About consignments - Page 2

FASHRUS

if you want a profit of $7 on a product which cost you $3 you will have to give it at $10.
but depending on the commision that your consignee want to take the price of your item will inflate more.. say they want to take 30% per piece they will sell it at 13dollars.
but i hope that you are not giving real life example. because as responsible supplier you wont want to take that kinda margin which ultimately will inflate the price of your product soo much that the end buyer will never get value for money. and anyone who decides to reduce the price of your same product can kill your market share almost instantly!

duriancake

hey ChinChic. based on your example.. the cost is $3. selling at $10. so if it's 30-70, you will back $7.. but, the real profit is $4 because cost is $3?

normally you supplier decide the range, eg, 70-30 or 60-40.

like FASHRUS said, some shop might mark up more so that they can earn more. but i guess it's ok for supplier to give a range for the pricing to prevent marking up and losing of market share.

ChinChic

thanks FASHRUS & duriancake for your helpful replies but i don't really understand the part about the market share...

EarthlyScents

ChinChic, different companies have different T&Cs regarding consignments. In my case, one of my consignors states that I get 30% while they get 70% at their retail price. That means if the consignor states that you sell a certain product at $3, you'll only pay 70% of your retail price to them. You then get 30%. Consignors will never, I repeat, never want to give you the bigger share. In many cases, consignors will not negotiate with you in terms of percentage.

EarthlyScents

PS: Usually, the retail-prices that the consignors give you are controlled-prices unless stated otherwise. Else, if you charge according to your preference and not of the consignor's, they may withdraw the deal as you r either under-cutting then or over-pricing them.

ChinChic

huh? in your example, does that mean that if my product is sold at $10, i'll only get $3 back? how could that be possible??? wouldn't I be making a loss? i'm the one who paid the the items, isn't it? i'm really so confused now...

if you don't mind can you give a more specific example how this may work? like:

cost price of product:$3
the deal: 30-70
product selling at:?
the shop earned:?
I earned:?

TanPohKiat

normally i do ladies tee consignments for 40% 60%,

EarthlyScents

For example, your consignor lets you have his product at $7 but he insists that you can only sell it at the retail price of $10, he is actually getting 70% of the retail price and you get 30%.

You're not in a lost as in the case of consignment, it's always a win-win situation as you don't need to pay a single cent for the goods till you sell them at the retail prices that he has stated you to.

Consignors usually don't allow you to under-cut them in retail pricing if they already have their goods sold in other places where the retail prices are fixed. Eg, if the consignor states that you sell the product at $10, it also means that the other places that he consigns to are selling at $10. You can't change that price because it's controlled pricing.

Hope that helps you.

FASHRUS

okay chinchik..
do not get confused.. its very simple. you bought something for 3$. you wan 7 dollar margin. 3+7 = 10 which is your target price which you wanna keep intact. then you also have to give your retailer 4% margin, so sell it to your retailer at
14 $ (because 10+4% = 14 mah..).
tell him on every piece he sell he will get 40% margin. that will solve your problem of 7 dollar margin and his issue of 40% margin..
(but 7 for a 3 dollar thing is still unrealistic margin. hope its not real life example.)
And now your doubt on MARKET SHARE.. suppose you are selling your product.. say "bag".. and there is 100 shops in singapore selling bags (example). and you manage to win 5 of those shops to take goods from you.. so 5 out of 100shops is your market share for bag business in sigapore lah.. you get more shops to take frm you then you increase your market share.. simple also right..?

EarthlyScents

Now you're confusing ChinChic. She's asking from a consignee's point of view, not as a consignor because she's still new to business. Then again, ChinChic, what's your intention for knowing?