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, because every item is different. For example, electronics stores selling iPods make as little as 10% from each sale. It's the same for a lot of designer cosmetics. If you would like to clear up a few things about 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 is a wholesale price calculated?
It's really not that complicated: a wholesale price 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 cost of the mark-up the wholesaler adds on from the price they pay when they buy from a manufacturer.
Why do wholesale costs vary so much?
Quite simply because the costs above can vary greatly from product to product. For example, an item which requires very little specialized human labor, for example, someone to turn on a machine and watch that items don't fall off a conveyor belt will cost a lot less than a product which requires a lot of expertise to produce. 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.