Ok, so I just started legally 1 month ago- selling exclusively cupcakes. Question: How much should I take off $$ wise or % wise to a wine lounge who wants to sell my cupcakes to her private parties?

Background: Owner of lounge also runs a marketing/promo company. I met her last month when I donated 200 mini's to a fundraiser/event she was doing--trying toget name out there.
Received 2 referrals since from that event.
She purchased from me 2x since for parties she has put on for her customers.
She reports she will need my services 1-2x per month 1-4 dozen cupcakes each time.
She reports as the holidays come up/if she promotes more there could be more opportunity.

So I ask because I can not find a thread discussing this issue in detail. When I do research most sites say 50% off retail. Wow! Is that correct? Because her lounge hits the market I am going after and she is a marketer ny profession, I think, "ok, this is worth it", but then I think, 1-2x per month is not really alot. Maybe I could give her 30% off @ 1-3x per month but if it goes to 4+x per mnth, then 50%.
I know someone will ask, I will make a profit at 30 or 50%, but want to make sure I start this relationship and my dealings correctly.

Sorry so long!
Oh, retail, my cupcakes are $24/29/36 per dozen --I have 3 categories
Mini's are $24/28 per 2 dozen
I live in So Cal, so this pricing is pretty norm. In my are I am the only cupcakery and we have no storefronts yet, so I am it unless she hits up a bakery and they don't do what I do.

If you didn't price your retail with a mind to do wholesale it's kind of hard to do a % thing. The sliding scale for volume is nice. I would work it to where it is more of a per piece price, not a dozen price.

Mike

I guess I never thought about per piece, as I do catering/delivery only and I have a 1 dz minimum-period. Even if I say $2 per cupcake, that is still $24 per dozen. ?? Maybe I am not sure what you mean by your statement.
And Mike, I did not think I would do wholesale- well, I was hoping. It just happened so quick so I was not prepared and still not as you can see. She asked me on Friday and I told her to give me the weekend to crunch some #'s. Problem is, what #'s!! I don't have some magic formula.
I made up the 30% then up to 50%. I guess I want to see what others do.
Thanks Mike.

I am not freaking out yet, just concerned.

I am working on wholesale now and it is tough to go back. So here is what I did.

Figure your per cupcake cost.
Then figure your suggested retail for the shop.
Then choose an acceptable margin for you, then figure out their margin from what they buy them from you.

Like.....

My COST: 1.00 per cupcake (organic)
Suggested retail: $3.00
My WHOLESALE PRICE: 2.00
My Margin: 100%
Their Margin: 50%

the formula for the margin is:

(Wholesale cost-Actual Cost) divided by Actual Cost= Profit Margin

You also need to consider how long the cupcakes last when you consider how many are included in your minimum order. My cupcakes will last most 4 days....

HTH Julia

ok- ok- I am getting it. I had started doing the per cupcake thing/cost last week-- so here I go back to finish this. So I am guessing that the 50% mark up on the retailers end is considered norm? or yours just happened to match what I am reading elsewhere.
You said, "it is tough to go back". Are you saying you are sorry you started this way?

Well my dh works in the copr office for the grocery chain we are working on selling to. He told me that they shoot for 40-50 margin on their goods. So I worked my wholesale price to give them the margin they wanted.

It is hard to go back because i set my prices based on a mark up, not a margin. So I would say the cupcake is 1.00 so I want to sell for 100% mark up, or I would say other people sell for 2.00 so will I . But then I had to go back and figure how to price for the grocery store and I got all confused.

Good luck

Julia

ok- ok- I am getting it. I had started doing the per cupcake thing/cost last week-- so here I go back to finish this. So I am guessing that the 50% mark up on the retailers end is considered norm? or yours just happened to match what I am reading elsewhere.
You said, "it is tough to go back". Are you saying you are sorry you started this way?

How timely! I'm going to talk with two potential wholesale accounts this afternoon.

I seem to have encountered a desire for a 50% mark-up by people looking to purchase on a wholesale basis. And I've got a retail price point, so I can work backwards and see where that gets me.

I view "wholesale" as a volume purchase. 1-4 dozen is NOT a volume purchase to me. The restaurant next door to me orders cookies for a weekly catering order he has and I give him a "good neighbor" discount for the 4-5 dozen he gets every Friday. but I do NOT consider 4-5 dozen a volume/wholesale quantity. It's a consistent, regular order, which merits a good-neighbor-consideration from me, but it's not a "wholesale" order.

A discount for volume is given when the orders is large enough or consistent enough to enable you to save money (1) in your supplies expense because you can buy in higher quantity for a cost savings, that you pass on to your customer, or (2) in your productivity so that you save labor costs.

I worked in manufacturing and we frequently got folks who wanted to "buy direct from the factory!", but we had minimum requirements .... and when they only need 50, but our minimum is 2500, then they just can't buy "wholesale".

She would have to buy 20 dozen cupcakes a week every week to get any kind of "wholesale" pricing from me. Wholesale (as Indydebi said) is dealing in volume....1-4 dozen cupcakes twice a month isn't volume...it's a cupcake order.

I would give a wholesale price on such a small order under one condition - they were packaged and labeled with my business name.

I've been approached by so many coffee shops who want to buy "wholesale" from me - but I wasn't interested. Now I am considering it as long as I can package and label them for the advertising.

One thing to think about.....

In order to sell wholesale in MA you need a different license.
You must supply labels with nutritional facts ingredients and what ever information they want. You have to have all your recipes on paper, all your ingredients you use readily available for the health dept. Check with your state to make sure its OK to sell wholesale.

Good Luck