reducing RRP- effect on my current stockists??

rebecca82 · #1 (**permalink**) 12-09-2008, 08:39

Hi,

I have been trying to find out info on this but I am having no luck- basically I sell my own cosmetics range online and into several boutiques and stores in the UK. After lots of research and customer feedback I have decided I have over-priced the products and want to cut the prices quite significantly. This would be fine if I just sold on my website but I'm not sure how to deal with this with my current stockists? I would be reducing the RRP and also the wholesale prices for future orders, but for those stockists who have stock of my products currently, they obviously won't be happy if the RRP is reduced as they will now be making much less margin having paid the original wholesale prices. I was thinking the answer could be to offer to reimburse them in stock (so work out the difference between the new wholesale price and the old one they paid and times it by the amount of stock they currently have and give them stock which equates to that amount?) as I can't afford to reimburse them in cash.

I would really appreciate any advice.

Many thanks,
Rebecca

AccountingBasics · #2 (**permalink**) 12-09-2008, 08:57

Reducing your RRP with the stockists may want them to stop stocking your product, as they are interested in profit. If there is a competitor out there which they can make more profit on, then they may switch suppliers.

Speak to the stockists and see how your product is selling, you may find that in different places that the stock will sell at a higher price. Other stockists may also have more overheads than you and can not afford to reduce the price.

If they are not selling the volume it may then be time to reduce the price and offer them more stock, but only do this if you have to.

Some people find that if they reduce the RRP they are expected to reduce the wholesale price.

Remember you will have to sell a lot more to make the same amount of profit.

RawRob · #3 (**permalink**) 12-09-2008, 08:58

Maybe you could reduce the wholesale price now for all future orders, and tell your stockists that the rrp will go down on a set date, say 2 months from now or something. So it will give them a changeover period where they can keep selling for the old price.

Rob

rebecca82 · #4 (**permalink**) 12-09-2008, 19:30

Thanks so much for your advice Accounting Basics & Raw Rob, I've been going round in circles trying to think of the best way to deal with it and you've really helped.

Rebecca

consultant · #5 (**permalink**) 13-09-2008, 08:24

PROMOTE!

Sell them more!

By offering BOGOF's, package discounts, stocking discounts, freebies etc, you can allow the retailer promote, which couldincrease sales, without reducing prices.

Indizine · #6 (**permalink**) 13-09-2008, 09:03

Yes I agree with consultant, use the incentive for the stockists to promote your products more.

ARK · #7 (**permalink**) 13-09-2008, 22:34

Offer your stockists somthing called a 'Sales Out Allowance' or a 'Markdown' whereby they sell the product at the reduced price but can retain the profit margin by you issuing them with a credit for the amount your Wholesale/RRP has gone down by.

I used to work for a very large Games retailer and this sort of thing happened all the time from our suppliers