

Good luck!

You should be working on the basis of margin not markup. Your mentor is talking about 60% , usually 50-60% is where you want to be.

jimmii

How specialist is it and why has no one else done it before you? Is it something that upto now that the people/companies needing it have had to import from abroad or have they made do with an alternative? If they are having to import it at a fairly high cost you'll probably find you are able to have a pretty big margin if the import costs have traditionally been quite high then you could charge a higher margin than normal. Typically you are looking at a retail price of 2.5x the wholesale price but that would be for things that are fairly readily available and I have seen shops in Dublin that stock the same products as us and using a 4.5x mark-up which is mad but they seem to still be able to sell the stuff!!

Peterdalkey

Typically a distributor would look to about 60% gross margin on this kind of product which equates to 2.5 times the unit landed cost of the goods (on your floor). The more specialised the product the higher the margin. Work out your prices on this basis and see how they compare with other similarly specification products.
It is really difficult to make money below 40% gross margin!

sandin

Accountant has to be talking margin - 40% margin equates to about 68% mark-up. That would be on your landed cost afetr shipping and duty (2.7% on paper I think)


e.g. buy at €6, sell at €10 + vat.

I would probably look at adding 75%-80%, then do a retail calculation by doubling that figure and then add 23% vat.

Then check to see if that is a reasonable retail price when compared to similar products - if not then adjust your wholesale price to ensure the retail price is right.

Spice Girl

Ok. So if I get the paper landed at Dublin for €0.30 per sheet it would be reasonable to sell to a retailer for €0.50. They would then retail it for €1.20 or so, which wouldn't be crazy.