Reply To: Questions

Erin Melnychuk

Hi Linda,

Getting an offer on wholesale is exciting, but it does come with challenges. Your idea on what constitutes a volume discount may differ from theirs. I would suggest asking them what volumes they are interested in. This will help you understand how much wiggle room you have in your margins. They may be interested in enough volume to cover the hard costs and you’d be willing to give up some amount of profit margin in order to be able to secure a great client like this.

Generally, you would consider a formula like this to arrive on a retail price: material costs + labour costs + overhead costs + retail profit margin (higher than wholesale, I think craft woodworking is usually 60%-70%).

And then for wholesale, it would differ something like this: material costs + labour costs, + wholesale profit margin (lower than retail, perhaps 30%-40%). *Omitting the overhead costs because you aren’t retailing it and carrying those costs.

While this might look scientific, it’s actually not. It’s just a starting place and then you’ll have to adjust to what you think is tolerated by the market.

I hope this helps!

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