Questions About Selling My Product Through Distributors

Archive New Product Ideas
1

Ok, so I have a product that I think has some market potential. I’m an engineer for a company that manufactures their own products so I have a good grasp of how much my product will cost to produce. I also know how much I need to sell it to cover my overhead and make a reasonable profit.

While I could sell it on-line through my own web site, I realize that I can get more exposure and greater sales if I sell through distributors like Sparkfun, Electronics123, Jameco, et al. I may also sell it on my own but don’t want to undercut my distributors prices.

I was wondering if any of you have any experience selling products through that sort of channel. If so, what kind of mark-up do they apply? Do you know what kind of quantities they purchase at one time. Any other recommendations would be greatly appreciated.

BTW - I need to sell my product for about $100. It’s a development board for a market that isn’t well addressed at this time.

2

When I asked SFE about selling something I was thinking of putting into production, they mentioned a 30% markup.

Leon

3

Leon, Thanks for the info. That’s a bit higher than I expected. The company I work for gives our distributors between 15 - 25%. However, we’re a big player in our industry and we do a lot of marketing. Our distributors primarily support local sales and service - that’s probably why we give lower margins.

4

My guess would be that the markup should depend on how much time the distributor saves you. You might reward a distributor that also organises the manufacturing with a higher markup.

If you ‘outsource to the max’ you have more time to design new boards, do some marketing, optimize stuff, and keep the end users satisfied.