How much do retailers mark-up a product? If MSRP is $50, how much margin does a retailer expect?

Question

I have a laptop stand that I'm selling for $50 directly online and would like to sell through distributors and retailers. What sort of mark-up or margin do they typically look for in a product? Also, what kind of volume discounts to they typically look for? Product is at www.laptopstandup.com.

Answer 1

That is a very wide open question. Mark up has huge variables depending on the category of retailer. Jewelry has abnoxious markup that can range 100-200% or more, furniture stores typically carry 35-45% Gross Profit markup. For the type of product you are looking to sell, which could/would/should be carried at retailers such as: CompUSA/Fry's (based in CA)/Circuit City/Best Buy those buyers will squeeze you to get your retail down allowing you perhaps a 20% GP markup. At CostCo & Sam's Club you'll be lucky to secure 15% GP markup. Of course all of this is putting the cart in front of the horse if you cannot get a retailer to buy into your concept. The Wal-Marts of the world will put you through an incredible spanking. You'll probably deal with a 25 year old buyer that has purchasing power over millions of dollars and to think your potential P.O. is at stake by convincing some kid. Make sure you have your ducks lined up in terms of Landed Gross/Sales per sq foot or sales per sq inch. The advantage you have is you'll quickly be able to pull metrics of your online sales history.

You'll have to get creative with regard to volume discounts, but these guys will look to get a rate of sale on your SKU before you begin discussing volume discounts. Just be prepared for some serious jerking around from these young buyers. You have a great product !!!

Answer 2

Retailers typically mark up a product at keystone. This is a 50% mark-up above a vendor's wholesale price. However, there are many categories that have higher mark-ups, such as cosmetics.