Laura Zaruba
09-22-2004, 10:18 AM
I'm just getting my business started so I'm in the early phases - ordering various samples, practicing, testing markets, etc. My prices aren't set in stone but I think I have a retail pricing model I'm comfortable using.
However, I've run across a product that seems to be well received among general retail customers but I've also found a niche market to wholesale the same type of product. The problem...the general retail market won't support much higher prices than I'm charging and the niche market retail prices for basically the same item, just some slight differences in the personalization and designs, are significantly higher and they are more than willing to pay the higher prices.
I don't know how I can charge one market more than the other for basicallly the same item, especially when the wholesale prices to the niche market would be more than the retail prices for the other market. It wouldn't be hard for the niche market to find my general retail prices if I continued to sell to both.
To add to the confusion there are several other niche markets I had planned on contacting for wholesale opportunities however the pricing would also be significantly less than this particular market I'm considering now.
I could offer the same product in different materials for the different markets, however, my niche market customer knows the relative wholesale price of materials (being in a similar industry) and they could use any of the materials for their purposes. I'm thinking about only offering these products to the particular niche market and here are my current thoughts:
Niche Market
Pros: Higher profit margin, less labor intensive, many opportunities for multiple wholesale relationships as my current prospective customer is wanting to plug me into their network.
Cons: Potentially lower volume, requested designs/artwork are so far hard to find and/or expensive. If I only sell this product wholesale at the higher price it restricts my retail product line.
General Public Market & Other Niche Markets
Pros: Potentially higher volume, designs/artwork easy to find and not expensive, adds to my overall retail product line.
Cons: Much more labor intensive, lower profit margin, sales will depend on mostly my own efforts (labor intensive).
In simple terms, if you can sell a widget to Market A for $10 retail or to Market B for $20 wholesale (and Market A won't pay the retail prices Market B will), what would you do? (Now that I re-read this it seems I've answered my own question!) Is there any way to sell to both and be fair?
I can always try only selling to the niche market and if things don't work out I can start offering the product to retail customers again but I'd like your thoughts and advice if you've run across this. This opportunity is making me reconsider my entire business plan and I'd like to get as much feedback as possible before I make any significant changes.
Thanks in advance for your (hopefully quick) replies. :)
However, I've run across a product that seems to be well received among general retail customers but I've also found a niche market to wholesale the same type of product. The problem...the general retail market won't support much higher prices than I'm charging and the niche market retail prices for basically the same item, just some slight differences in the personalization and designs, are significantly higher and they are more than willing to pay the higher prices.
I don't know how I can charge one market more than the other for basicallly the same item, especially when the wholesale prices to the niche market would be more than the retail prices for the other market. It wouldn't be hard for the niche market to find my general retail prices if I continued to sell to both.
To add to the confusion there are several other niche markets I had planned on contacting for wholesale opportunities however the pricing would also be significantly less than this particular market I'm considering now.
I could offer the same product in different materials for the different markets, however, my niche market customer knows the relative wholesale price of materials (being in a similar industry) and they could use any of the materials for their purposes. I'm thinking about only offering these products to the particular niche market and here are my current thoughts:
Niche Market
Pros: Higher profit margin, less labor intensive, many opportunities for multiple wholesale relationships as my current prospective customer is wanting to plug me into their network.
Cons: Potentially lower volume, requested designs/artwork are so far hard to find and/or expensive. If I only sell this product wholesale at the higher price it restricts my retail product line.
General Public Market & Other Niche Markets
Pros: Potentially higher volume, designs/artwork easy to find and not expensive, adds to my overall retail product line.
Cons: Much more labor intensive, lower profit margin, sales will depend on mostly my own efforts (labor intensive).
In simple terms, if you can sell a widget to Market A for $10 retail or to Market B for $20 wholesale (and Market A won't pay the retail prices Market B will), what would you do? (Now that I re-read this it seems I've answered my own question!) Is there any way to sell to both and be fair?
I can always try only selling to the niche market and if things don't work out I can start offering the product to retail customers again but I'd like your thoughts and advice if you've run across this. This opportunity is making me reconsider my entire business plan and I'd like to get as much feedback as possible before I make any significant changes.
Thanks in advance for your (hopefully quick) replies. :)