Well we got back from the Seattle gift show and we really learned a lot. We found out about how our packaging needed to look. We talked with a couple of showrooms about having them Rep us when we get ready to take our product to store shelves. All of the showrooms charge 15% to rep your product.
We also talked with a manufacturer that was at the show for his new product line he had just introduced. He told us that if we want to manufacture and sell whole sale that we should be at a margin of 3 to 1. For every dollar it cost us to make our product, our whole sale price needs to be 3 dollars. The reason for this is that manufacturers often give discounts on their whole sale price if the buyers are purchasing a given quantity. This is usually around a 5% discount. They also offer different terms of repayment depending on buying levels. As an example:
Minimum order $500 net 30days
$1000 order net 60days
$1500 order net 90days and 1/2 FFA
FFA stands for free freight allowance. This means in the above example, if someone bought $1500 worth of product and they paid within 90 days, you would only charge them 1/2 of the shipping cost to ship the product to them.
Usually the invoice shows the entire cost to ship the product, say $100. If they pay within 90 days they only get charged $50. If they are late, they get charged the entire $100.
Usually the more they buy, the longer they have to pay their bill.
Other things that are typically done by manufacturers is the initial order minimum might be $250 and then reorders might only be $100 or even $50 depending on the product retail price.
When we go to the Long beach show in March, we will be looking at more options.
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