Electronics Distributor Commission? OT

[steamer]

Sorry a bit OT but... any idea what percentage (on average) an electronics distributor would take on an electronic music device?

I think that the retail price for my device should be £50, but it costs me £20 to make it, so thats £30 profit to share between me and the distributor.

Thing is wouldn't a distributor be looking at making £30 on a £50 device normaly anyway?

Which would leave me with nothing!

Your thoughts..

 

[Johnson777717]

I suppose there are some other factors that the distributor would consider here, which would help them (and you) determine the final cost. Here's what I think:

1. The distributor would want to add in their "processing" costs associated with distributing the product for you. This would include overhead costs as well as costs which are derived from the direct processing of your item. For instance, labor, materials, logistics, sales, administration, special handling etc.

2. The distributor should take into consideration, the volume at which the product is expected to sell. At higher volumes, the distributor may decide to reduce their "cut" from the product. At the same time, the distributor may decide to increase their cut from the product, because more of their resources are spent on your product. I would say that this is a rare case, but still possible.

This is just my personal opinion here, but YOU are the distributors customer (One of them anyway, the other being the consumer), and you must be treated as such. Hopefully you can work out a deal where you have the upper hand! If they want your business, they should be flexible to allow for your concerns and requests.

Maybe you can offer them a specific amount, and barter from there. I suppose before any negotiations are made, you would want to consider what you are willing to accept, and what you are willing to reject. If the distributor will not flex for you, maybe it's a good idea to find a different distributor.

 

[Nigel Goodwin]

I would suggest that a distributor would be looking to make 50% (if he's lucky!) - so would probably sell your £20 device on for £30. Bear in mind that he has to charge VAT (even if you are not VAT registered), so it would be £30+VAT=£35.25. The retailer would probably add a further 50% (again, if he's lucky!), making £45+VAT.

Generally though, both the wholesaler and retailer would most likely be working on lower profit mragins than these!.

 

[steamer]

Thanks, some good advice from you both there. I'm gonna figure out what is the minimum I am willing to accept is, have a meeting, then play it by ear, I'm such a rubbish haggler though!