Who typically makes more profit with wholesale accounts?

[Clear Black]

As of now, my 16oz candles cost $7 to make. A few of the items are pricey, but I hope to drive that cost more towards the $5 per mark when I can afford to buy raw mats in bigger bulk. So for now im at the $7 per mark. Im thinking they will retail between $18/$20. So if they cost me $7 to make and retail for $20, what should the wholesale buyer be getting from the $13 profit on each candle? Would it be $3 me, $10 buyer? Does the buyer typically get the larger profit portion? Hope this makes sense in any way. I know a bunch of you folks have wholesale accounts and can maybe shed some light here. I really do think the $7 per candle cost is hurting me when it comes to wholesale and I am ok with that knowing I can further cut costs in the future by making bigger material purchases.

 

Thoughts?

[TallTayl]

The buyer will typically want to at least double their investment. 

 

A common basic wholesale equation from the manufacturing side is 2-3 times cost to manufacture. Then retail is twice wholesale. 

 

In your example, you would need to wholesale for at least $14, your buyer would need to sell for at least  $28.

 

there are no hard fast pricing rules, though you need to cover your nut should something happen. Too often people underprice leaving no room for profit to reinvest. 

[Clear Black]

3 hours ago, TallTayl said:

The buyer will typically want to at least double their investment. 

 

A common basic wholesale equation from the manufacturing side is 2-3 times cost to manufacture. Then retail is twice wholesale. 

 

In your example, you would need to wholesale for at least $14, your buyer would need to sell for at least  $28.

 

there are no hard fast pricing rules, though you need to cover your nut should something happen. Too often people underprice leaving no room for profit to reinvest. 

 

Thanks a bunch TT. I can always count on your advice and expertise. I know youve done some wholesale business so I was hoping you would respond.

 

I may have to hold off on the wholesale end till I can drive those prices per candle down a dollar or so. I am also becoming increasingly aware that I may be pricing my candle a bit low. Im hoping to get on to ETSY soon and have been doing a lot of "price matching" and see most sellers there selling their 8oz, 10oz and 12oz candles for more or the same price I was going to sell my 16oz.  I think I have to re-think my selling point . I just dont want to scare away customers with a price point I cannot back up seeing as I am new to the market(ETSY) and have no customer base to justify that price per candle.

 

Ughhh

[olives]

I recently upped my 14 oz candles to $22 each retail (so, $11 wholesale). I could probably go a smidge higher, and maybe will next year, but right now this was the most conservative jump I could make without shutting out certain longtime customers. Luckily, most of my wholesale accounts have been supportive, and two of them had actually told me last year that I needed to raise my prices. So - don't undervalue your work. 

 

16 oz is a hefty candle and if you're targeting the right customer (one who will pay for quality ingredients and something that's locally, artisan made) and you're branding in a way that conveys the value of your brand, I would personally have no issue with paying $28 - $30 for a good candle that size. 

 

Again - the key is targeting the right customers who will be fine with paying that price for a candle. Not everyone will be, and that's fine - they're not your customer.

 

And yes - definitely try to get that cost per candle down. That's something that all of us small makers struggle with, since most of us don't buy in huge bulk. I just got an order of 3,000 jars delivered to me last week - on 2 pallets - which are currently stacked in my living room and front hallway. So for me it's not only trying to be careful about cash outlay, but I also have serious space issues!

 

 

[Clear Black]

20 hours ago, olives said:

I recently upped my 14 oz candles to $22 each retail (so, $11 wholesale). I could probably go a smidge higher, and maybe will next year, but right now this was the most conservative jump I could make without shutting out certain longtime customers. Luckily, most of my wholesale accounts have been supportive, and two of them had actually told me last year that I needed to raise my prices. So - don't undervalue your work. 

 

16 oz is a hefty candle and if you're targeting the right customer (one who will pay for quality ingredients and something that's locally, artisan made) and you're branding in a way that conveys the value of your brand, I would personally have no issue with paying $28 - $30 for a good candle that size. 

 

Again - the key is targeting the right customers who will be fine with paying that price for a candle. Not everyone will be, and that's fine - they're not your customer.

 

And yes - definitely try to get that cost per candle down. That's something that all of us small makers struggle with, since most of us don't buy in huge bulk. I just got an order of 3,000 jars delivered to me last week - on 2 pallets - which are currently stacked in my living room and front hallway. So for me it's not only trying to be careful about cash outlay, but I also have serious space issues!

