What percentage do stores make?

Discussion in 'Growing and Managing a Business' started by suit, Feb 16, 2011.

  1. suit

    suit
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    Typically, what percentage do stores make on a product?

    Also what percentage does a business owner usually make on a product?

    If it helps, we can use roller skates as an example. Let's say the manufacturer is charging $40 a pair. What should they then go for in stores? How much should they be sold to the stores for?

    Is there any real formula to this? Or is it just whatever you can get away with?

    Thanks in advance
     
  2. Fergal

    Fergal
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    Welcome to our Business Forum suit.
    There isn't really any formula for this and most businesses will charge as much as they can for the products they sell. Obviously businesses have to make a profit in order to survive, so their selling prices will need to be higher than their costs. However, saying that costs are generally not the main factor in setting selling prices, customers are. Prices need to be set at a level that customers will buy the product at.

    Positioning or brand image is another important factor - for example a pair of designer jeans that sell for $500 wont' cost 50 times as much to produce as a pair of jeans that sells for $10. The price of the designer jeans is based on the fact that they are positioned as a premium product at the high end of the market.

    Saying all that I've seen some retailers selling products for just under twice the price they paid for them. So if the retailer was paying $40 for roller skates they may sell them for just under $80. Obviously they have to pay their overheads out of the mark up, so the difference isn't all profit.
     

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