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Production for bulk products
I have been asked to formulate and manufacture a number of all natural products in bulk. In the past I have created and formulated and manufactured for retail products. What I need to know is how to figure out how to calculate bulk figures for the end user. Of course, I have the quantity to be made yet need to know what kind of markup I need to add to the manufacturing costs so I’m not working myself out of business in the process. Also, what suggestions would you give as to the minimum quantity of product per order/initial order? Any suggestions would be of great help.
I also need to know of a mixer/filler that is not overly large or expensive for filling a 5 gal bucket for shipping. Again, any assistance is greatly appreciated.LaNita -
4 Replies
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Ultimately this number depends on how much money you want to make and how much money your distributor would be willing to pay. I don’t know, it depends on the product.
If it cost you $100 to make a batch, I would sell it for $300 - $400 or more. -
Basic rule of thumb is that you always sell for at least twice what it costs you to make. Add up all costs, including overhead and cleaning/set-up time, and double it. (The salesmen I know would say then add 40 -50% more and start negotiating down. If the customer doesn’t flinch when you tell him your starting price, you started too low.)
Minimum quantity should be one full sized batch, however large your vessel is. It would probably be a good idea to find out what your competitors are charging, also.You should almost always be able to fill a bucket just by pouring. How thick is your product? -
I have been asked to formulate and manufacture a number of all natural products in bulk
- “Danger, danger, Will Robinson!” I hope you’ve discussed preservation with the client. Too easy to imagine a delay in transit and poor transit conditions producing a 5 gallon bucket of slime at the destination.I agree with Bob regarding margins. Basically I go the other way: retail at 6x costs ( 83% margin) then deduct distributor margin (say 50% max) and we get 33% margin, where margin = profit/selling price as a percentage. -
I saw few labs selling a luxury body lotion 8 oz bottle for $ 3.5 /ea when you buy 500 as minimum. Im wondering which margins they have with that selling price. Any comment on this will be appreciated. Regards, Javier
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