 

 

 

 

Thats the thing, Ive been retailing them for $16 and doing really well. I set them at that price knowing that people in my area do not go to craft fairs looking to spend $25+ on a single candle.  I will have to re-think this strategy as I now feel I am selling them too low. This was my issue transitioning into wholesale. How could I make money wholesale by retailing them myself at only $16.  I think if I bump the retail up to around $22 and try to shave $1 of my per candle cost, I will be happier and feel more confident approaching wholesale clients.

 

Thanks

[TallTayl]

The first decision you need to make WRT pricing: who is your target customer? 

 

etsy has a customer for every seller. The way you attract an etsy customer is to brand yourself to appeal to those specific buyers. It’s more than price. Your packaging, photos, copy, tags and description will lure “Your” customers, who will pay whatever you ask. Your “competition” is yourself. 

 

Wholesale is not for everyone. It is the same amount of time, materials and work for much less profit per item. I keep a small amount of wholesale for simple cash flow, but don’t love doing it. I learned over time to keep the minimum order quantities and required commitment for annual order volume high enough so I don’t dislike it so much. 

[jbradshaw]

I'm entering in my second wholesale agreement, and doing a private label line for a local store. My 5.5oz candles I wholesale at $5 (it costs me about 2.30 to make them, depending on the scent) and retail at $10. Right now, it's really not much profit - however, I am still new in my business and know that as I operate at a larger scale that will help somewhat bringing costs down. I'm also not dependent on this income, I just do it on the side of my day time gig so I don't strictly NEED to do better than break even. 

 

I also agree with olives that I would be happy paying over $20 for a 16oz candle. 

[Clear Black]

On 3/1/2018 at 10:01 AM, TallTayl said:

Wholesale is not for everyone. It is the same amount of time, materials and work for much less profit per item. I keep a small amount of wholesale for simple cash flow, but don’t love doing it. I learned over time to keep the minimum order quantities and required commitment for annual order volume high enough so I don’t dislike it so much. 

 

This is the conclusion I may have to grasp unfortunatly. Wholesale may not be for me. It sucks because there is this one really nice store a few hours drive from me that sells candles made by people like us. You walk into the store and you can shop from no less than 20 different candle brands, all hand made and no major brand name/factory made candles. Its such a nice shop and would love to see mine sitting on their shelf. Maybe I can go in there and speak to the owners and hear what they have to say. Maybe shed some insight on how their end of wholesale works so I can better judge if its feasable for me like you said TT.  Thanks.

[Clear Black]

On 3/1/2018 at 12:32 PM, jbradshaw said:

I'm also not dependent on this income, I just do it on the side of my day time gig so I don't strictly NEED to do better than break even. . 

 

 

This is the main difference for me as well. I still have my 9-5 M-F, although at some point I would love to be able to quit that and pursue this (candle making) full time.  Hats off to you folks who rely on this for full time income. Lots of work and little profit on the wholesale side, makes me wonder what other source of sales are coming in from those who do this full time. So most have their own retail stores? Craft fairs? Etsy? Probably a combination of all to make ends meat

[TallTayl]

Breakeven is higher than most people expect. Once you factor in taxes, licensing, Product Liability Insurance, waste, breakage, etc. you need to sell a LOT of candles to break even. 

[kandlekrazy]

I think it somewhat depends upon area as well.  Soaps in this area wholesale is between 30-40% off of retail.  It doesn't leave a whole bunch of room for the retailer but it's the best we can get in my area.  If we go outside, we pay shipping which ups our wholesale costs. 

[Candybee]

Wholesaling is just a part of my biz. I have been slowly moving away from it because I just don't enjoy it and I can make more money selling my product by myself. My main bread & butter so to speak is selling in person at venues like craft shows and markets. My website and wholesaling are more of an afterthought. I have a few shops that I have been selling to for a while, some for years, and no longer advertise wholesale.

 

Also I am just one person and can only make, store, and handle so much product at once. On top of that handmade items are inherently more expensive than assembly line products and don't always do well as a wholesale one due to the price.

 

I have been able to wholesale many of my products because many take the same ingredients which allows me to buy in larger quantities.

