hi,
I am pondering what is the best price to pay a fulfilment company, so I can negoiate. i have many different items at retail value from 37.99 to 59.99
item cost 23 exc vat - item retail 37.99 plus 4.50 Post&Packing
42.49 retail total value, 17.5% of this will be paid in VAT, around 5% or 7% in advertising, with £2.90 in postage cost.What would be a reasonable fulfilment cost to expect on an item at
42.49 for example a pair of trousers, to pack,send deal with customer enquiries/email.I am pondering what is the best price to pay a fulfilment company, so I can negoiate. i have many different items at retail value from 37.99 to 59.99
item cost 23 exc vat - item retail 37.99 plus 4.50 Post&Packing
42.49 retail total value, 17.5% of this will be paid in VAT, around 5% or 7% in advertising, with 2.90 in postage cost.What would be a reasonable fulfilment cost to expect on an item at
42.49 for example a pair of trousers, to pack,send deal with customer enquiries/email.It depends a great deal on the volumes. How much will it save you getting someone else to do it ? Why can they do it cheaper than you can ? How much cheaper can they do it than you can ? How much profit would you want if you were doing it ? If they are packing are they or you paying for and organising packaging materials ?
Is the charge always a per item charge. Or is it more reasonable to have a setup fee, a shipping item fee with minimum guaranteed volumes, and an enquiry response fee per enquiry - it is hardly their fault if you produce a bad batch and they get tons of returns.
volume 10 a day, 300 a month? save me getting someone else? nothing just another cost they cant do it cheaper than me as I do it all myself I only want to pay about £2.90 but they want 10% i am paying for materials yes always per item or order
No, only 14.9% of this will be paid as VAT (17.5/117.5, not 17.5/100). That leaves 36.16 as retail value inc P&P exc VAT, less cost £23 and £2.90 postage, leaving £10.26.
If advertising costs 6% of 42.49, or £2.55, and postage £2.90, this comes off the above £10.26, to leave £4.81. This has to fund packing materials and fulfilment charge and your profit.
10% of what? Of 37.99? That would leave you only £1.01 (minus packing materials) as profit. It's outrageous. Is your retail price (37.99) too low?How much? 43p per item?
Will they be taking the orders too, or just dealing with post-order customer queries? How much work does it involve per order or per item?
15 minutes? At say £6 an hour? That's £1.50 plus employer's NI, plus their overheads (e.g. premises) and they'll want a profit too. So double it to £3.38. That still only leaves you £1 profit.Forget it. Just keep doing it yourself, or employ a part-timer to help out 2 hours a day. Make sure their earnings are less than £97 a week and there will be no NI to pay (neither by you nor by them).
"Ronald Raygun" wrote
Hold on there! You've just deducted postage TWICE ...
I agree - its probably ideal work for a part-time stay at home local needy mum (or dad).
Oops. That's because it's cheap at twice the price. :-) The profit margin's still pretty narrow, though.
Thanks guys, have been doing it the Mum way :-)
but we have had a trial with a fulfilment guy, which involves them dealing with calls, processing orders, emails, ordering, packing and sending.
Thats the margin on the lowest cost item, there are more items that cost 27.00 retail at 49.99 plus 4.50 postage. but the margins are still slim
You see I want to use the P&P to cover my fulfilment and postage really, so i have the rest as a profit for the business. packing materials are I would say about 20-30p per item, postage is £2.88-£3.00 depending if royal mail put it up.
So this guy does all the work, but you want all the profit. You must have an MBA. :-)
That's not entirely reasonable. Postage & packing is the cost of delivering the stuff away from your stockroom. The cost of getting it into the stock room and storing it and taking orders and dealing with customers is traditionally included in your mark-up, not in the amount represented to the customer as "P&P".
...except on eBay where you see items marked as 'BuyitNow' for 1p, with 5 P&P. Oh, and ads in the 'big' newspapers where you buy something for X.99, and then usually P&P is another 5-10 when it would probably cost 1-2 to send it. Oh, and the same goes for many magazine ads. Oh,and for many internet sites which do the same. But apart from those.......
Well it's taken me a while to build this business, I am the sole Director. I have to pay thousands in stock commitments per season I have to pay for advertising I have to be responsible for the website and make sure it's constantly maintained I have to speak to suppliers Pay the bills of the business Pay the Accountancy fees Pay/Talk to Affiliates
:-) and on the above margins, they are actually getting more out of it than me
Apparently QVC makes more profit on the P&P than on the goods.
Sounds like you need to find a cheaper source of supply, or charge more.
That, I believe, is a scam to reduce ebay listing fees.
sure it is, but I think most items on ebay have a P&P well above the actual P&P cost.
That is true about ebay, i've noticed similar items to mine with £6.95, £7.95 postage lol
I was thinking about 5% for packing cost/shipping, then a cost for calls/emails.
At the moment 10% as a blanket cost is no good.
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