hoping someone can help me …am thinking of buying a small paddle company located in canada the company makes and sells kayak dragonboat and outrigger paddles i am hoping someone can suggest the average mark up of the paddle from the manufacturer to a distributor and from the distributor to the final user the paddler…lets say the example for a $100 paddle what is far for everyone… really appreciate all suggestions
I managed a couple of wilderness sporting goods shops and did some manufacturer rep work in the 70’s and 80’s so I can offer my own experience and some strong opinions (which you can take or leave). The standard wholesale margins for “hard goods” gear at that time were 20% to 30%. This is margin, not markup. In other words if the wholesale price to the dealer is $100, at 20% margin the net cost for the manufacturer to produce it is $80. So a 20% margin means a 25% markup, maker to dealer.
The “list” price to the consumer (usually established by the manufacturer) was usually based on a wholesale to retail margin of 40%. You get this price by applying a 66% markup on the wholesale price (this is why dealers can afford to have sales of up to 50% off when they need to clear stock or raise cash).
So that paddle the dealer bought from you for $100 now has a list price of $165, or a little over twice what it cost to produce. This was a fairly standard ratio structure for the gear we sold (kayaks, paddles, XC skis, backpacks, etc.) Markups/margins were even higher for “soft” goods like clothing and shoes.
The prices of your competition and the value you offer (quality, uniqueness, customer service are all factors – don’t make the mistake of trying to just be the cheapest product to get market share because you will lose in the end) as well as your ability to manage your overhead and project your costs and volume figure into where you set your prices as well. But I figure you must already be taking all that into account.
Simplest calculation I can think of is to look at what the going prices are for similar wooden paddles. Then ask yourself “Can this company I am thinking of buying produce them for half that price? And is a 20% profit margin on what I expect to sell going to be enough for me?” If not, you are taking a big risk.
Also, don’t even THINK about selling your product direct to consumers if you also expect your dealers to sell them. The higher margin may tempt you but the dealers are your biggest ally – if you undercut them you will lose market share and shoot yourself in the foot. And the headaches of dealing with individual consumers (selling them on the product and then servicing them after they’ve bought it) are what the dealers do to earn that extra margin on your goods – trust me, it’s worth it to you to let them do the selling and servicing.
Would help everyone much if you’d also mention the markup for a boat, so the buying public understands that it’s not what it is for accessories.
Many buyers think boat dealers have markups like car dealers have. Find questions all the time about how a dealer is a jerk cause he won’t give a customer 50% off
dealers and manufacturers
Btw, if you’re a customer just a hint, don’t waste the manufacturer’s time by calling them trying to buy direct. Most companies with products worth buying do not ever sell direct, can’t legally. Most don’t have a license to sell direct and legally collect the taxes, they sell wholesale and don’t collect taxes, only paid by the end user.
I used to get several calls a week, PITA.
Also another hint, if the company sells say fiberglass canoes, no they won’t build you an aluminum pontoon boat/ jon boat etc., don’t ask.