pcm
Novice
Posts: 75
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Post by pcm on Jan 8, 2011 21:39:21 GMT -5
Does anybody know what the break down for the mark up on chocolate bars is?
If it costs me $1.00 to make a bar, what would be my wholesale price? Also, what would the mark up be from wholesale to retail? Is there a standard for artisan chocolate? Thanks.
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Post by Brad on Jan 8, 2011 22:42:04 GMT -5
Assuming you're in business to make money, the price for your product, whether it's widgets or chocolate bars is based on two somewhat opposing factors:
1. the simple economics of supply and demand. 2. the public's perception of your product - a perception that's manipulated solely by you.
If you're good at snowing people over with fancy packaging and in my opinion somewhat deceptive marketing (such as Noka), then by all means charge a bazillion dollars for a bar of your chocolate. Somebody will be stupid enough to buy it, and at a bazillion dollars you only need to sell one, right? Heck, I'd even position it that they get the company thrown in for free for that price! ;D
The most intelligent way of positioining your business is to closely evaluate the peers in your market - their quality, their pricing, etc. and price yours accordingly. If you make chocolate and they don't, play on it, and use it not only as a product differentiator, but also a justification for charging more for it. People like artisinal products, and generally expect to pay more for a hand made widget or bar.
Also, don't forget to factor the cost of YOUR labor into the bar, and as a business owner, don't be afraid to charge a reasonable rate for your labor. After all, business is about making money, and your time ain't free. If it IS free, let me know. I'll fly you here to Calgary on my dime, where you can wrap chocolate bars for free for me! Ha!Ha!
Hope that helps.
Brad
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pcm
Novice
Posts: 75
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Post by pcm on Jan 9, 2011 19:28:10 GMT -5
I hear you, Brad but I was wondering more what the standard mark up is from the cost of making the product to wholesale to retail, if there is one. I am coming from a background in furniture design and it is very standardized. I need to make a piece of furniture for 1/4 of the price it will retail at. So If my competition is selling a chair for $100 retail, I need to be able to make a comparable chair for $25 if I want to compete, philosophy aside.
I am looking at chocolate bars that cost $7 for a 3 oz bar off the shelf. How much is it costing the maker to produce? Of course I am factoring in labor, packaging, overhead and materials. Fancy packaging and crappy chocolate or great chocolate with crappy packaging, it doesn't matter. I just wonder what I can expect. How much does the store pay Pralus for a bar that sells for $7?
btw: We are shooting for beautiful packaging and amazing chocolate! I do believe that the experience of eating chocolate is enhanced by the presentation and the two are not mutually exclusive.
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Post by itsallaroundyou on Jan 9, 2011 20:05:21 GMT -5
It gets tricky to figure out other company's mark ups because they pay different prices for their ingredients and their overhead is different.
Retail price is usually double wholesale price. Usually. There are no rules though. I think its best to start with the price you want your bar to sell in a retail store, and charge half that as your wholesale price. If you're losing money at that price point, raise it or figure out how to lower your costs.
-Mike
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Post by sharkman on Jan 10, 2011 1:12:45 GMT -5
Aloha everyone! I have trouble selling the stuff because I give most of it away. Seriously,most of my cost is labor and equipment and repair. The beans are here and the labor to process them is donated or paid for{as part of a seminar on chocolate making. I don't have a lot of Hawaiian competition and I do the farm markets,tours and have a retail coffee shop.I sell a 2.2 oz bar for $5 or 2 for $8. I wholesale them for $3.50 and the local health food store sells them for $5.99 and $6.49. I give out a lot of samples to let people taste the quality. It helps and I am trying to get the word out about growing cacao and the quality of the chocolate. Go to the local health food stores and do tastings and demos on your chocolate.{like Costco] The more people know how good it is the more the word gets around. Also try coffee shops and especially wineries-wine shops {if around -Mike] Wine lovers appreciate good chocolate. Thanks for being here everyone. Sharkman
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Post by Brad on Jan 10, 2011 16:47:23 GMT -5
Different industries have different "rules of thumb" when it comes to marking the product up over wholesale.
I too was in the furniture industry, and both manufactured wholesale and owned retail shops. Your mark-ups are correct - 100% from manufacturer to retailer, and 100% again from retailer to customer.
On average, in the "parts business" - such as motorcycle parts and accessories, and so forth, the average mark-up is around 30-35%.
In the commercial food industry, such as with Costco, and other big box grocery chains, their margin is anywhere between 2-5% of the retail price , and sometimes as high as 10%. They rely on volume.
In the specialty foods business, the margin is usually around 30-35% of the retail price.
HOWEVER.....
Heed my earlier post. The price is STILL driven by the economic and subjective conditions I posted above. You will need to keep the "rules of thumb" in mind, but STILL have to calculate your costs, and margins based on local market conditions and the perceptions you can create in the minds of your consumers.
Economics are as "for sure" as death and taxes.
Cheers.
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