|Salon Owner, Manufacturer Garrett Markenson|
I assume by now you have priced the product so that you can make money. That reminds me of an episode from The Office where Michael is talking to the kids of the employees on "Bring your kids to work" day. He tells them that Dunder Mifflin buys the paper for a $1 and sells it for $2. All the kids said, you are ripping people off!
Don't worry about what the kids think, that is how business works. You have to determine your cost of goods. This must include everything; packaging, filling, literature, labor. Then determine how much you want to sell it for.
If there is not enough room, then you won't have a business. The only additional thing I would say is that often while you are small you have to live on a small profit margin until you can buy enough to lower your per unit costs.
The other obvious thing you need to consider with pricing your product is the market you are going after. If you want to be premium, check out what the most expensive product is. Are you going to be above that price? At that price? Or below that price? And that depends on the quality of the product and the market you are trying to capture.
OK, so you have priced your product.
The first thing that someone has to do is determine distribution. Who will sell your great new product? Are they a distributor? Do they sell competitive products? Are they large and demanding? Or are they small, focused but likely have less resources?
Perhaps you don't want to go through distribution, rather you want to sell directly to the retailer or consumer. Again, do you want large national retailers or small local retailers? It probably is easier to get into smaller local retailers, but how do you get to enough of them to be large enough to compete? Large retailers can be great, but as a new manufacturer do you have the money and resources to service a National chain?
Once you determine your path, you need to set your distributor or retailers up to succeed. That means you need to do something to help your product stand out. With National retailers this can be difficult and potentially expensive, but you might instantly have shelf space in 500-1,000 retailers! Pretty good trade off.
If you are going through distribution or if you are selling to small retailers, the process for standing out is probably the same. You need to package your product in such a way to make it easy for your retailer to succeed. Get one box. Put your tester and retail in the box. Put the signage in the box. If you have a display, put that in the box. Don't forget to give the retailer a price list! They need to know how much to sell your product for.
Make it so the $8 receptionist or stock clerk can open the box and make it look EXACTLY the way you want the product to look on shelf. The easiest way to assure this is to put pictures of exactly how it should look.
And then there is the whole aspect of building a brand but we will save that for another day!