I keep Turning Down Wholesale

[Sndfrddy]

I sell at a Farmers' Market once a week for 18 weeks. I make about a $300 week profit there and it keeps growing every year. It's getting to the point my brand is being pretty recognized locally although I try to keep myself personally out of the spotlight. I'm a one person show.  I sell on line. Tend to get pretty big orders over the winter. I also sell at a restaurant. They sell for me at the same cost I sell on line and at Farmers' market. All they get in return is some free candles to burn. They say it's also a win for them because people go there specifically to buy my candles and end up eating there or getting a cocktail. Over the years I keep getting approached from brick and mortar shops to sell my product by me selling to them wholesale. I always turn it down as usually they want it for 50%. I don't sell my candles hugely expensive. But yes, over the years I've learned tricks to make my profit margin pretty good. About 70%. That's why I keep turning down wholesale. Yes I could sell more. But I would be working much longer and harder to make the same profit. To me, it's not my total number of sales, but the profit margin. So I'd rather sell a little less but I'm making a much bigger profit margin for what I do sell. I just got contacted AGAIN from a newly opened brick and mortar store. I feel I am about to turn them down again. Am I being stupid? Please share your thoughts with me. Thanks so much.

[kandlekrazy]

Wholesale can be a great way to expand your business, but it can also be a nightmare.  If you want to stay small and local you are probably better off not doing it.  I still have a few old wholesale accounts that are completely

out of my area so I don't mind selling to them at a lower profit margin, but If and when they decide to stop I will not look for more wholesale.  Some here are mostly wholesale as they do not do markets or have their own

location.  Only you can decide how much work you want to put into expanding and how big you want your company to grow.

[Guest OldGlory]

My business is wholesale and I really like it.

 

My background is retail management so I understand the thinking behind both types of retailers - the higher end retailer that sells 2 candles, each with a $5 margin of profit and makes $10, AND the mass marketer that sells 5 candles, each with a $2 margin of profit and makes $10. Both thrive in today's market.

 

You can keep a good margin for yourself and let the potential retailer raise their prices beyond your retail to satisfy their margins. If that means that they have to sell your product for $2 more than you sell it for, why not let them try? You can offer a different size/shape, use a different label, whatever it takes so that the candle looks different than yours.

Edited January 17, 2016 by OldGlory
spelling

[TallTayl]

I have two rules WRT my business.

1) i only do what i "want". If i choose to not offer wholesale, that is OK. If i do, then it is on my terms. Which leads to #2

2) when i do offer wholesale i sell for what $ i need to in order to make it worth my while. There is no rule that says you have to sell WS at 50% of your retail. You "can" but if it does not make sense, charge whatever does make sense.

[Candybee]

I have a limited amount of wholesale accounts and so far have done fairly well profit wise. I didn't sell at wholesale for a long time until I felt ready for it. That's the way I like it because I am mostly about selling at craft fairs and market venues.

 

Now I charge the price I want and I couldn't do that early on. Not until I got to the point in my biz where I was buying large enough quantities of supplies at a lower cost to make wholesaling worth while.

Edited January 17, 2016 by Candybee

[justajesuschick]

I am pondering the same. 

I was just featured on my web platform's Master's Series podcast, have another podcast that will be released soon and was just invited to participate in a very cool, non-wax related blog. As a result, I am now getting much more interest and in a different direction than I have.

One wholesale request that I am considering is a very upscale and historic men's store in New England. I am grateful that my brand essence was understood and certainly flattered for the interest.

They want masculine scents and I do have a few that would match with their brand well.

They sell a candle brand in store and on their site that has dimensions of 4.75" tall for $25!! I know they will not quibble on the wholesale price I quote. I have spent a lot of time building my brand so will not private label.

I am considering proposing/offering a different sized Melt for them and perhaps renaming some scents so that they sound more masculine. For instance, I have a scent named Fancy Salon that could just as easily be named Barbershop or Clean Shaven. 

I still work (almost 30 years now with my corporation) a very demanding, full-time career so I do not want to take on more than what I can do. My own online business takes all of my evenings and weekends.

THIS is why I am like you, and pondering. 

[Trappeur]

Like others said, you have to decide what makes you happy.  You can sell retail and make more money with working less or you could do wholesale, make less money but have to work more hours but the the thing with wholesale you have the repeat business all the time.  It's your calling what works best for you.  It sounds like you are very happy where you are now and that's great.  Good luck with what every you decide to keep on doing.