 

I could make more money off of it but as I said before I just don't enjoy doing it anymore. So I keep my few accounts that I have as an added income resource.

Edited March 5, 2018 by Candybee

[Lighten Up]

On ‎2‎/‎26‎/‎2018 at 2:11 PM, Clear Black said:

As of now, my 16oz candles cost $7 to make. A few of the items are pricey, but I hope to drive that cost more towards the $5 per mark when I can afford to buy raw mats in bigger bulk. So for now im at the $7 per mark. Im thinking they will retail between $18/$20. So if they cost me $7 to make and retail for $20, what should the wholesale buyer be getting from the $13 profit on each candle? Would it be $3 me, $10 buyer? Does the buyer typically get the larger profit portion? Hope this makes sense in any way. I know a bunch of you folks have wholesale accounts and can maybe shed some light here. I really do think the $7 per candle cost is hurting me when it comes to wholesale and I am ok with that knowing I can further cut costs in the future by making bigger material purchases.

 

Thoughts?

My entire business is wholesale, mostly via fundraisers. I do have a few stores, but I just consider that advertising as they really don't give me much return.

 

Our area is flooded with cheaper soy candles, so retailing is difficult. I am happy to wholesale and 'mass produce' a pre-ordered product.

 

Is your above mentioned cost materials only?

Edited March 6, 2018 by Lighten Up

[Clear Black]

6 hours ago, Lighten Up said:

My entire business is wholesale, mostly via fundraisers. I do have a few stores, but I just consider that advertising as they really don't give me much return.

 

Our area is flooded with cheaper soy candles, so retailing is difficult. I am happy to wholesale and 'mass produce' a pre-ordered product.

 

Is your above mentioned cost materials only?

 

 

Fundraisers for schools? I know most of the schools up in this neck of the woods do a Yankee Candle fundraiser like 3 times a year. Its nuts

[LitUp]

On 2/26/2018 at 2:11 PM, Clear Black said:

As of now, my 16oz candles cost $7 to make. A few of the items are pricey, but I hope to drive that cost more towards the $5 per mark when I can afford to buy raw mats in bigger bulk. So for now im at the $7 per mark. Im thinking they will retail between $18/$20. So if they cost me $7 to make and retail for $20, what should the wholesale buyer be getting from the $13 profit on each candle? Would it be $3 me, $10 buyer? Does the buyer typically get the larger profit portion? Hope this makes sense in any way. I know a bunch of you folks have wholesale accounts and can maybe shed some light here. I really do think the $7 per candle cost is hurting me when it comes to wholesale and I am ok with that knowing I can further cut costs in the future by making bigger material purchases.

 

Thoughts?

 

$7 is a very high wholesale cost to have, and if that is your cost then the minimum you want to sell it for is $14 wholesale and the retail will have a markup of 2-2.3x so $28 to  $32.20. Keystone aka a 2x retail markup used to be the standard but more and more stores are going as high as 2.3x markup in order to make enough money to survive. We stepped into wholesale full time last year and went from being carried in 5 stores locally to 140 in the US along with stores in Canada and Hong Kong, so if you have specific questions I'm more than happy to help out answering where I can.

[Lighten Up]

12 hours ago, Clear Black said:

 

 

Fundraisers for schools? I know most of the schools up in this neck of the woods do a Yankee Candle fundraiser like 3 times a year. Its nuts

Schools, sports teams, dance, band, 4-H, travel clubs, etc... anyone that has a group that needs money.

[LitUp]

4 minutes ago, Lighten Up said:

Schools, sports teams, dance, band, 4-H, travel clubs, etc... anyone that has a group that needs money.

How does it work? Do you provide them samples or do they just sell based off a linesheet?

[Lighten Up]

1 hour ago, LitUp said:

How does it work? Do you provide them samples or do they just sell based off a linesheet?

It's pretty simple. I offer one jar and a limited selection of fragrances, some are year round, some seasonal. I provide a flyer with all the info and, when it's time, an order form. I do not offer 'samples'. I do have a promo pack with 2 full sized candles and the flyer. I will, however, front the committed group a mixed case of the fragrances to count against their order.

 

I started with friend that was a teacher and it has snowballed over the last 10 years. Everything has been referral or someone that has bought my candle from a fundraiser and has a group of their own. I do no advertising.

