Do you give terms?

This is a sentence you’ve heard or will hear if you are in the wholesale business. But, what does it actually mean? The phrase gets casually thrown around as if everyone has a clear understanding of what it means.

First, let’s chat about  Net 30 (Trade Credit) in general terms. It means you take an order and get paid in full in a set amount of (30) days.

If you run your Small Biz on an all “cash-basis” extending credit can be daunting. You certainly don’t have to do it either. It’s common practice to run a credit card when the order is shipped. You get instant satisfaction and semi-instant payment from your CC (Credit Card) processor.

Why should you ever extend credit? Well, there are larger retailers that “only” do business on Net 30 terms. Providing trade credit to the select clients can be a way to position your company  for growth. If you want to grow, it can be tough to stay on a “cash-basis.” Not impossible, just tougher.

The downside is, if you don’t manage the process of Net Terms you could end up in a cash bind, late payment, chasing payments and employing bill collectors. Eventually, even writing off non-payments as bad debt. Not fun.

As you can see, there’s a fine between trying to grow your business and the risk of extending credit to retailers.

When you’re still relatively small, a $200 or $500 order may seem like a large order. When a retailer asks if they can have Net 30, you may want to extend credit to get the order.

Just because they ask for Terms does not mean they are a large retailer or even have good credit. Even if they say they only do business on Net 30. That doesn’t mean YOU have to and you still may get the order.

Just to let you know, an order of $200 or $500 is not a larger order for any established boutique or small retailer. They’ll have many lines with required minimum buys that involves rules for reorders and fixtures. These larger branded companies generally give terms because the $ is high.

When retailers ask for Net 30 on their order with you, they’re simply trying to extend their date of payment in order allow them time to sell your goods to pay the bill.

Nothing wrong with that- for them.

For you, it’s all good until they are late with payment and you expend time and energy for a lousy $200.

If they can’t afford to pay $200-500 by credit card for the order, then they really can’t afford to be doing business with you. Now, they may have lots of $500 orders with various retailers and you may have to run the CC# a few times or call for a new number….but it usually goes through.

With that said, there are times smaller orders are placed and retailers would like to establish credit with you on follow-up orders. This is more of a bookkeeping issue for them. Accountants Payable likes to have planned orders, invoicing, etc., so they can plan and track the payments and paper trail more efficiently. This is not your concern, you can still say no. You can make the decision on a case per case basis.

When a retailers asks if you extend terms, the ones that are prepared hand you a list of credit references including banks and wholesalers they do business with.

You then call these references to get an idea of their history. Of course, they will only offer the references that they know will give good feedback.

The banks can only tell you if they have an account or not. The other wholesalers can give your more information pertaining to payment history, duration of business relationship, etc.

You can, of course, have your own Credit Application. However, if a company is used to doing business on terms they usually have a sheet prepared. So, I wouldn’t worry too much about having your own.

There are services that, for a fee, will provide a commercial credit report on a company. Examples would be Dunn & Bradstreet (D&B), Experian or Credit.net.

All of this checking and references does not guarantee payment, but it does give you a better idea of who you are dealing with.

The funny thing about Terms is that there is a balance of what you can afford to extend credit on and what you cannot. You would think the larger the order, the more likely it would be that they expect and you would extend credit. That’s not the case.

You may receive an order for $1000 or $10,000 or more. This may be from an overseas distributor, large hotel or chain retailer. When you’re small or even medium size, purchasing the materials to manufacture the products for the order may be difficult without prepayment or some other agreement. But that’s another topic. Let’s just consider your average size order.

So, you’ve decided to extend terms…what does that actually mean?

The fact is, it means different things to different people. Of course, it’s usually understood according to the bias of what side of the fence you’re on.

Check out the variations below. I’m sure you’ll be able to see which ones the wholesaler and which ones the retailer would like to believe.