 

Trappeur

[moonshine]

I do both and I have to say wholesale is becoming a PIA for me

I only have 3 accounts but no matter how many times I ask for advance notice it's always last minute "I need them now" and I screwed up in the beginning just being giddy and flattered my products would be out there in stores and I priced them based of the general census of half retail- I since then Increased them but to me the time and rush I put into these orders is becoming not worth it to me anymore

My own retail I make at my own pace- adding scents when I want and if I run out of a scent and don't feel like making it right away then it doesn't matter- pick another one that I do have in stock and I can make more money off them

I too have a full time job and this is a side thing for me - wholesale is becoming a "job" and I am thinking I am going to not offer it any more

[nursenancy]

I have almost the exact situation as Moonshine.  I only have a couple of accounts because I keep turning people down.  Then they think you're crazy because you don't want their business.

[David Fields]

OK. I differ from you on one point. It's net profit before taxes  that counts. Yes, your profit margin helps, but bottom line, what are you putting in your pocket? Your are obviously content with your profit before taxes and your workload, so, don't change anything. At a point, however, you may want to take your business to the next level and then the next. To do this you need to think about hiring help, improving your margins so that there is room for a wholesale price, a brick and mortar of your own, a website to sell you goods. All of these takes lots and lots of work but can be rewarding financially. But again, if you are content and don't have any thoughts about growing, don't change.

[Vernie1]

I totally understand what Moonshine is saying. I hesitated for a while to do wholesale but recently tried it. The lady was very nice and even advised me that my prices were too low. Although I did offer my items to her at half off, I will do it differently if i decide to wholesale again.

 

Wholesale is great if you're looking to expand your brand and company name. if you can make money wholesaling at half price then do it, if not please do don't. I tested this one wholesale account just to see if I would like wholesaling. Since wholesaling, I feel like I'm cheating myself out of money so, I really don't see myself doing this again anytime soon.

 

If you can make if work for you Sndfrddy, then do it, if you can't make a decent profit, please stay with your frame of mind. You can always wholesale later in your business. Do what works and is working for you!

[wthomas57]

On 1/17/2016 at 10:54 AM, Sndfrddy said:

I sell at a Farmers' Market once a week for 18 weeks. I make about a $300 week profit there and it keeps growing every year. It's getting to the point my brand is being pretty recognized locally although I try to keep myself personally out of the spotlight. I'm a one person show.  I sell on line. Tend to get pretty big orders over the winter. I also sell at a restaurant. They sell for me at the same cost I sell on line and at Farmers' market. All they get in return is some free candles to burn. They say it's also a win for them because people go there specifically to buy my candles and end up eating there or getting a cocktail. Over the years I keep getting approached from brick and mortar shops to sell my product by me selling to them wholesale. I always turn it down as usually they want it for 50%. I don't sell my candles hugely expensive. But yes, over the years I've learned tricks to make my profit margin pretty good. About 70%. That's why I keep turning down wholesale. Yes I could sell more. But I would be working much longer and harder to make the same profit. To me, it's not my total number of sales, but the profit margin. So I'd rather sell a little less but I'm making a much bigger profit margin for what I do sell. I just got contacted AGAIN from a newly opened brick and mortar store. I feel I am about to turn them down again. Am I being stupid? Please share your thoughts with me. Thanks so much.

 

Here is my two cents.. because yes, wholesale can eat into your profits if they sell them for what you sell them at BUT they get it to you at 50%

 

So, I'd offer them a couple options:

 

1) Agree at 35%

2) Tell them they can bump up the price a dollar or two from your retail rate if they want

3) Offer PRIVATE LABEL. This is such a key a lot of people forget about. First, many retailers like to have their own private label products anyways. Secondly they can charge a bit more for it over yours and no one would think anything of it. The only issue with private label is that you dont get your name out there from those sales and that is a bummer.

4) Hybrid Private Label - This is something I do myself. Basically I make them a label for their shop just like private label. But its a shared private label. So it would also say "made by "xxxxx"" or something to that affect in small text or with my logo appearing somewhere. That is a nice balance between the two. Plus they can still charge what they want for it and still no one would think anything of it.

5) Lastly, only sell certain jars for wholesale and certain ones for your own retail. That way there is no conflict of interest on pricing with what you are selling verses them. I dont like this option as much  because I want to sell everything I have to offer from my own retail side... but I know some who have done it this way.

 

I'd consider option 3 or 4 if you haven't before. IF not, then go back to 1 or 2. Or... dont do wholesale.

Edited August 1, 2016 by wthomas57
typo

[Candybee]

Are you saying agree on 35% of your retail price?

[wthomas57]

Just now, Candybee said:

Are you saying agree on 35% of your retail price?

oh not... sorry.. i meant they get 35% discount rather thatn 50. I guess it depends if we are talking about straight wholesale or consignment though, ha.

 

But what I was suggesing was that there is no hard rule that you have to charge wholesalers 2x on your cogs. You can negotiate whatever you want and they are willing to do.

