%MARK UP

[Dewey]

I'm thinking of adding a product for sale at my Mill..  Although I'm paying Retail I think I can still move some here because its a hard to find product..  If I start selling more I'll  get better pricing...
My question is what is a decent markup % wise... At this time I plan on getting it as ordered ..

[WV Sawmiller]

   I'd say mark up varies based on availability, risk, handling and storage, cost of replacement, difficulty and training required to process, etc.

    We had a family business as a kid selling and installing granite monuments and chain link fences. There was a lot more mark up on the granite because we had to have much more and more expensive equipment to handle it plus if we chipped an expensive stone it was much more costly to repair or replace than a roll of fence wire or a metal post or piece of top rail. We had to have an expensive boom truck with chain falls and padding to handle the granite while all we needed for fencing was a regular pick up with a ladder/top rail rack and some basic hand tools.

[Dewey]

Pretty much all there would be is time and handling. I would have to drive an hour to pick up . 

[WV Sawmiller]

   How many miles? What kind of vehicle? How heavy to lift? How much storage space required? How many units will you sell per day/week/month? How will you advertise? How much is your time worth? How much risk that it doesn't sell? Will it increase your other sales or take time away from your other work?

   Basically it has to be worth your time, effort and risk and only you can answer those questions. Good luck.

[Ron Wenrich]

If you're buying at retail, I don't see how there is enough margin to cover your expenses.  At a minimum, you should have the interest on the money that is invested in product.  Or another way of looking at it, the amount you could make if you invested in raw material or other product.  Best to see if you can buy wholesale from a distributor.

I've always found hard to get items readily available on the internet.  If you price it too high, that alternative becomes more attractive.

[alan gage]

Percentage of markup often varies depending on cost. You might markup a $1 piece 400% and markup a $3000 piece only 25%.

I'd bet most retailers are doubling their cost.

Alan

[hacknchop]

We add 40% over wholesale sometimes a little more to recover shipping , we sometimes purchase at retail but only when we cant buy the product wholesale        ( sometimes the minimum order is to high or there might territory restricions ) but if we can we will try and make a deal based on quantity maybe 10%or 15% . Not the best business plan but having some hot items available in our shop can lead to more people comming through the door which usually leads to increased sales of other products.

[Old Greenhorn]

.. At this time I plan on getting it as ordered ..

I don't understated what you mean by this last comment, or do you mean, you would get the product when your customer ordered it from you?
Making some assumptions here that the product is low maintenance (no shelf life, heating cooling required, feeding, watering or any of that stuff) and that does not have a negative impact on your storage/stock space, so basically it is a 'hard good'.
If that is the case, then what you are actually selling (your 'value added') is the convenience of having it available locally for immediate purchase and without the hassle of going to find it for themselves. I am always happy to buy local and pay a little more for the convenience but it can't be so much more that it would be worth my while to wait and order it shipped to me, or make a longer drive to buy it cheaper. So I think the answer to your question lies at least partly in what the value is to the buyer to have it right there when they need it. Without knowing what 'it' is only you can make that judgement. Small items would likely sell well with a 25-35% markup because the real difference is not much, but if it's bigger dollars then a buyer will take more time to think it over. My last thought is that if your markup is too high, nobody will buy and it will  be pretty obvious to you. If you lower the margin people might see it as more of a deal. Nobody ever complains when a supplier lowers their price. However, going the other way and raising the margin that was too low to begin with, will be harder. So think about erring on the high side.
Good Luck.

[Dewey]

I  guess being vague brings more questions.... Old Greenhorn...  Yes at this point I plan to purchase Cedar Log Railings when decking is ordered by customer...   I sell quite a bit of  Cedar decking and I have always been asked about Log Railings . I've tried to find a place in New England to buy railing material wholesale but have had no luck... The place I can buy from gets it by the tractor trailer load all drilled and ready to go.. So it is a matter of having some here so that my customer doesn't have to travel around looking for it.  They will sell it a little cheaper if I buy full units of each particular part. If anyone out there knows where I could buy it wholesale let me know

[Old Greenhorn]

When a customer orders a cut list, do you deliver, or do they pick up? I suppose it doesn't really matter, either way, the value you add is becoming a one stop shop for their cut list. I don't see this as you adding a margin as much as I see that you are providing an additional service. That is, you could just have an added charge for ordering the rails and picking them up, in addition to having located the source in the first place which may not be so easy for them, if you had a tough time. It would come out the same but would be much more clear to the customer what they are paying for. Maybe this isn't what you would want the customer to know, but it is another way to look at it. You are driving a 2 hour loop, maybe load/unload time, fuel, it all adds up.
 The reason I bring this up is because if a customer orders just a small amount of rails and you charge a percentage you will be getting a lot less than if the customer orders a large amount. Seems fair, BUT your costs for picking up a small load verses a large load is probably about the same. I'm not sure how this plays out in your reality, but it is something to consider.

[Dewey]

Thanks for your thoughts....

[Old Greenhorn]

Good luck, please do let us know how it turns out and what you decided.

[WV Sawmiller]

   It sounds like a good fit for what you are doing and may increase your other sales. I'd work up a price list with a minimum amount to be worth your time and travel costs then work up price breaks for larger amounts up to the point you had to start making extra trips or using bigger equipment. 

   I set up a day trip in Africa one time like that. I found what it cost to get a boat and crew and a guide for the day to visit some remote fishing villages then I determined how many people we could take and told them price would be based on the number going and showed the break points. I think I invited 9-10 but then they invited others till I had 14 confirmed and I had to scramble and get a second boat and crew. It actually all worked out better having the second boat as a backup and we all had an absolute blast.

   Anyway, good luck on your venture.