Wholesale... selling to Retailers

[BaldDaddys]

Good afternoon,

I have a request from a local coffee shop who wants to carry our line of single serving size crumb cakes. Not ever selling wholesale before I am not quite sure how to price it. For argument sake, one of our cakes retails for $2.25, while cost to produce is around $.65. I know in apparel the retail mark-up is anywhere 50% - 60%. Does anyone have an idea what the wholesale to retail mark-up would be in a bakery? I was thinking in the neighborhood of $1.30 - $1.50.

Many thanks for any insight.

EDIT: I should also say that up until about 3 months ago baking was a hobby, I am just now starting to sell my products so I have only minimal retail bakery knowledge.

Edited September 30, 2008 by BaldDaddys (log)

[etalanian]

Hi, Eric,

Does your cost include labor and overhead? If not, your food cost is at 28% for this item; most businesses try to keep their food costs around 20%.

Be careful how low you go - you don't want the majority of that product out there at a low margin, which would bring down your overall margin.

Good luck!

Eileen

[BaldDaddys]

Hi, Eric,

Does your cost include labor and overhead? If not, your food cost is at 28% for this item; most businesses try to keep their food costs around 20%.

Be careful how low you go - you don't want the majority of that product out there at a low margin, which would bring down your overall margin.

Good luck!

Eileen

←

Hi Eileen,

Thank you for that information. I am right at that 20% for food costs so I guess my retail price is inline with the industry standards. My dilemma lies in the selling of the cakes at wholesale. Since I do not/have never run a coffee shop, I am in the dark about typical margins. As I mentioned in my previous post, I do know that with apparel, retailers have a 50% - 60% margin. Is that the same for the food business?

Thanks again!

[etalanian]

Hi, Eric,

When I sold products to retailers, they typically doubled the price, sometimes more than doubled the price. So if you keep that in mind, you might be able to back into the pricing.

Are your products sold in your own retail shop? Will they be competing price-wise with you at retail? That's another thing to consider.

Eileen

[BaldDaddys]

Hi Eileen,

No.. up until a few months ago baking was simply a hobby, whipping things up for family and friends. I am preparing to launch an online bakery this week. While I won't rule it out... at this point I don't have much interest in opening a retail storefront due to the crazy hours involved. I already had an 80 hour a week job in my previous career. Ideally, I would prefer to sell through coffee shops, restaurants, etc, and directly to consumers through our online offering.

I will have to give consideration to the pricing. I know that some companies, via their wholesale terms and conditions, state that resellers are not allowed to advertise a price below established levels.

Thanks again for all of your insight... I guess the 50% markup that occurs in apparel transcends over to baked goods as well.

Eric