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 Inventing a Retail Product Step # 10a

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PostSubject: Inventing a Retail Product Step # 10a   Sat May 30, 2009 3:22 pm

Our broker had sent back landed pricing of $1.32 on 5000 parts FOB Cincinnati, Ohio.

There appeared to be some confusion on how we calculated the profit on the product to decide if it was going to be worth our while to manufacture for retail. Remember, we have already spent a good deal of time on research and design, we have already had samples made in China, but the jury is still out about if the product will go to market because it has to make economic sense….if it doesn’t, we drop it and move on to the next one.

We know the landed is $1.32 and we have to add $.57 cents (43%) for fulfillment, giving us $1.89

Then we have to go down to the other end of the equation and start with our MSRP of $4.99 - We take out the keystone and we are left with $2.49

So at this point we know the profit is going to be a delta somewhere between this $1.89 and $2.49

We start back at the $1.89 and this time add a sales commission of $.25 cents (10%) bringing us to $2.13 if we subtract the totall developed cost of $2.13 from the wholesale price of $2.49 we are left with a profit of $.36 cents per unit.....or about 17%

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