How much is too much?

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Just musing over this one in the area of general product sales, e.g. creams, gel products, files, etc. What would you view as a reasonable profit. 25%, 50%, 100%, as much as you can get away with?! I usually look to make 50% where possible to kick things off.


Tim

 

Hi Tim,

I spent some time in retail (millions of years ago). Mark up could be anything from 30% to 500% however prices charged had to reflect the product quality, availability, and the competition. If you're charging £5 for an emollient and your large local super-pharmacy sells same for £1.50 your patient might spit feathers if they bought it from you and then see it in Boots for a lot less. On the other hand the patient may think it's worth an extra few quid to buy the product from you while they are attending your practice instead of trailing the High Street to get a better price. Especially if it is raining cats an dogs like it is here today in sunny Ayrshire

 

Generally, the more rapid a product turns over, the less the mark up (eg supermarket products) and the less rapid a product turns over, the greater the mark up (eg diamond rings).

 

Hi Tim and John,

When working out profit you also have to calculate your running costs and take those away from your total figure before deciding how much profit is good/honest/decent.

I think (as do most others, looking at the attached poll) that 50% profit is about right, but only once I've deducted my costs (petrol, lighting, heating, building, insurance, lab costs etc).

Cheers,
david

 

As I have previously worked in retail (in the footwear industry) I can only inform you that (on average) for a pair of trainers you are paying approx 100% profit from the supplier and distributor.

e.g. £75 pair of trainers actually costs approx £33.50 trade price to the retailer.

However the profit margin's do vary from 25% up to a massive 1000% - and yes people do pay that, thats why good stores and shops still allow a given percentage for bartering and closing that deal.

Hope that helps.

 

I think it really just depends what you are selling. Eulactol is always a good seller, but you need to keep it near the price of what the local chemist is selling it at.Should still be a good 75-100% mark up on it.

If its really little stuff like silipos, there no point going to the effort of stocking it and selling it if you are going to only make 1$ on it even if its is marked up 100%.

 

In my experience with footwear retail (for Clarks), the mark up was always high because of a number of factors:

(a) you had to carry a minimum number of sizes/widths to qualify as a Clarks retailer
(b) because of fractional fitting there was always the high probability you would end up with considerable left over stock in strange sizes
(c) you had higher training/cont.ed. requirements
(d) fitting/selling was a labour intense process (high salary costs)

All in all, the mark up was at least 100%. But Clarks also offered excellent training and customer service, so you had good back up.

IMHO, the mark up for something like over-the-counter products should reflect the resources required to carry, stock and sell the material, but I agree that you will do you self out of a sale if you are wildly above pharmacy/supermarket prices. Plus you run the risk of ill-will from your patients if you are seen to be 'ripping them off". My feeling is that a mark-up of 25 - 50% (unless it is a rare item or something will a limited shelf life) is in the ball park.