Reply To: Margins

[Klas]

Hi,

what Sara is saying is kind of the industry standard for traditional retail.

The equations look like this:
FOB x 2.2 = Wholesale Price
Wholesale Price x 2.2 = Retail Price

Typically it is around 2.2-2.5. I use 2.2 in this example. FOB is the cost of making your product, excluding shipping.

Let’s say your FOB is $100 then the calculation looks like this
FOB = $100
Wholesale Price = $220 (100 x 2.2)
Retail Price = $484 (220 x 2.2)
As you see, the retail price is 5 times the cost of making it.

So if you sell DTC, cutting the middleman out, and keeping the same retail price, you have a much higher margin.

We recommend you aim for at least a margin of 50%, so if you can get 60% that’s good.

Did that answer your questions?

//Klas

• This reply was modified 5 years, 6 months ago by  Klas.