Wednesday, August 11, 2010

How do profits compare though the process of manufacture to retail?

Lets say a company makes an item for 5 dollars and sells in bulk to distributors/ wholesalers then to retail stores. How much profit would each step usually take in of each product going through the system?How do profits compare though the process of manufacture to retail?
It varies a lot depending on the product. However generally speaking there is a small mark up on big volume sales and a big mark up on retail sales. So the manufacturer may sell the $5 item to the wholesaler for $5.50. The wholesalers sells it to the retail store for $6.50. The retail store sells the item to the customer for $10. I have seen cases where things costing 3 or 4 cents wind up selling for $5 at the retail end.

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