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Marketing/Negotiating wholesale prices with retailers

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QUESTION: Hello Glen

I am a grower of carnivorous plants, although I also have many inventions as well that I want to wholesale. I am in the process of contacting retailers.

Regarding my plants, they are a niche product with a self watering wick system which is a huge advantage over other ones sold. Therefore, they are priced higher for this reason.

After retailers reply wanting more information including prices, should I tell them only my wholesale price or should I state the retail prices I have been selling my plants for with a suggestion that people are happy with the prices? Hopefully then retailers will pay me a high wholesale price. If I only state the wholesale price I may lose interest if they think it is too high unless I say I could negotiate. The aim is to bargain as high a wholesale price as possible, so that is why I thought it may be best not to disclose the wholesale price. However I could include a wholesale price that is higher than what I would expect to get and say that I am prepared to negotiate. For example, I could make my wholesale price 70% of what I have been retailing the plants locally for in the hope that they may buy it for that price and sell the plants for a slightly higher price that I have been retailing them for.

For example, I could state:

"My wholesale cost prices are below. I am prepared to negotiate different prices if necessary.

I have been retailing them for much more than the below prices to people that visit me at my house and they have been happy with the prices considering the plants contain the self watering wick system which is a huge advantage over ones that other people sell as it saves people a lot of time and reduces the risk of the plants drying out and dying.

Sarracenia in 70 mm pot:  $8.50 to $10.50 depending on size and clumps.
Sarracenia in 95 mm pot:  $11.00 to $13.50 depending on size and clumps.
Venus Fly Traps in 50 mm pot: $7.00
Sundews (Drosera) in 70 or 95 mm pots $7.00
Nepenthes 70 mm pot:  $8.50 to $10.50 depending on the size of the plant.
Flower bucket and stand:  $2.00
Flower bucket by itself:  $0.70
"

Alternatively, I could list the retail prices I have been selling them for and state something like the below.

"The prices I listed below are what I have been retailing them for to mostly local people that visit me at my house so I understand that I need to wholesale them for less depending on how much you can get for them in your area. I have been trying to keep my retail cost down as much as possible as many people that have bought them are friends. People have been happy with the prices. I think you should be able to sell them for much more than the below prices because the plants do have an advantage over other ones sold due to the self watering wick system which saves people a lot of time and reduces the risk of the plants drying out and dying.

Sarracenia in 70 mm pot:  $12.00 to $15.00 depending on size and clumps.
Sarracenia in 95 mm pot:  $16.00 to $19.00 depending on size and clumps.
Venus Fly Traps in 50 mm pot: $10.00
Sundews (Drosera) in 70 or 95 mm pots $10.00
Nepenthes 70 mm pot:  $12.00 to $15.00 depending on the size of the plant.
Flower bucket and stand:  $3.00
Flower bucket by itself:  $1.00
"

Which of the above options do you think is best and do you suggest changes to the way the above is worded?

I have information and photos of my plants at http://www.advantagein.com/cp/

I also have many separate non-profit groups, plans, and information to help communities. I would appreciate your feedback and help. There are many new ideas, unique inventions with advantages, and rarely seen information with solutions. Please see http://www.truesolutions.info for a brief summary. Any comments and support on these plans will be appreciated. Are you able to share an email or papers that I could send you regarding this?

Any comments will be appreciated.

Regards Richard.

ANSWER: Dear Richard,

Ideally, you can describe the advantage of the wick system using facts, e.g., X% of plants typically die under ordinary care, creating customer dissatisfaction.  With my wick system, for a few dollars more, the customer is much less likely (or "is virtually assured" if you prefer a stronger claim) to lose their plant.  What's more, this unique wick system make it easier too, because it requires less frequent watering.

Having done that, offer the retailer "suggested retail prices" supported by your experience selling directly to the end consumer.  I wouldn't be so specific as to note the venue (your house) as it may give the retailer negotiating leverage because that is an indication of a motivated buyer who may be willing to pay a higher price.

In quoting wholesale prices, I agree with the idea of leaving some room to negotiate, particularly if the retailer will commit to volume minimums (whatever threshold you think is appropriate).

