Everyone Wants Their Slice of the Pie

Everyone wants their cut of the profits.  However making it in America increases the cost of production and in turn lessens the amount of profit for everyone.  This can make negotiating wholesale prices tricky for us. 

The most important thing to always consider is what consumers can and are willing to pay for the product.  We have to make sure that we keep the cost low enough to be affordable but high enough to cover expenses.  Simple economics yes, but when you factor in the higher prices for goods and services stateside it leaves little wiggle room and can kill potential deals.

When we started selling the St. Helens model in 2008 we thought $49.95 was a fair price.  Originally we thought $39.95 but after factoring all the elements realized that we couldn't afford to operate at that price.  The $49.95 price did not include shipping which runs upwards of $15.  That alone inflated the final sales price to $64.95.  So in May of 2010 I decided we'd try to include the shipping into the price and make all RocLok's an easy $64.95.

The change not only helped our customers feel better about their purchases but it allowed us to offer "keystone" pricing to our vendors.  Keystone as we learned early on is 50% margin or greater.  With our prior prices there as no way of accomplishing this goal.  Some catalog companies required Keystone plus 20% which definitely wasn't going to happen.  Needless to say we weren't sure what we where going to do to get some traction in the marketplace.

From day one we knew we wanted to try and keep as much of the production and raw material sourcing as local as possible.  This meant and continues to mean higher prices on everything from the plastic we use in the injection molding to the tape we use on our packages. However instead of taking the greedy way and having our product mass produced overseas for pennies on the dollar and pocketing the proceeds, we have remained stead fast in our resolve whether that be to the detriment of our financial state or not.

Recently requests have increased from vendors throughout the United States and Internationally wanting to offer our product to their customers. Of course we love this new attention but sometimes it is disheartening to get excited about starting a new business relationship and finding out that we can't make a deal because of margins.  For example our margins are such that we can not afford to bring on a Manufacturer Representatives. 

A Manufacturer Representatives aids as the go between person, introducing your products to large big box chains like The Home Depot for example.  The theory is that they have established a good working relationship with buyers in these chains and have pull as to which products get noticed and ultimately sold in the store.  Obviously they want to be paid for their services as well they should be.  However if the margin is not big enough to begin with bringing a third cut into the mix just won't work.  Thus we haven't had the luxury of having a Manufacturer Rep on team RocLok.

Thankfully with some strategic placement at various trade shows and a lot of luck, our product has garnered the attention of  some large vendors and we have been able to nurture our own relationships.  It definitely wasn't a quick process but doing it ourselves allowed us to learn which has to count for something. I think that grow slowly will prove beneficial to the longevity of the business in the end but it is awfully painful on our bank account so far. They say "A journey of a thousand miles begins with a single step," so if we keep putting one foot in front of the other someday we're bound to get there... right?