• Your business RECEIVES CHECK (in hand) a few days after the 30 calendar days from the client RECEIVED the shipment. Meaning the client/retailer mailed the check on or right before the 30th day after receipt.
• RECEIVE CHECK (in hand) by the 30th calendar day of when goods were RECEIVED by retailer. This includes transit time in mail.
• Still others define it as RECEIVING (in hand) the CHECK within 30 days of SHIPPING the goods (including the transit time in the 30 day term)
• And then it can be defined as RECEIVING the check and cashing it (RECEIVING PAYMENT) within 30 days of shipping.
• Lastly, you may get called with a CREDIT CARD # for payment to be charged against by the 30th calendar day. This is the worst because you have waited to get paid AND you have to pay the CC merchant and processing fee. BUT- You have been paid.

So, I’m sure you had to read the list a few times to get it straight. The one thing that is agreed upon is that the 30 days DOES include weekends and holidays. 30 days means 30 calendar days.

The point of having terms is giving the retailer a reason to pay it on time. If there’s nothing being held over their head why should they pay it on “time?” You need an Either/Or statement.

• Either the retailer pays it by X date OR  they start incurring finance charges of X% per day.
• Your company must receive the payment within X days or you will charge the CC# the retailer must provide at time of ordering on the X day after payment due.
• If there is a late payment, Net Terms will not be extended for next X orders.
• Net Term payment will be made by check, not CC as matter of regular business. If you let the retailer have terms AND they always intend to pay by CC# – that is not acceptable. You loose time and money. In this case, you loose money 2x’s. Time lost and CC fees. If they want to pay by CC# then they should do it up front.

Simply saying Net 30 doesn’t mean anything. YOU have to DEFINE the TERMS.  The same with Net 15, 45, 60, 90.

Have your terms clearly stated on the order, invoice and the policy section in the wholesale area of your website.

Once they sign the order, they have agreed to the terms.

If you take the order by phone, be sure to email them a copy of the order with the Terms clearly stated. You may even have them fax a signed copy back to you.

Don’t feel like you are being a pain. No matter your size, YOU have to watch your back. No one is going t watch it for you, they’re too busy watching their own.

It is easier to have established Terms in the beginning than trying to enforce new ones after the fact.

I talk a lot about the need for the right “mix” when you promote your product, business, book, whatever it is – engaging in social media is no different. To get a good result you have to find the recipe that’s 100% ALL YOURS. But just like the hard-to-bake souffle, there are some ingredients I’ve seen in of the work of ALL successful social media contributors.   Here are the components I believe you should always use for your  social media recipe…and some of experts who cook it up just right. Feel free to add your favorite folks – let’s get a good list going!

- Content is SO important. But not YOUR content all the time. Go find some interesting info and share it – we like it when you do research for us. If you don’t have a ton of time, add some RSS feeds to your Google homepage. Mashable and Brian Solis always have daily  stuff you can show your readers. I add in weird stuff once in while just to keep it interesting – a little orange peel adds some zest to the recipe don’t you think?

- You gotta have a sense of humor,  especially if you have a ton of content and you post frequently. Copyblogger does a fantastic job of keeping humor in the mix almost all the time and yet it’s one of the most instructional social media sources I know. On the other hand, I love the content in Problogger but if we were talking cereal Copyblogger would be Raisin Bran and Problogger that fiber stuff.

- I love Mari Smith because she’s so approachable. Of course, she’s the Queen of Facebook so we expect that of her. But it’s not a given. I’ll leave unnamed a few social media snotties that  have great content but leave me feeling like I’m sitting at the nerd table in junior high all over again.  (Or if we’re still talking souffles,  eating at that posh French restaurant with the waiters staring disdainfully at my hush puppies .)

- I don’t know if editorial guidelines are needed  but consistency is really important. When you visit your favorite restaurant and order your favorite food, you want it to taste pretty much the same. Maybe there’s chocolate drizzled on it occasionally and perhaps you order cider instead of beer but you really want to know those ingredients you love are mixed together just the way you like ‘em.

