Summary: Selling designer sunglasses at retail is an attractive business proposition. But it's critical that retailers understand everything about pricing on both sides of the transaction. Pricing lays the groundwork for profit.
There is money to be made selling wholesale sunglasses at retail. But to make it profitable, you really need to understand the financial aspects. This includes a comprehensive understanding of typical pricing, discounting strategies, and tiered wholesale structures. If you don't understand how pricing works at both ends of the transaction, you might struggle to make the money you are hoping for.
OE Wholesale Sunglasses has been partnering with retailers like you since we first launched our company many years ago. We want you to fully understand everything about pricing so that you can build your own successful business. To that end, we have put together this comprehensive guide. Study it. Also take advantage of other resources offering additional information.
The Markup Principal in Retail
Retail sales are built on the principle of markup. The principle applies to every product on retail shelves, including designer sunglasses. When you buy bulk sunglasses from us at wholesale prices, there is an expectation that you will mark the products up. What does that mean? It means you charge more than you paid for the products.
Wholesale sunglasses can cost as little as a few dollars per pair for basic models. High-end models can be two or three times the cost. And of course, features add to the price. A pair of polarized sunglasses will cost more than a basic pair without polarized lenses.
Also note that our industry utilizes something known as keystone pricing. You don't have to practice it, but most retailers do. Keystone pricing is the practice of setting your retail price at double the wholesale price. Doubling results in a 100% markup.
Product Markup and Your Margin
Retailers mark up wholesale products in order to cover their own costs and generate a profit. If you were to pay $2 per pair for a lot of one dozen sunglasses, marking up and doubling the wholesale cost regenerate $48 in total revenue for that lot. You've more than covered the wholesale price of the products. You have money left over to cover other business expenses. Whatever is left after all expenses have been paid is your profit.
Here's the important part of all of this: the amount of profit you make represents your margin. Margin is measured as a percentage of total revenue. An easy example would be generating $100 in total revenue against $75 in total costs. Your profit is $25. As a percentage of your total revenue, your margin is then 25%.
The great thing about wholesale sunglasses is that they can generate margins of up to 1,000% when retailers price their products competitively. This isn't to say that you will definitely make that much. Your margin will depend heavily on how much you pay for bulk sunglasses, your markup rate, and the other costs you incur while doing business.
Selling Volume and Discount Pricing
The next thing to understand is discount pricing. To the inexperienced business owner, discounts may seem counterproductive. Giving a discount means selling at a lower price. But there is a reason for discounting sunglasses. The reason is to increase sales volume.
As a retailer, you can make your money in one of two ways:
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Unit Pricing – You can concentrate on selling each pair of sunglasses at the highest supported price, making the most profit on every unit you sell.
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Volume Pricing – You can sell at a lower retail price with the goal of moving more pairs of sunglasses as a result.
Discount pricing is all about volume. You are trying to sell as many units as you possibly can. You might not make as much profit per unit, but you more than make up for the difference by selling a higher number of units in total.
For the record, discount pricing is the foundation of wholesale distribution. We sell most of our bulk sunglasses in lots of twelve. In addition, our biggest customers can purchase hundreds of lots per order. Thanks to the incredible volume at which we sell, we can afford discounted wholesale prices and still make a generous profit.
Tiered Wholesale Structures
We offer competitive prices on every lot we sell. But we also take advantage of the wholesale principle of tiered pricing. For example, if you spend at least $500, we will discount your per-unit price even further.
Here is a basic tier structure that illustrates the point (note: this is not representative of OE Sunglasses' pricing):
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Basic Tier: 10-50 units at $5 each, representing a 10% discount.
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Standard Tier: 51-100 units at $4 each, representing a 30% discount.
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Premium Tier: 101+ units at $3 each, representing a 50% discount.
Tiered wholesale structures reward retailers for bulk purchases. The more you buy, the less you spend per unit. Of course, wholesalers have a rock-bottom price they will not undercut. That price differs from one wholesaler to the next.
Practical Pricing Tips for New Retailers
Getting used to pricing, discounts, and wholesale tiers can take time. If you are new to retail sunglasses, learn everything you can and pay attention to the details as you move forward. Here are a few pro tips you can employ right away:
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Always reverse-calculate your costs and margins to better understand whether you are meeting profit targets.
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Attract new customers and reward repeat customers by aligning your discounts and upselling structures with your competitors.
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Routinely evaluate product quality and features when setting pricing. Better quality and more features justify higher prices.
There is money to be made in retail sunglasses. It starts with finding the right wholesale partner. Here at OE Sunglasses, we want to be your only wholesale supplier of sunglasses for men, women, and children.
FAQs
How important is wholesale pricing in finding a good supplier?
Although wholesale pricing should not be the only factor you consider, it is still critically important. You need prices low enough to allow you to hit your markup and profit targets.
Is there a specific margin I should be shooting for?
No. Margins are up to each business owner to decide for themself. However, don't sell yourself short by settling for an exceptionally low margin. Aim high and see where it goes.
Should I start with keystone pricing right away?
We recommend keystone pricing from day one. It is one of the best ways to figure out what type of pricing your products command. If it does not end up working for you, you can always revisit your pricing later.
How many pairs of sunglasses should I purchase with each order?
Like margins, the size of your wholesale orders is entirely up to you. If you are just getting started, order just enough product to start reaching your customers. You don't want to overextend yourself financially while building a loyal customer base.
Is it okay to use more than one supplier?
As a retailer, you can use as many wholesale suppliers as you choose. We believe we have what it takes to be your only distributor of wholesale sunglasses, so we hope you will consider making us your primary supplier.
