product pricing advice
I would like to get some advice on pricing our new product. Our business is called Friends FIR Life and we have invented a Far InfraRed (FIR) radiant heat therapy device for pets. The first of it`s kind designed for home use, our product is an effective alternative to drugs for arthritis, hip dysplasia, skin irritations, hot spots, dermatitis, anxiety, etc. You can check out our website at www.friendsfirlife.com for more info and to see what it looks like.So my question re. pricing: We are working on defining our pricing structure for retail, wholesale, and distributors and would love some advice.Our cost per unit from our manufacturer is $300 while we amortize up-front costs over the first 300 units, but ultimately will average to $200 per unit . We are a home based business with no employees other than my husband and myself and since our manufacturer drop ships for us, we don`t have a lot of overhead for warehousing, etc. We plan to both do retail sales through our website and shows, as well as wholesale through trade shows, direct contact with retailers, though vets, kennels, etc.After doing some research, we have come up with the following structure:Wholesale (3 unit minimum): $390Distributor (20 unit minimum): $300Suggested Retail: $550Our Website - 10% off: $495This allows for a 40% mark-up from wholesale to retail for smaller stores that just want a few units at a time, and an additional 30% for large retailers or distributors who might, for example, sell at wholesale to kennels who would then sell to their customers at retail.Does this pricing structure make sense? Any comments or suggestions would be much appreciated.Also, since we are just going to market with a brand new product, we are considering doing some introductory pricing. Can this get us into trouble with then raising prices to the above structure (or whatever we come up with) after, say, 6 months?Thanks in advance to all for any advice you can give us.Lisa
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