[LitUp]

On 3/7/2018 at 10:10 AM, Lighten Up said:

It's pretty simple. I offer one jar and a limited selection of fragrances, some are year round, some seasonal. I provide a flyer with all the info and, when it's time, an order form. I do not offer 'samples'. I do have a promo pack with 2 full sized candles and the flyer. I will, however, front the committed group a mixed case of the fragrances to count against their order.

 

I started with friend that was a teacher and it has snowballed over the last 10 years. Everything has been referral or someone that has bought my candle from a fundraiser and has a group of their own. I do no advertising.

 

 

Thanks for the insight. My aunt had asked me about using our candles for a fundraiser for their school since I think they currently use yankee. We've been thinking about ways to go about it but that helps with some of the things we've been considering!

[Bia]

On 3/7/2018 at 1:56 AM, LitUp said:

 

$7 is a very high wholesale cost to have, and if that is your cost then the minimum you want to sell it for is $14 wholesale and the retail will have a markup of 2-2.3x so $28 to  $32.20. Keystone aka a 2x retail markup used to be the standard but more and more stores are going as high as 2.3x markup in order to make enough money to survive. We stepped into wholesale full time last year and went from being carried in 5 stores locally to 140 in the US along with stores in Canada and Hong Kong, so if you have specific questions I'm more than happy to help out answering where I can.

LitUp, thank you for offering to help, I totally need it!  I have a candle company in Brazil and I am moving back to the US, my home country, and have been evaluating the US market, which is saturated with companies but also has immense demand (exact opposite of Brazil, an immature market with growing demand and very few companies).  I'm not a big craft show / market seller, I'm too shy to sell directly to people/the public!  It's much easier for me to do B2B, in this case wholesale or private label. I understand the pricing but I would really like to know how you approached the wholesale market, how and why you chose the stores you did and most importantly, how did you expand so much?!  Did you use a third party?  Thanks so much!

[Bia]

On 2/26/2018 at 2:11 PM, Clear Black said:

As of now, my 16oz candles cost $7 to make. A few of the items are pricey, but I hope to drive that cost more towards the $5 per mark when I can afford to buy raw mats in bigger bulk. So for now im at the $7 per mark. Im thinking they will retail between $18/$20. So if they cost me $7 to make and retail for $20, what should the wholesale buyer be getting from the $13 profit on each candle? Would it be $3 me, $10 buyer? Does the buyer typically get the larger profit portion? Hope this makes sense in any way. I know a bunch of you folks have wholesale accounts and can maybe shed some light here. I really do think the $7 per candle cost is hurting me when it comes to wholesale and I am ok with that knowing I can further cut costs in the future by making bigger material purchases.

 

Thoughts?

Great question.  Thank you for asking.  Lots of insights from the responses!

[JoeyG]

On 2/26/2018 at 1:11 PM, Clear Black said:

As of now, my 16oz candles cost $7 to make. A few of the items are pricey, but I hope to drive that cost more towards the $5 per mark when I can afford to buy raw mats in bigger bulk. So for now im at the $7 per mark. Im thinking they will retail between $18/$20. So if they cost me $7 to make and retail for $20, what should the wholesale buyer be getting from the $13 profit on each candle? Would it be $3 me, $10 buyer? Does the buyer typically get the larger profit portion? Hope this makes sense in any way. I know a bunch of you folks have wholesale accounts and can maybe shed some light here. I really do think the $7 per candle cost is hurting me when it comes to wholesale and I am ok with that knowing I can further cut costs in the future by making bigger material purchases.

 

Thoughts?

 

My experience has been that it depends on who the wholesale customer is. Walmart may be happy only bumping the price by 5%, while C-Stores tend to want in the 30%-40% range return on their investment. Have you tested price points for your candles yet? You're thinking they'll sell for roughly $20, but what if they only sell for $8? Have you tried selling them for more? Most of these wholesale accounts are going to want to know, not think, how much they'll retail for. But there are exceptions and it also depends on what your goal is.

 

Are you wanting a bunch of wholesale accounts, or trying to get one or two major accounts and manufacture solely for them? If it's the latter, there are things you can do to improve your chances. Negotiate deals with regional and national distributors to try and piggy-back off their distribution routes to try and get your product introduced into their stores. You can also do private label spec candles. Many companies call on their clients and like to leave little gifts behind for them. Candles make great gifts. We did this with one of the companies who actually supplied product to us. Their product had 10 different flavors, so we made candles with scents that mirrored their flavors. If you give it some thought you may realize that you already know companies that you can tailor make your candles for.

