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. However, 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.
How do you know if a supplier has true wholesale prices?
To get true wholesale prices, you need to buy from a true wholesaler. In order to be able to sell at or below wholesale prices, a supplier must be a well established wholesaler with a proper business set up (with a business license and tax ID). The only way a supplier can sell to you at a price that is truly wholesale is if they buy from a manufacturer in massive bulk.
The difference between a true wholesaler and a fake wholesaler lies in who they buy from, and how much they spend. A true wholesaler will invest tens of thousands of dollars at a time when buying from a manufacturer. A fake wholesaler will buy from larger wholesalers in medium to light bulk and therefore, they won't get items at the best possible prices and be able to pass them on to you, the retailer at the best price possible.
Unfortunately, many retailers are fooled by individuals acting as wholesalers when really they are simply middlemen who don't have the money or the contacts to invest in huge bulk.
To really ensure that you are only dealing with true wholesalers you need to make sure they are trusted and legitimate. The best way to do this is to access supplier databases from trusted sources. You can find these online by Googling “product sourcing directories”.
Most directories will charge a joining fee, but this is worth it as it can save you a lot of money by preventing you from being scammed in the future. SaleHoo.com is a trusted and reputable directory which also acts as an online community for online sellers with regular blogs and plenty of information and support for sellers to take advantage of.
SaleHoo is one of the fastest growing product sourcing portals on the internet. It contains a database of drop ship, wholesale, closeout and manufacturing suppliers offering thousands of product suppliers to consumers! Located at http://www.salehoo.com, visitors are allowed to sign up for unlimited and lifetime access to the completely searchable database of products and suppliers. The database is regularly updated, ensuring that the latest retail products are always available for purchase and SaleHoo carries the BBB Reliability Seal!