So if your cost is $5, standard wholesale is $10 and Retail is $15. Thus they aer making 50% profit of what would sell yourself at retail. (I.E. they are making $5 and you are making $5 on each sale, whereas normall you would be making $10 on your own retail sale.  w

 

What I was suggesting was sell to them for $11 or $12 for example. Yes, they make a bit less per sale but it also means the different between you being able to work with them and not being able to work with them. Their margin is a bit lower in order to work with you. Negotiations like that happen all the time. And I am not suggesting those exact amounts or percentages. Might point was that you can negotiate a bit. Simply tell the shop that the best you can do is "X". If they like your product enough, often they will bite. And then you are in a much better situation as well making the wholesale account more "worth it" to you.

[Candybee]

Okay. Got it.

 

I don't know about your area but around here merchants expect 50% of your retail price as their wholesale price. I understand you can charge what you want but its not always going to be the case and not always the most reasonable. Around here for example you can easily lose accounts or not gain any if you insist on a wholesale price is that is not reasonably close to 50% of your retail. So another factor you must consider is the business practices in your area. You could have a tier pricing system but then you have to be prepared to fill larger orders if your merchant account wants to save money and stock up plus you have other things to worry about too if you choose this method.

 

I had to wait a few years before I was ready to do wholesaling. I buy my supplies in much larger bulk now so I am able to offer wholesale and make it worth my time and money.

 

But it doesn't work for all my products. I sell a lot of soap and my costs are low enough I can wholesale at a good price. But I won't sell lip balms even thou they are cheap to make simply because I don't want to spend my time and money on making the quantity of lip balms it would take to make them worth while. So I don't do it.

[wthomas57]

yes I agree... I wa sjust giving easy numbers to work with. Mainly was just stating that there is sometimes a little negotiating you can try.

It wasn't one of the first things I'd try to get a wholesale account as its usually not that successful. It also depends on who your going after. Bigger box stores or local shops. Lot more flexibility with small local shops.

 

But one thing I got a little lost on in your last post. You said they expect 50% of retail cost? So in my example of:

 

COGS = $5

Retail = $15

 

You're saying you need to sell for roughly $7.50 to get an account? That kinda nuts. I wouldn't do that period. Lol

Or did you mean 50% of retail profit. So,

 

COGS = $5

Retail = $15

Wholesale = $10

 

??

[Candybee]

Not exactly. Based on your figures my retail would be $20 not $15.

 

What I am saying is if you charge $10 for a product the local merchants won't do business with you unless you offer around the $5 range for wholesale. Which is in effect half or your retail price. So the first priority is pricing your retail effectively so you are able to sell at wholesale. Hope that explains it better.

[Trappeur]

Exactly what Candybee said, retail would be 20.00.

 

When you sell wholesale this is how it is done.

 

Example:

Figure out what your cost is to make the product (cost of goods)                       $5.00

 

Wholesale to a store should be (at least) double what it costs you

to make the product.                                                                                                  $10.00

 

Retail (What the store will sell for)                      

They always sell double the price what they paid you.  Some

Stores will charge more if your product is really cheap and they 

feel that the product can sell for a higher price than just doubling                      $20.00 (The store will sell your product for this or maybe more, but they won't

                                                                                                                                       sell for less....) well, I wouldn't think they would.....

 

Depending on the area where you live can dictate what a shop will sell the product for.  If it is in a high end district, they most likely can get more than doubling the wholesale price.  You also have to figure in if you are going to ship or deliver yourself so you need to know that.

 

For example I sell to a shop in Blue Ridge, Georgia that just opened up.  Now this town has the railroad that is right smack in the middle of the downtown area andit brings thousands of tourists and 2'nd home buyers and the street downtown is just booming with beautiful little shops....some cheap and some more high end.  This shop I designed a couple collections of candles for them.  I wholesale the 8oz tin to them for 6.00.  They retail the tin for 15.00! Hard to believe it, but when you go into the shop it looks pretty high end but because it is so tastefully decorated and though it is not that really expensive it LOOKs expensive and they can get more $$$ for a custom candle.  Now too I private label and I spend an enormous time (too much time! lol) when I am working on a custom label.  This works out beautiful for me (as much as they are a pain in the a.....ss to do).  So they can command a higher price.  But I never thought they would sell for 15.00 this little tin.

Now the 12oz status jar that I wholesale for 12.00, they sell for 26.00.  It's all about presentation, presentation.

 

You could always too, maybe add 50cents or even a dollar more to your wholesale price if you think you can get it.  But remember....do you think the store can double that price easily?

 

Trappeur

 

[wthomas57]

I dont know where you all sell... but a status jar for $26 would never fly here except rare occasions or unless I am specifically targeting luxory. Most everyone I know complains about yankee pricing which is why they buy crap cheap candles from WM, lol.  And a Tin for $15!!???  Wow. I sell mine for what you wholesale at.

