Question I have a product that I am looking to sell to specialty / boutique stores and I am wondering about how much margin these retailers are expecting? For example, if my cost to them is $10, how much would they need to sell the product to stay in business?
It somewhat depends on the type of specialty store you are selling into. For example, a fashion retailer (shoes, clothing, jewelry etc.) is going to need or at least want at least a 60% margin, which means your $10 cost will represent a $25 retail price (formula is your cost - $10 divided by COGS percentage 40%). If it is not a fashion store, lets say a sporting goods store or a hardware store, they would like a 50% margin, so the $10 cost would translate into a $20 selling price.
Now, this does not mean that some fashion and non fashion stores will run with much higher or lower margins, this is certainly the case, but what I have given you is the average. Retailers love high margins, high margins can hide or mitigate a whole bunch of mistakes.
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Over 40 years in the retail industry, store level, store manager, buyer, merchandise manager, Vice President.
Education/Credentials BS Psychology, MS Psychology, PhD(abd) Industrial Psychology Illinois Institute of Technology
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B.S Chicago State University
M.S. Chicago State University
PhD (abd) Illinois Institute of Technology