Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 1 of 1 Posts

2,247 Posts
Hire factory reps!

Usually, a manufacturer hires factory reps. The factory reps sell to the wholesalers and they earn 5%.

The factory can set a Suggested Retail Price, but usually the wholesaler will set the actual price they want to charge their customers. So, the problem you may have is someone has to determine the price that the customer is going to pay before you can determine how much the wholesaler will pay the factory to earn 30% which sounds about right.

It seems like the manufacturers make the smallest percent on the products they sell because they make their money on the volume. I think most manufacturers make 5%, or less on the products they manufacture.

Another obstacle I always found with manufacturing was the packaging and shipping often costs more than the product. Then, the manufacturers get hit hard with collecting their money and having to wait several months for large accounts to pay.

To make money by manufacturing you usually have to do a huge volume. I know many people who were very successful with some very simple ideas. A plumbing contractor made an aluminum pan to go underneath water heaters and they've been selling at every supply house in the country for more than 40 years. Then, he made a flat plate to cover the holes when plumbers have to break tile to install tub and shower faucets. I know another plumber who made a simple bicycle rack, sold them to almost every shopping mall, strip mall, and was very successful.

I was listening to a radio story a few weeks ago about an Asian who came to the U.S. from Vietnam about 20 years ago. He couldn't find a job so he started making hot sauce and sold it to local stores. He never spent one penny for advertising and today his business is grossing $80 million annually. The radio host kept emphasizing that there are many companies making knock-offs of this sauce and the original company's sales still increase every year because his VOLUME IS SO HIGH and his WHOLESALE PRICE IS SO LOW the new companies can't compete. The reason they can't compete is because the new companies have to advertise and that increases their cost. Thus, the customers are not willing to pay the higher price.

Inventions are only 2% idea and 98% sweat.

Lots of Luck.
1 - 1 of 1 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.