 

My perspective for selling products is always this. What makes mine better... or what problem does it solve for the buyer? If I can't answer either of those questions satisfactorily, then I don't sell that product.

[Clear Black]

On 4/14/2018 at 11:57 AM, JoeyG said:

 

My experience has been that it depends on who the wholesale customer is. Walmart may be happy only bumping the price by 5%, while C-Stores tend to want in the 30%-40% range return on their investment. Have you tested price points for your candles yet? You're thinking they'll sell for roughly $20, but what if they only sell for $8? Have you tried selling them for more? Most of these wholesale accounts are going to want to know, not think, how much they'll retail for. But there are exceptions and it also depends on what your goal is.

 

Are you wanting a bunch of wholesale accounts, or trying to get one or two major accounts and manufacture solely for them? If it's the latter, there are things you can do to improve your chances. Negotiate deals with regional and national distributors to try and piggy-back off their distribution routes to try and get your product introduced into their stores. You can also do private label spec candles. Many companies call on their clients and like to leave little gifts behind for them. Candles make great gifts. We did this with one of the companies who actually supplied product to us. Their product had 10 different flavors, so we made candles with scents that mirrored their flavors. If you give it some thought you may realize that you already know companies that you can tailor make your candles for.

 

My perspective for selling products is always this. What makes mine better... or what problem does it solve for the buyer? If I can't answer either of those questions satisfactorily, then I don't sell that product.

 

Thanks for your reply JG. To answer your question, they have been selling great at trade shows at or around $20+ retail. And ive never had a complaint about the price point. Mostly just some modest compliments on the packaging.  I feel they could retail for a few dollars more, but in a retail store maybe. The demographic at the local trade shows arent willing to go much higher than $20 retail so I keep it around or near there depending on the current location I am selling at.  For wholesale, I have actually gotten my price per container down from $7 per to $6 per by switching label companies. I can drive that further towards $5 per container once I start getting more items by the pallet like my FO for example.  Im mostly just a one person show in my shop, so my main goal isnt national accounts, but a few local retail stores that cater to candles and handmade gifts. There is big business around these parts during tourism season, so Id like to get just a few wholesale accounts for the summer. I still work a 9-5 so anything more than that is not feasable due to time constraints.  I think if I approach those wholesale accounts looking for $10-$11 per, they can retail them for $20-$22 per. They already carry 5 other brands of candles that retail between $20-$25 per so I feel mine fit in with what the other brands are doing. Who knows, they may tell me they arent interested, they may like what they see. I will know in about a month when Im ready to approach them

[JoeyG]

17 hours ago, Clear Black said:

 

Thanks for your reply JG. To answer your question, they have been selling great at trade shows at or around $20+ retail. And ive never had a complaint about the price point. Mostly just some modest compliments on the packaging.  I feel they could retail for a few dollars more, but in a retail store maybe. The demographic at the local trade shows arent willing to go much higher than $20 retail so I keep it around or near there depending on the current location I am selling at.  For wholesale, I have actually gotten my price per container down from $7 per to $6 per by switching label companies. I can drive that further towards $5 per container once I start getting more items by the pallet like my FO for example.  Im mostly just a one person show in my shop, so my main goal isnt national accounts, but a few local retail stores that cater to candles and handmade gifts. There is big business around these parts during tourism season, so Id like to get just a few wholesale accounts for the summer. I still work a 9-5 so anything more than that is not feasable due to time constraints.  I think if I approach those wholesale accounts looking for $10-$11 per, they can retail them for $20-$22 per. They already carry 5 other brands of candles that retail between $20-$25 per so I feel mine fit in with what the other brands are doing. Who knows, they may tell me they arent interested, they may like what they see. I will know in about a month when Im ready to approach them

 

Sounds like you're already doing great on your costs... and even better yet if you're going to be able to buy by the skid. You must be selling a ton of candles... congrats!

 

Good luck as you move forward, and continued success.

[Trappeur]

You go boy!!  Great to hear of your success!  Congratulations...I knew you would do it Clear Black!   Your in the right area for selling candles and you have so many places to go to on the beach, all in Portland, Kittery, etc......

 

Trappeur