Finally, in approaching retailers, try out your approach on your least desirable retailer first.  It is best to learn and refine your approach before engaging with the most desirable retailers, so that you maximize your chance of success.

I hope the foregoing is helpful.  Please let me know if any of it raises follow-up questions.

Either way, good luck with your venture!

Best regards,
Glen Franklin

---------- FOLLOW-UP ----------

QUESTION: Hi Glen

Thanks for the suggestions. I will send you the three letters I plan to send.

Below is the first letter I have sent to a number of nurseries.  If they reply and are interested, then I send them the second letter with more information. Then if they prefer to buy the plants outright I send them the third letter.

I had another thought regarding sending the recommended retail price. I thought if I do, then they may not want to pay as high a wholesale price. For example, for the sundews, I have been selling them for $10. However, retailers could sell them for 11 or 12 dollars. If I say that, they may not want to pay anywhere near as much as $7. Perhaps I should just email them the wholesale price.

If you have any suggestions, please let me know.

Regards Richard.


Hello

Currently, I have many carnivorous plants here that contain a self watering wick system for easy care. Are you able to resell them for me or do you know of anyone else who could?

Nurseries that resell my plants could continue to resell carnivorous plants from their other suppliers as my plants would be regarded as an alternative niche product. They could resell my plants on a commission basis without having to buy them first. You could also market them online or by sending me referrals for a commission without having to stock my plants.

The self watering wick system reduces the risk of the plants drying out and it saves people the time of having to frequently water. Optimum growth is enabled by the system, as it provides the correct level of water so that plants should be bound to thrive. Please see more information at http://www.advantagein.com/cp/

Are you able to share some letters, messages or print outs if I send them to you?

I plan to use any profits to fund projects to benefit communities.

I have also invented an automatic water saving irrigation sensor controller with advantages over other systems. I can give you a free trial.  It saves time and improves plant growth because it provides the optimum amount of water.
This irrigation sensor is durable and affordable and is adaptable to an alarm, or any new or existing, commonly used irrigation computer station timer controller, or any electrical pumping equipment. The invention automatically prevents these existing systems unnecessarily watering in cool, overcast, humid or wet weather.  More information is at http://www.advantagein.com/irrigation/

I also have many separate non-profit groups, plans, and information to help communities. I would appreciate your feedback and help. There are many new ideas, unique inventions with advantages, and rarely seen information with solutions. Please see http://www.truesolutions.info for a brief summary. Any comments and support on these plans will be appreciated. Are you able to share an email or papers that I could send you regarding this?

Any comments will be appreciated.

Regards Richard.


BELOW IS THE SECOND LETTER I HAVE BEEN SENDING IF THEY REPLY AND ARE INTERESTED.


Hello

Thanks for your letter.

I had some ideas about how my plants could be marketed. I would like your suggestions on my ideas below. It would be appreciated if you could help market them.

Regarding reselling the plants, there are three possible options.

The first option is where someone could simply make a sale and take an order like an affiliate or associate program. This could be done by sharing promotional information about my plants such as papers or an email I have that I can send you.  If you have a website you could put some information on your site or a link to my site where I could track where the order came from. I can also send you a message to share that is suitable for Facebook or Twitter so that you can share it. When you send me the details of who orders a plant, I could post the plant to them and pay you the commission. This first option may be the best if someone does not have a nursery or showroom. You would not have any risk in buying or stocking my plants and it would not take you much time as I could handle the postage and money transactions. If you choose this option I could also send you down some display plants.

The second option is like above where you would not buy the plants outright and therefore there is no risk to you as I bear responsibility for and ownership of them. Unlike in the below option, if they die in your possession I will wear the loss. If that happens there will be no cost to you. If their health deteriorates, I can take them back and replace them with healthy ones.  You would have to stock and look after the plants and make money transactions and maybe post plants to people if they order by the mail.

The third option is for you to buy the plants outright. You will make a bigger profit margin that way as I would receive less money for each plant.  However, you would then own the plants and bear any possible risks involved with losing them.

