When you hear the words “wholesale price” do you immediately deduct 50% off the retail price? It’s no surprise if you do, as there are so many sources out there telling us that this is what wholesale is. For example, electronics stores selling iPods make as little as 10% from each sale. It’s the same for a lot of designer cosmetics. Just because you find a supplier to sell wholesale products, doesn’t mean you’re going to get a huge discount. Usually, retail profit is made by taking a small profit from many sales. If you would like to gain a greater understanding of what wholesale price really means, read on as I show you the real ins and outs of wholesale pricing, as well as how to ensure you are always paying the true wholesale price when you buy in bulk!
How are wholesale prices calculated?
It’s really not that complicated: wholesale pricing is based on four different factors:
- The commodity price. e.g. the price of the raw materials which are used to produce the product.
- The manufacturing costs (including labor)
- The packaging costs
- And finally, the amount of profit the wholesaler takes .
Why do wholesale costs vary so much?
Basically because the costs above can vary greatly from product to product . For example, an item which requires very little specialized human labor will cost more than an item that’s pumped out from a conveyor line. Likewise, a plastic bottle with the main raw material being petroleum will cost much less than a ring made from gold. Surprisingly though, a cheaper item made from plastic will often have a higher percentage mark-up than a luxury item such as a bottle of perfume .
How can you be sure that a supplier has true wholesale prices?
To get true wholesale prices, you need to buy from a true wholesaler. In order to be able to sell at or below wholesale prices, a supplier must be a well established wholesaler with a proper business set up (with a business license and tax ID) . The only way a supplier can sell to you at a price that is truly wholesale is if they buy from a manufacturer in massive bulk.
The difference between a true wholesaler and a fake wholesaler lies in who they buy from, and how much they spend. A true wholesaler will invest many thousands of dollars at a time when buying from a supplier . A fake wholesaler will buy from larger wholesalers in medium to light bulk and therefore, they won’t get items at the best possible prices and be able to pass them on to you, the retailer at the best price possible.
Unfortunately, many retailers are fooled by individuals acting as wholesalers when really they are simply middlemen who don’t have the money or the contacts to invest in huge bulk.
To really ensure that you are only dealing with true wholesalers you need to make sure they are trusted and legitimate . The best way to do this is to access supplier databases from trusted sources. You can find these online by Googling “wholesale supplier directory“. Most directories will charge a joining fee, but this is worth it as it can save you a lot of money by preventing you from being scammed in the future. You also need to do a sufficient amount of your own research to verify that this is a company you want to work with. SellWholesale.com also has a good review of Salehoo.com, and this is a great place to start your wholesale research. You’ll find tons of wholesale suppliers there.