All this goes toward one thing – building a unique voice in the social media world. Just like a great recipe it takes time to develop and sorry, not everyone will like it. For me there was a point suddenly when it was easy to stay connected in my social media world and it was an important part (if not ritual) of my day. That was when I found my voice.

I’m always trying to make my own personal souffle better but I’m still totally thrilled when people like it. Thanks for reading!

———————-

You can always read more from Bonnie at Wax Blog.

You think all the hard work is over once you price your product, then you realize you have to pay for the boxes and the  padding that you ship all your fabulous product in.

How do you allow for that in your pricing?

There are a few ways you can do the figuring and any of them are perfectly acceptable.

BOX SIZES:
First of all, how are you shipping? Carrying multiple sizes of boxes can be tedious and space hogging. My recommendation would be to take a look at your product minimum, the average items and quantities ordered.

For example: An average order may be 36 bottles (lotions/washes), 24 body butters, 12 body polishes, 12 Travel Packs and 4 Testers.

Get these items together and start mocking up your packing and measuring different scenarios.

You have to think about weight of the box for easy handling, which items pack best together and what size boxes will work best in almost every instance ( due to order/product variance).

You’ll have the odd packed box every now and then, but for the most part, you want to have 2 inches of space around the edge of the box and from the top. You also want to have the least amount of padding/peanuts, etc. that is acceptable in order for the items to fit and ship snugly and safely.

If you have an odd size item that is 9 inches tall when all your other items are 6 inches tall, you don’t want to have to order all 11 inch tall boxes for that one item. That’s a lot of peanuts on top of the shorter items. Also, every retailer may not order the tall item. So the best thing is to allow for a box that will be best suited for tall item by itself. This would also apply to more fragile items that would be best shipped by themselves.

Once you have mocked up your shipment you can start fooling around with inner and outer box sizes.

You’ll need the outer boxes to be 1 inch taller and wider than the total measurement of the inner boxes in order for them to fit inside each other. Your outer box may have to be a bit larger than this- but not smaller.

This exercise takes a bit of time and patience. I would recommend getting a catalog from one of the shipping suppliers. I use Uline. You can then have all the dimensions of the available boxes in front of you while you are working all this out.

Sometimes you’ll be tempted to get a certain size box because it’s cheap and you could make it fit if you added a lot of padding. Well, padding, like peanuts, cost money too, so I usually opt for the box that will seem like it’s been as custom fit as possible for my products.

At this point, I use 1 size inner, 1 size outer and 2 specialty boxes. The outer boxes and the specialty boxes are similar in dimension, so it makes packing out and stacking easy.

I also have 2 smaller sizes for online orders.

Now, how to charge for these boxes.

PER PRODUCT:
The first thought you  have is probably to add a charge to be included in the wholesale cost per product. But that’s kind of hard because your products are all shapes and sizes. Here are 2 ways to look at that cost.

Pre-Packs:
Do you have pre-packed boxes for each of your products?
For instance, your minimums on lotions are 12 bottles and you have a box that holds 12 bottles. The cost of the box is $1.00 plus about 3 cents for the shipping you paid to get it. So,  $1.03 /12 = 8¢ per bottle.

Do you use inner and outer boxes? If you pack 2 or 4 inner boxes to an outer box, then you also have to figure in the outer box.

Let’s say 2 inner boxes to 1 outer box. The outer box is $1.58 / 2 (inner boxes) = 79¢ cents.
79¢ / 12 = 6 ¢.

So now you have 6 more cents to add to each product. That’s 15¢ a bottle.

Loose Pack:
This makes things more difficult because you never really know what or how many will go into each box. After shipping and packing for a awhile, you have a pretty good idea of what and where items will fit.

