Price mark up's from winery to shop
- Thread starter slimslam
- Start date
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If you sell directly to the store, expect retail to be a 45% markup.
If you sell to a distributor, expect retail to be a 100% markup
100%! Yikes. How do you factor in the markup when trying to determine a price on top of all your cost and still make some profit without being unreasonably high?
If you're targeting a retail price of $10, then you have to have your costs below $5/bottle to make a profit. If you want a 25% profit margin, for example, you need your costs to be $4/bottle. If you can't hit that target, you can 1) sell at a loss and hope production scaling will bring your costs down quickly [a good formula for losing your shirt] or 2) raise the price. Basically you should know who you're selling to before you formulate the recipe and process. If you're aiming for the $10/bottle market, you probably won't be able to do extended barrel aging, exotic fruits & honey, or other "fancy" things. If, on the other hand, you want to do these things, you better market your mead so that it warrants a higher price tag.
The company I work for (not mead, but still a good example) makes widgets for our customers. When we move a new design from prototype (think pilot brewery) to manufacturing (main brewery), there is a series of meetings to figure out what steps are involved in manufacturing, how long these steps take, and ultimately how much the thing costs just to produce. Then they come up with a price to extend to the customer. If we're right then we make a profit. If we're wrong (it takes more effort to manufacture), then we're stuck selling at a loss. Do not skip this exercise!
Yes, we're doing pretty well with online sales. Though we're working with an established online retailer to avoid having to deal with the permits, packaging costs, labor, etc. involved in the online sales element of the business. It's worked out well in my opinion. There's a link from our website (Buy Online) to Winebuys.com's B. Nektar Meadery page where you can order all of our meads, including some of our more rare items that usually never make it to stores.
I would agree with the above statements
I would agree with the above statements on price. However, know that if you are a premium product (like Isaaks of Salem is positioned to be) you will be looking at 50-60% markeup in some specialty or high end low volume stores.
Online sales are brand new for us, no idea if it is going to work. However, not a big gamble in the long-run of things. Selling to stores and restaurants will always be our bread and butter for the next 4+ years (or more).
The concept of 'fishing where the fish are' applies to the above online statement. Brad's choice to go with an established online seller, is probably a better move than going it yourself (what we are doing). However, Massachusetts is REALLY bad about allowing anything online or direct, so we are sort-of pushed into the DIY realm for sales online.
I would agree with the above statements on price. However, know that if you are a premium product (like Isaaks of Salem is positioned to be) you will be looking at 50-60% markeup in some specialty or high end low volume stores.
Online sales are brand new for us, no idea if it is going to work. However, not a big gamble in the long-run of things. Selling to stores and restaurants will always be our bread and butter for the next 4+ years (or more).
The concept of 'fishing where the fish are' applies to the above online statement. Brad's choice to go with an established online seller, is probably a better move than going it yourself (what we are doing). However, Massachusetts is REALLY bad about allowing anything online or direct, so we are sort-of pushed into the DIY realm for sales online.
Thx for the info Brad.
Whats the best way to set up to accept payments? do they have you swipe a credit card o nthe spot? or do they give you a number you run with the invoice before the wine is delivered? just wondering what kind of equipment one would need to start with.
thx again
Slim
Whats the best way to set up to accept payments? do they have you swipe a credit card o nthe spot? or do they give you a number you run with the invoice before the wine is delivered? just wondering what kind of equipment one would need to start with.
thx again
Slim
I used to do assistant webadmin work for a clothing company that did a lot of online sales. The equipment to run cards was provided by the bank with which the merchant account was held.
As far as the system for taking and processing orders, what we did was this.
- Customer placed order online and supplied standard info (contact, shipping, billing, CC info)
- We received the order and then doublechecked our inventory to verify that we actually had what was ordered in stock.
- If it turned out we didn't have the item in stock for some reason we emailed the customer back and said so. Otherwise...
- We used a typical credit card terminal that has numbers on it to manually enter the information, but also had a swipe on it in case we were doing a direct sale at the warehouse (usually only happened for employees, friends of employees, or celebrity types who came to shop directly)
- If the card number and sale went through then we completed the order process and shipped the items.
You can opt to not take cards via a standard bank and go through something like PayPal Merchant Services instead. They offer a few different options for direct online payment and also for taking orders over the phone or fax and manually entering the info in your paypal account. No equipment needed.
Google has a way to accept credit cards, just google 'Google Checkout'
Their rates aren't too bad, and you can be set up in just a few minutes. They do tend to hold your money for a couple of weeks when you first set up the account. Otherwise after 60 days it just flows on through to your bank account less their percentage.
Also if you only plan on taking credit cards occasionally check out
https://squareup.com All you need to use this is an iPhone, iPad or Android based phone.
In addition many ISP's offer shopping cart capabilities with credit card processing for their clients.
Cheers
Jay
Their rates aren't too bad, and you can be set up in just a few minutes. They do tend to hold your money for a couple of weeks when you first set up the account. Otherwise after 60 days it just flows on through to your bank account less their percentage.
Also if you only plan on taking credit cards occasionally check out
https://squareup.com All you need to use this is an iPhone, iPad or Android based phone.
In addition many ISP's offer shopping cart capabilities with credit card processing for their clients.
Cheers
Jay
Since the very beginning, we've been using a simple receipt book with carbons you can get from just about any office supply store. We hand-write orders on the spot and accept payment by check from retailers. We don't accept credit cards from retailers, and I've never run into one that wanted to use one to buy mead for their stores. Small liquor stores (we call them Party Stores here in Michigan) will pay by cash or money order on occasion.
Here in Michigan (as well as in some other states), orders for alcohol are COD only. Many of the big chain stores (i.e. Whole Foods) has now stopped making checks available at the stores, and require vendors to use an electronic payment middleman. The company that's very widely used in the alcohol industry is Fintech (www.fintech.net). They charge a one-time setup of about $250, and then $20 per month + a charge for each transaction. The premise here is that you can deliver your order, get your invoice signed by the one taking the delivery, then go online and request payment when you get back to the office. It eliminates the need to wait for a check and for the store to write one. The funds are automatically transferred into your account via EFT (electronic funds transfer). I personally resisted getting a Fintech account until Whole Foods literally forced all their suppliers to switch over to them.
Of course, the simplest way to deal with deliveries and payment is to hire a distributor. But that's a story for a whole other thread.
Here in Michigan (as well as in some other states), orders for alcohol are COD only. Many of the big chain stores (i.e. Whole Foods) has now stopped making checks available at the stores, and require vendors to use an electronic payment middleman. The company that's very widely used in the alcohol industry is Fintech (www.fintech.net). They charge a one-time setup of about $250, and then $20 per month + a charge for each transaction. The premise here is that you can deliver your order, get your invoice signed by the one taking the delivery, then go online and request payment when you get back to the office. It eliminates the need to wait for a check and for the store to write one. The funds are automatically transferred into your account via EFT (electronic funds transfer). I personally resisted getting a Fintech account until Whole Foods literally forced all their suppliers to switch over to them.
Of course, the simplest way to deal with deliveries and payment is to hire a distributor. But that's a story for a whole other thread.
There's always your iPhone and Square if you want to take credit
Cards on the spot with no terminal around...if you're dealing with amounts under $1k a week, anyway.
Cards on the spot with no terminal around...if you're dealing with amounts under $1k a week, anyway.
