Page 64 - Spring Into Markets

All of the above will provide a trader with a start point of how much they wish to charge customers. There are, however, other factors to consider:
1: How much it will cost for the trader to buy the products from the manufacturers,
wholesalers, suppliers, distributors, etc.
2: How much it is going to cost to run a stall.
Ultimately, the stall needs to make a profit; therefore the prices charged to customers must cover ALL costs and allow a profit to be made.
Getting the price right for traders
Negotiating the cost of the products from a manufacturer/wholesaler/supplier/ distributor is the start point for all the final decisions on how much the customer is going to be charged.
The ‘Wholesale Price’ (cost of goods)
The wholesale price (or cost of goods) refers to the amount of money that a trader has to spend buying the goods from a wholesaler, manufacturer, supplier or distributor. The better the price that the trader can negotiate, the more competitive a price the trader can charge customers.
The ‘Retail Price’
The retail price is the amount of money that the trader charges customers for the products.
Mark Up
A mark up is the difference between the price the trader pays the manufacturer/ wholesaler/supplier/distributor (the wholesale price or cost of goods) and the price the trader charges customers (the retail price).
Mark up is often confused with margin. They are not the same and actually relate to different aspects of your products.
Mark up is linked to the cost of goods while margin relates to the sale of goods. Example: If I buy a t-shirt from a supplier for £10 and sell it for £20, then the gross
profit is £10 – i.e. the difference between the two values.
Mark Up = Gross Profit x 100 = £10 x 100 Cost Price £10
Margin = Gross Profit x 100 = £10 x 100 Sale Price £20
= 100% = 50%
64 Is the Price Right?
Guide 9