Your box will fit 12 bottles , 6 soaps and 24 lip balms. That is 42 items. Box is $1.23. That is 3 cents added to each item. Do the math again if you do inner and outer boxes.

The 3 cents may sound cheaper per item, but remember, depending on your order size and items ordered, you are never really sure how many boxes each order will take. You may have 12 more bottles that you need to pack and only have the  one box size, so the price per item for that box it 10¢.

This will get very confusing and erratic in figuring out the charges.

*You may decide to have just single boxes- no inner and outer boxes. This usually adds up to more individual boxes which cost more to ship. I’ve ship more confidently and efficiently with inner and outer boxes. I can ensure they have adequate padding and taping to get to their destination safely.

AVERAGE ORDER SIZE:
Your average order is $500.00. It takes about 8 inner boxes at 89¢ per box and 4 outer boxes at $1.21.

Again- the average order may be 36 bottles (lotions/washes), 24 body butters, 12 body polishes, 12 Travel Packs and 4 Testers.

That’s about $12.00 in boxes. $12. / 88 = .13 per product.

ACTUAL BOX COST:
This is easy and seemingly the most straight forward.
The order is $660.,
13 boxes for a total of 13.25 on boxes
$48, Actual Shipping

Invoice says:
$660 for product
$61.25 Shipping ( maybe have it read “Shipping & Handling”)

Now, with this said, sometimes you get a retailer that directs you to use their UPS or Fed-Ex account number. In that case, they’ll be charged the actual shipping charges. You can still add “Handling” charges or elect not to worry about it, as it doesn’t really happen that often.

FLAT FEE:
You may also decide to have a flat fee you charge for each order to help with the shipping charges.
Let’s say $5.00 – $10.00 per order.

The object is not to have this be a profit center, although many companies do try and make a profit here. I don’t think that’s a good idea.

I’m willing to write some of shipping costs off in my profit margin, but not all of it.
Being a small Biz makes it difficult to allow for per product shipping charges due to variance in product and order size and recover the % of cost you want.

Whatever you decide, I hope this information helps you  out a bit.

Do you have a different thought? Let me know. I’d love to hear it!

This article was originally published on Masthead.org for writers looking to have their work published in a magazine. I thought it had some salient tips for those of us trying to get our products featured too.

Instead of editing it- I thought it would be best for you to take what you needed and get on with the pitching!

12 Essentials Tips For Getting Published In Top Magazines

{If you don’t follow this advice, the pitch you just spent 3 hours on
will take all of 3 seconds to end up in the editor’s trash.}

1. Know the magazine’s ins and outs. Before sending a query, read as many issues of the magazine as possible–not just a casual reading of one or two issues. Even women’s magazine prides themselves in the distinct tone or perspective that their magazine offers, so don’t just assume that you can write for a female audience and throw a generic pitch to one of the editors. Take note of regular columns and sections that span several issues, as well as recurring themes/topics. Make sure you’re not pitching an idea for a topic that’s recently been covered. This could be the first indication that you haven’t done your research, and no editor is going to trust you with researching an entire article for their publication if you can’t even flip through their previous issues.

2. Query the right person. Different editors edit different columns and departments, and they don’t always have time to re-route your query to the correct editor. If you are ever unsure about who to send your pitch to, just call the magazine’s main line, request to speak to an editorial assistant, and ask for the correct editor to pitch, and how that editor prefers to receive queries–via fax, email or regular mail with a self-addressed stamped envelope (SASE). Please use your discretion when doing so, and above all–be respectful.

Don’t request to speak to the editor, it will likely be an extreme annoyance. If you’re going to follow up with a phone call, be polite to the assistant you speak with; he or she is probably the person who read your query first and made recommendations to the editor.

3. Don’t address queries to interns or editorial assistants. While you may think it’s flattery, your pitch will go nowhere. Always address your pitch to the appropriate sections or department editor.