When you were telling me about whoelsaling I was gonna ask how on earth you made your products at such low costs to profit from wholesaling.. but never mind. The real factor was that you have wholesale accounts willing to pay that much and sell for so much. Congrats to you. I am in the midwest..., that just wont fly. Ha!

 

All kidding aside... Id like to lower my costs but I dont see wholesaling making much money by itself for me anytime soon because the prices they would have to sell them for is just too high IMO. That being said.. I would prefer to sell less for more, rather than selling like crazy. But.. I'm just not sure Id sell hardly any at all raising prices too much.

 

[wthomas57]

 And to follow up with that.. currently since I dont really do much in regards to true wholesale accounts.. i am abel to sell direct for a less cost. I'd have to change that as well I'd imagine.

 

Thanks for all the clarification by the way. 

[Trappeur]

Your welcome.  Bottom line is we all have to be comfortable and know what we are capable of doing and just decide which direction to go.  Know your market, and even at that, it doesn't always pan out.  What works for this person, doesn't work for another one.  Each one of us is different and it's all trial and error.

 

What jar are you using by the way?

 

Trappeur

[TallTayl]

I don't offer my whole catalog for WS. Many things are just not profitable enough to be worthwhile for me. However, one way around that is to offer slightly different items for WS only that do not perfectly align with what I offer retail. Win win.

 

No way I would offer for WS at only double my cost. It does not leave enough room for potential problems and the risk. I get pretty darned good bulk pricing (which pads "my" bottom line). The WS customers I have kept make enough and turn enough volume so it is a win win.

 

the Key to WS for me is volume. I set minimums high enough to discourage tiny orders which do not amount to enough profit per transaction. used to get annoyed at not making enough per transaction, so I raised prices and mins until I did not feel quite so annoyed. It has suited me well.

[Moonstar]

28 minutes ago, TallTayl said:

I don't offer my whole catalog for WS. Many things are just not profitable enough to be worthwhile for me. However, one way around that is to offer slightly different items for WS only that do not perfectly align with what I offer retail. Win win.

 

No way I would offer for WS at only double my cost. It does not leave enough room for potential problems and the risk. I get pretty darned good bulk pricing (which pads "my" bottom line). The WS customers I have kept make enough and turn enough volume so it is a win win.

 

the Key to WS for me is volume. I set minimums high enough to discourage tiny orders which do not amount to enough profit per transaction. used to get annoyed at not making enough per transaction, so I raised prices and mins until I did not feel quite so annoyed. It has suited me well.

This is great advise and something I think many of us struggle with, or at least i do . You bring up a point that Ive been meaning to post about and that is minimum 

orders. Would you mind if I ask how much that is. I don't even know where to begin when you have several products - candles/melts - bath + body .If my question

is straying from OP question, please just let me know + Ill just post a new topic .... thank you in advance .

[TallTayl]

1 hour ago, Moonstar said:

This is great advise and something I think many of us struggle with, or at least i do . You bring up a point that Ive been meaning to post about and that is minimum 

orders. Would you mind if I ask how much that is. I don't even know where to begin when you have several products - candles/melts - bath + body .If my question

is straying from OP question, please just let me know + Ill just post a new topic .... thank you in advance .

My perspective is that wholesale is a business partnership, not a one-time or quantity discount. If we are both committed, we both make money. And I sure as heck don't want my WS customers becoming direct retail competition in my market segment. 

 

My standard WS partner agreement/contract starts at:

-$250 min opening order

-$100 min reorder

-min order quantities per product that match my manufacturing requirements (for instance minimum of 10 soap bars per scent)

- $1000 in order volume per revolving 12 months. 

 

It it has really weeded out the nonprofitable accounts and those looking for small quantity discounts. Not to mention people looking give "cheap" gifts. 

 

 

[wthomas57]

Thank you all again for the added clarification. And TallTayl, I do COMPLETELY agree about not offering whole catalogue. I have made the same suggestoins to others as well.

Thanks for providing your baseline agreements too.

 

And Trappeur, I have a few jars I regularly use. They include: Straight Sided Tumblers, masons in two sizes and currently testing apothecarys but having hard time wicking them easily so far (at least the biggest one). I have looked into the status jars.... but they are so similar to my tumbler with the exception of the flared bottom foot. So I have avoided them thus far. But I cant imagine selling those at such a high price. I wouldn't sell one I'd be afraid.

 

That being said.. I do put a lot of time, care, and aesthetics into my candles and packaging.. so I probably could charge more. But I cant see, in my current state, doubling or more for WS and doubling that for retail.

 

The better solution would be lowering my cogs, but not sure how to do that yet. I do buy in somewhat of bulk.. but apparently nothing close to what you and TallTaly do.