I have done some research on recommended mark ups and commissions and found a fair commission may be 10% for option one. That is a similar rate to what affiliate programs average as seen at http://www.affiliateseeking.com/ppsal/23000069/or/1.html .  For option two, I found that a 20% commission is common as there is more work and responsibility involved for the reseller and less involved for the wholesaler, grower or supplier. For a 20% commission, a reseller would pay a grower $8.00 for a plant that they would resell for $10.00. For the third option where resellers would buy products outright, I found a reseller often buys a product wholesale for about 60% of what they retail the product for. This varies depending on sales volume. Larger retailers buying large volumes mark the products up much less than smaller ones.

I am prepared to negotiate different commissions if necessary.

Which of the three options could you use to sell my plants?

I have information and photos of my plants at http://www.advantagein.com/cp/

Please let me know of anything else that you would specifically need to know.

Please let me know what you think and if you want any more papers to share or if you can share the email to promote my plants that I could send you. Also, are you familiar with sending messages on Twitter or Facebook as I could send a message for you to share?

Also, do you know of any courier companies that are very affordable to send parcels or plants Australia wide and do you have an account with them?

Your help would be appreciated.
Regards Richard.


IF THEY WRITE BACK AND ARE ONLY ABLE TO USE OPTION 3, THEN I WILL SEND THEM THE BELOW LETTER.


Hello

Thanks for the letter.

My wholesale prices are below, and I am willing to negotiate depending on volume of sales, freight and delivery costs, and the like.

My plants have been selling (retail) for much more than the below prices and people have been happy with the prices considering the plants contain the self watering wick system which is a huge advantage over ones that other people sell as it saves people a lot of time and reduces the risk of the plants drying out and dying.

Sarracenia in 70 mm pot:  $8.00 (medium)  $9.00 (large)  $10.00 (extra large)
Sarracenia in 95 mm pot:  $9.50 (medium)  $10.50 (large)  $11.50 (extra large)
Venus Fly Traps in 50 mm pot: $6.50
Sundews (Drosera) in 70 or 95 mm pots $7.00
Nepenthes in 70 mm pots are not yet available but will be soon.
Flower bucket and stand:  $2.00
Flower bucket by itself:  $0.70

Do you want me to send you a box of plants.?

Regards Richard.

Answer
Dear Richard,

I've thinking about this for a bit.  What you really care about is the wholesale price point and maximizing your profit.  Thus, I concur with you that getting specific on retail prices may not serve you well.  Instead, perhaps you can inform the retailer of the potential margin in selling your plants.  Obviously, it's an easy calculation to determine the retail price, however it would focus their consideration to what their specific benefit/potential revenue is.

Also, I suggest re-ordering the beginning of the letter to emphasize key points early on:

-----
Currently, I have many carnivorous plants here that contain a self watering wick system for easy care.

The self watering wick system reduces the risk of the plants drying out and it saves people the time of having to frequently water. Optimum growth is enabled by the system, as it provides the correct level of water so that plants should be bound to thrive. Please see more information at http://www.advantagein.com/cp/

What's more, I plan to use any profits to fund projects to benefit communities.

Are you able to resell them for me or do you know of anyone else who could?

Nurseries that resell my plants could continue to resell carnivorous plants from their other suppliers as my plants would be regarded as an alternative niche product. They could resell my plants on a commission basis without having to buy them first. You could also market them online or by sending me referrals for a commission without having to stock my plants.

Are you able to share some letters, messages or print outs if I send them to you?  ...
-----

Otherwise, I think they generally flow well (change to margin vs. retail notwithstanding).

I hope this helps!

Best regards,
Glen

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Glen Franklin

Expertise

I have broad expertise in marketing, including research, innovation, advertising, branding and direct response. Additionally, the unique areas of my expertise are green marketing (consumer needs and wants related to environmental concerns) and sustainable business practices (how to operate a business in an environmentally friendly way).

Experience

My two decades of experience encompasses senior marketing positions in Citigroup, Harley-Davidson, and other large companies. I also own a small online business (www.mydreamlocale.com).

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http://ezinearticles.com/?expert_bio=Glennon_Franklin

Education/Credentials
Bachelor of Arts in Political Science and Certificate in International Relations from the University of Rochester.

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