4. Check your grammar and spelling once, twice. And then again. There is no bigger turn-off for an editor than receiving a query with her name misspelled or a query addressed to an editor who hasn’t been with the magazine for two years. The way the editor sees it, if you can’t find out the correct information for the query, it’s questionable that you’ll be able to find out the correct information for the story.

Also be careful about making last-minute changes to one or two sentences in your query letter. You can sometimes mess up the flow or verb-tense agreement of a sentence without realizing it. Be sure to read the whole letter again before sending it.

5. Keep it short and simple. The average time spent reading a query is probably 30 seconds to one minute. Keep your query limited to one page with your central idea easily identifiable. Explain what you want to write about, how you plan to organize it (or what column you suggest it for), who or what your sources might be and some specific examples. Also, skip the decorative stationery. Some people may think it makes your query stand out, but remember that what you really want is for the editor to take your work seriously.

6. Realize that most magazines have a formula. Many writers send queries about ideas that may be great, but just aren’t right for the magazine. The best way to get published is to look at what the magazine already does and put a new spin on it.

7. Don’t waste space by telling your life story. Editors don’t need to know that your mother-in-law’s cousin once filed for Chapter 11 to see that you are interested in writing about financial budgets.

8. Be as specific as possible. Editors get many queries that cover vague ideas. For example, a query may state, “I want to write an article about diabetes.” What about diabetes? Are there any new studies? How will this article be different from the other five articles that we’ve run about diabetes in the past two years?

9. Don’t harass people. Keep in mind that each editor at a consumer publication often receives more than 40 queries every day. It may take anywhere from four to eight weeks for them to contact you. Calling their assistant every week won’t help you–it’s more likely to annoy them! If they’re interested, they’ll get back to you.

10. List where you’ve been published before, but don’t send every clip. Select a few standouts.

11. Start small. It is a lot easier to get an editor to take a chance on you for a short item than for a big feature. And it can be hard for an editor to brainstorm 4-5 ideas for certain columns every issue. Help them out by pitching good, short pieces that can be used for those sections.

12. Don’t get discouraged when you get rejected! Furthermore, don’t get discouraged when you are sent a form rejection letter. There simply isn’t time to comment on every query they receive. And remember, as a writer, you open yourself up to rejection. Accept it and move on.

- Article republished with permission from Masthead.org

For more information on Masthead.org:
How To Contact Magazine Editors Without Expensive Mailing Lists

When you say you need to get some “Press”, most people give you the genius advice to look up the editors, writers, etc. at the front of magazines or the mastheads…

According to Wikipedia: Masthead is a list, usually found on the editorial page of a newspaper or magazine, of the members of the newspaper’s editorial board. If no editorial board exists, the masthead will often feature a list of top news staff members. Some mastheads also include information such as the publication’s founding date, slogan, logo and contact information.

So, you go to the store and buy a bunch of magazines at $4- $7 a pop. Then you think to yourself- Hey, Self, wouldn’t it be great if all this information was listed online somewhere? Well it is.

A long time ago, when I was trying to figure out how to get Press coverage, I ran across:

So what does Mastheads.org DO exactly?

Mastheads.org is a collaborative, community directory project of
750+ magazine staff mastheads (and 1,500+ archived mastheads)
built for professional writers, editors, illustrators, photographers,
designers, advertisers, creative agencies, and media firms.

We have complete magazine staff lists for every department
(editorial, art/photo, advertising, marketing, & business) with phone,
fax, mailing address, and e-mail formats! Plus free live chat support when you need help finding a specific magazine contact.

Popular magazine titles are usually updated within 1-3 months. If you are having trouble getting through to an editor that appears in one of the listings, you can verify their status by contacting the publication direct. Mastheads.org members may also submit a research request through live chat support for further help obtaining a verification or e-mail address.

The masthead listings match print mastheads in the magazine. When they get a tip on a staff change, they update it with a note on the masthead. They are working on building long-lasting relationships with publishers and checking in with a verified staff contact at each publication on a regular basis.

