When you hear the words "wholesale price" do you instantly subtract 50% off the retail charge? Many factors combine to determine the final wholesale pricing for an item. For example, electronics stores selling iPods make as little as 10% from each sale. It's the same for many designer cosmetics. Read on as I show you the real truth behind wholesale pricing, as well as how to guarantee you are always paying the accurate wholesale price when you acquire in bulk!
So, how are wholesale prices calculated?
1. The commodity charge. e.g. raw materials cost, which are used to create the ware.
2. Manufacture costs- including the labor cost.
3. The costs to package the product.
4. And lastly, the amount of the mark-up the wholesaler tacks on from the price they pay when they obtain from the producer.
What causes the variation in wholesale prices?
This is due to the fact that costs can change significantly from product to product. For example, a product requiring slight human expertise will always cost less to produce than merchandise which needs a lot of expertise. In the same way, a plastic item with the main raw material being petroleum will cost much less than gold jewelry.
Surprisingly, luxury goods such as cosmetics or perfume have a smaller percent markup than less expensive products made from plastic.
How do you know if a vendor has honest wholesale prices?
The answer is, make sure you procure from a true wholesaler. The vendor needs to be well established with the fitting business set up (with a business license and tax ID). The wholesaler must obtain their procure from a manufacturer in large bulk if they are going to be able to pass the least expensive prices on to you.
The variation between a genuine wholesaler and a faux wholesaler lies in how much they spend for their goods and who they procure their products from. When they are buying from a manufacturer, a dependable wholesaler will spend tens of thousands of dollars each time. A faux wholesaler will procure from larger wholesalers in medium to light bulk and therefore, they won't get items at the most desirable possible prices and be able to pass them on to the retailer at the most reasonable prices possible.
Sadly, countless retailers are tricked by individuals acting as wholesalers when actually they are only middlemen who don't have the capital or the contacts to invest in large volume.
To truly see to it that you are only working with straight wholesalers you must make sure they are legitimate and trusted. To do this the right way, I recommend that you use supplier databases from trusted sources. These can be found on-line by Googling "product sourcing directories".
It is important to note that most vendor directories charge a fee to join, but this is worth the cost as it can save you a lot of money by preventing you from being tricked in the future. It is worth mentioning that a very good directory is Salehoo.com which also acts as an online community for online sellers with seller support and regular blogs with plenty of facts to take advantage of.
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