Pricing products you don't make.

[Pyle's BBQ]

Does the 3x pat rule still apply? I sell bars and ice cream made by someone else but don't charge 3x my cost. Should I be charging more?

Thanks in advanced.

 

[HBMTN]

I think so. Say you bought a case of ice cream cones and your price break down was 50 cents per cone. You have the risk of not selling them all and you have to make money. $1.50 for a cone at cost x 3 is what I would sell it for.

 

[marubozo]

Even if you aren't spending time making the product from scratch, you still need enough margin to cover all your indirect costs. I think 3x is still a good starting point, but you should look at the individual product. Is it priced competitively with your competition? Is it an item that could work as a loss leader?

There are certainly some products or situations that could warrant a lower or higher price depending on local market conditions, if it's a product that you want to price aggressively just to get people in the door, etc.

 

[landarc]

Most restaurants do not make beer, wine or soda, yet sell at significant mark-ups. The same with candy, chips and other items. I think 3x markup is a reasonable thing. And, as was previously stated, you still have risk in that you may not sell the item before it becomes unsaleable. And ice cream cones is a great example, you definitely have waste everytime you open a bag, unless you sell out. There is nothing worse than a stale cone.