You’ll have hundreds of mastheads at your fingertips, but you’ll still need to become familiar with the topics and subjects that are covered by the magazines and writers who work for or contribute to the magazine.

Yes, the masthead info is technically “free” if you stand at the magazine rack and jot down the names. Or you may already have subscriptions to the magazines you are interested in contributing to and therefore don’t need any other resource.

To join Mastheads.org is $2. a month or $24 a year. A lot cheaper than a magazine and you also have somewhere to turn to get some help if you have questions.

If you would like to see what a sample listing look like….Click Here. At the bottom of each listing will have the contact info that looks something like this (for example):

La Dolce Diva Magazine
2305 Broadway, 40th Floor
New York, NY 10019
main line: (212) 777-5555
fax: 212-777-5556

how to e-mail: firstinitiallastname@LDD.com

I’ll be honest, I have not received any coverage from using this route. However, that is due to my negligence of devoting time and effort. You know how it is..so many projects, so little time.

Still, I thought it was worth passing on to you.

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/0

As I’m sure you’ve heard by now, the FTC has released new regulations that directly apply to Bloggers & Social Media.

Basically, they (we) must disclose any type of benefit, payment, free samples, etc. that is received for publishing information about a product or service. We must also disclose if we have a relationship with the company or product we are endorsing.

There’s already been a lot written about this and a lot more to come, I’m sure.

What I want to pass on to you is a tip on a fast, free and easy way for you to comply with these guidelines.

If you don’t want to clutter up your posts with lots of extra paragraphs explaining your “Disclosure”, you can have a simple link at the bottom of your post that looks like this:

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/0

When readers click on the link, they will be taken to the full disclosure, which looks like this:

DigComm launched CMP.ly which addresses the new FTC guidelines for endorsements and provides a simple and easy method to disclose material connections in the content that you publish.  Cmp.ly disclosures follow a standard naming convention that is easy for readers to understand and can be used for disclosures in print, online, SMS, tweets or other digital communications.

There are 5 disclosure options right now and one in the works for a custom version:

CMP.ly/0 – No conflict, unpaid, my own opinions

CMP.ly/1 – Based upon a review copy

CMP.ly/2 – Given a sample by vendor/agency/brand

CMP.ly/3 – Paid post – cash payment or other compensation

CMP.ly/4 – Employee/shareholder/business relationship

CMP.ly/5 – Custom Disclosure

Below, I’ve listed some links that may interest you for more on the FTC Guidelines:

Ad Group Calls on FTC to Rescind Blogger Rules

FTC: Bloggers, testamonials need better disclosure

Commentary And Analysis: The FTC’s New Blogger And Social Media Advertiser Guides by Indie Beauty Network. Of which, I’m a member – not sure if I needed to disclose that

Bloggers Mugged by Regulators: The FTC wants to police book reviews on Twitter

The FTC Guidelines go in to effect December 1, 2009.

I wonder how this is going to affect affiliates? Maybe it would be a business relationship or a Custom disclosure? What do you think?

DISCLOSURE OF MATERIAL CONNECTION: http://cmp.ly/0

*originally posted on Wax Blog July 24, 2009

It’s summer and so for that reason I’ll break from my insistence on pragmatic advice and write on a topic you might consider fluff. Yet it’s the biggest mistake I see small business owners make, including me. We have no patience. I think that it’s a given that a requirement for being an entrepreneur is to have a low grade case of ADD, or in my case, ADHD with an emphasis on the H. And in marketing, that will kill you.

I can’t tell you how many times a client tries something and when there are no immediate results says “Well that doesn’t work.” It’s like lifting weights one day and expecting a tricep cut to develop overnight. I’m not suggesting that we all go out and spend a bajillion dollars on advertising during American Idol. But I do think that in order for your PR, social media and marketing tactics to work you have to learn to wait a bit. Here are a few tips to use to figure out if you’re too impatient.

