A big issue for me was to figure out how much I could charge the retailers for my drill bit holder. In lack of good advice I begun a trial and error strategy that failed miserably!
I know nothing
The production cost was easy to get grips on. My manufacturer was very clear on what he needed to deliver the gadget. On the other hand I was clueless what the retailers margins were. I heard that some jewellers had an average profit over 1.000% and the local grocery store maby had about 50%.
My buddy’s advice
Earlier a Big shot buddy was nice enough to gave me some free advice and helped me out with some business strategy. Among many things, he suggested to focus on how much profit I needed and we came up with 25% to keep any sneaky bastards away.
My advisor’s advice
I also had a professional business counsellor who skilfully avoided answering this pricey question. It later turned out he was a complete bastard.
Starting from around me having 25% profit and the retailer around 300% I typed in many different scenarios. If I sold over 100 000 units it would just cover my expenses. Was that good or bad? It took over a year before I found someone that told me my calculations were fucked up.
I had no money, hardly any income and needed a painful loan to start the production. So the first order had to cover most of the expenses and I set the price stupendously high. This made the retailer only a tiny profit but they were really kind to accept. Since this ”very high” price for my drill bit holder worked for them I should have been able to stop myself from going on a crazy rampage later on.
*Actually I use Open Office.