Hi all.
I was hoping to get some feedback on some pretty open ended estimations.
If some of you more experienced members can ratify these estimations it would help me (and many others) with their business negotiations with furniture manufacturers.
This is my brainstorming. tell me if it sounds right…
Case 1:
Designer sells domestic product to manufacturer with retail branches e.g. Artimede, iGuzzini, Euroluce, etc.
Designer design, prototyping, legal etc. Royalty :1.5% of retail value (mid-high turnover product)
Manufacturing company Total costs and profit 35.00% profit, 65.00% costs
Cost breakdown:
Development, legal and other costs 5.00%
manufacture and delivery to base 25.00%
Warehousing and distribution to retail location 10.00%
Retail inc. overheads 25.00%
any others??
Notes:
Typical exclusivity arrangements
There is a trend towards transferring liability to designer. Contracts need to be carefully managed
Case 2:
Designer sells to manufacturer who manages distribution without retail branches e.g. Vibia,
(this is also the case when manufacturers with retail branches decide to push the product through more outlets
Some companies exchange risk associated with having retail outlets for a broader distribution and sales base.
this can be useful for medium-low cost designs that sell in high volumes.
Designer design, prototyping, legal etc. Royalty :1-1.5% of retail value (mid-high turnover product)
Manufacturing company Total costs and profit 20.00% profit, 35.00% costs
Cost breakdown:
Development, legal and other costs 10.00%
manufacture and delivery to base 25.00%
Retailers Total costs and profit 25-30.00% profit, 25.00% costs
Cost breakdown:
Warehousing and distribution to retail location 5-10.00%
Retail inc. overheads 20.00%
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tell me what you think…
and regarding distributors, how much of the wholesale value do they typically charge per product if you manage manufacture yourself? (particularly interested in business to business contracts)