• Are you measuring your campaign results by the number of orders you’re getting off each initiative? In a word, DON’T. Look at your website hits instead, or the traffic in your store. What’s the first step toward buying your product or service? Do they request a brochure? Do they visit the website? Are you adding Twitter followers or Facebook fans like crazy? Measure by those “first steps” in the short term.

• Are you changing your marketing strategy on a weekly or monthly basis? WRONG. You had better have confidence in your strategy (or your consultant) from the start. Nothing works if you don’t believe in it 100% from the beginning. Switching around what you’re doing on a constant basis and you’ll end up running circles.
• Are you relying on only one outreach method? It may work now, but it will stop working eventually. Or you’ll end up trying one thing after another. BLEND your messaging channels. If you’re doing radio, connect it to a twitter promotion.. Trying guerilla marketing? Make sure you’ve got some PR working in conjunction with those “on the ground”techniques.

Particularly in the online world, patience is the key to success. Jay Conrad Levinson, the founder of Guerilla Marketing, believes that patience is the most important characteristic of successful entrepreneurs. Be confident in your approach. Measure it wisely. And then, like that old farmer in the field, be patient and watch the seeds of your marketing work grow.

Here’s a great post with some more tips on social media and patience – great stuff here!

* You can check out more from Bonnie at  The Wax Blog

Where do you want to sell? Are you planning on selling Wholesale or Retail?

This is where small businesses get screwed up. Most Small Biz owners who sell on Etsy or their own domain think you take the cost of the product, double it and that’s what it sells for. They even may call that their “Retail” price.

They may even go to other retail sites of “competitors” and think they’re “over- priced.”

They may well be, but, let’s look at the larger picture of Retail Reality. If you want to grow your Biz beyond Etsy and your own Domain.com, then  you’ll have to think about that from the start.

Let’s say your product cost you $2.36, plus your general overhead of 15% (.354) =$2.72 cost. So, you sell it on your site for around $5.50.

Wow- you’ve made 100% mark up. In retail math- that’s really a 50% mark up (because your cost makes up 50% of the “retail price”).

Okay, you want to sell wholesale to retailers. Great, you sell it to them for $5.50. Still making your “fabulous mark-up.” All is right with the world..no?

No. The retailer has to make money too. They sell it for $11.50 or even $14.00 or more depending on what the market will bear and the type of shop they are.

$11.50! $14.00! What’s up with that?! Now your product is priced the same as those so-called “over-priced” competitors have on their sites

It’s called retail mark-up. Doubling the cost is called Keystone. Keystone-plus is anything beyond that. And, guess what? They don’t want to see you underselling them by 50% or more online.

The most common thing to do is to Keystone your prices on your website from your sell cost, which will now be $11.50. Now do you see why your “competitors” have such “high” prices.
They aren’t trying to rip anyone off or to make a killing on the internet. More likely, their website serves as a marketing tool and they do most of their business wholesale.

These days buyers and even retailers  expect you to have an online storefront. They’ll expect to have competition, but they’ll not tolerate your underselling them unfairly.

If you ever intend to sell your product to retailers, you’ll have to take this into consideration when pricing your product online. You’re allowed to have sales and special offers, however, this is actually best done through special discount codes given out in Newsletters.

By now, I’m sure you are realizing why you need to think about where you want to sell. If you start off selling twice your cost and have a great online business you can expect more than grumbles when you have to adjust your pricing when you start to sell  wholesale.

I know, you’re asking yourself about the keystone-plus retailers. Don’t worry about them. It’s common practice to have a MSRP (manufacturers suggested retail price) on your order sheets. If retailers want to mark-up the prices more than you recommend, that’s their decision. By listing the MSRP on the order form, they’re getting clear notification of retail prices they may be seeing at other retailers.

If you want to mark your online prices up a bit more to allow for some higher retail mark-ups, it’s your Biz, do what you think is best.

Here’s the major PLUS to selling wholesale. VOLUME. You’ll have a minimum order of around $150 or more ( whatever you decide- $150 is probably the lowest.) You’ll have product minimums too! 6 or 12 bottles or jars of each scent etc.

Of course, there are pros and cons to both sides of being a wholesaler or selling your own products retail. It’s up to you to decide your business model. Either way, you’re probably in business to turn a profit and the best way to do that is with the knowledge of how pricing works.

And, oh, if you happen to get a sales rep, they’ll expect about 15% of the wholesale price and sometimes a base fee per month for the showroom shelf space. This really impacts your bottom line, so you’ll need to be sure your pricing is correct and allows for all these factors.

Did this article help you? Do you have any questions about product pricing?

Why does the mere mention of 3 little letters strike terror in our little B&B hearts and simultaneously cause eye-rolling?

I think it’s fear of the unknown or watching to much Oz on HBO.

Playing against the hype, I’ve actually found that the FDA tries to be as user friendly and consumer oriented  as possible.

If you’re serious about being in the Bath & Body biz, then you’ve probably already visited the Cosmetic section of the FDA site on more than one occasion. If you haven’t been there, I highly recommend the trip.

I’m not going to get up on any “soap box” about cosmetic issues. I just thought I’d point out that there is a a lot of useful information on the  site and it warrants a few minutes surfing. You may be surprised at how much information is there and it’s even in a readable, understandable format.

Will you still have tons of questions, be mildly confused and exasperated? Um, probably. However, it’ll give you a good starting point for questions and a base for doing more research.

I have links to the Cosmetic section of the FDA site throughout this site, but, let me list a few of the helpful pages to get you started.

Is It a Cosmetic, a Drug, or Both?: Or Is It Soap?

Need to know more about labeling?: Cosmetic Labeling Guide

Want to know more about how the FDA is involved with Import & Exports?: Cosmetics: Import & Export

Do I need to print expiration dates on my cosmetic products?: Shelf Life/Expiration Date

What’s a “Cosmeceutical?”

Is there any danger to Temporary Tattoos or Henna /Mehndi?

What is VCRP- Voluntary Cosmetic Registration Program?

Since the FDA is a government agency, it’s important to use this as a starting point when researching and analyzing information. I’m not advocating or criticizing it’s power, I’m simply pointing out that it is the US regulatory agency.

There are other organizations that may mean well for the agenda that they’re representing.  “Their” agenda may or may not be for the public good – I’m not here to judge (well not right now anyway.) The point is, the FDA is responsible for regulating and supervising the safety  of  product that we produce – Bath and Body products otherwise known as “cosmetics.” You should know where they stand.

Check it out.

I’ve brought marketing meetings to a screeching halt by actually saying that I thought all Mission Statements sounded lofty, generic and well, stupid. Eyes bulged and rolled. Grown men and women, who practically wear their MBA credentials in neon on their magnetized name badges, sputtered and choked. Then, ultimately, my comments were dismissed. I was a designer after all, what did I know.

Even Guy Kawasaki thinks Mission Statements are a bunch of gobbledly-goook. Since he is held in much higher esteem and is a lot more successful than any of the marketing people I knew, I figure myself pretty close to being a genius.

Who’s Guy Kawasaki? I’ll let him tell you himself in his brilliant keynote speech to TiE (The Indus Entrepreneurs) in 2006.

I learned more in this 40 minute speech  on Art of the Start and 10/20/30 Rule than all the business books I’ve read and seminars attended – combined.

Although I would love to hear what Guy thinks about starting and running a small business in this recession, I think this speech still holds up.

The next time you find yourself in a business vortex of confusion, just ask yourself, WWGKD; What would Guy Kawasaki do?

You just may find the answer.

Look who stopped by and read my post. Okay- so I DM’d him on Twitter. So what.