Also shipping. But it just did not fit in my nifty little headline.
What ever physical business you run, Amazon, dropship or brick and mortar, profit seems to be important, right?
The biggest issue about making things overseas is getting a final cost of a product ready to sell.
Let me clarify what I think “getting a final cost of a product ready to sell”
- Cost of product
- Sample fee
- Cost of moulds or set up fees
- Cost of Qc
- Cost of testing
- Cost of packaging
- Cost of duties
- Cost of Trumpy tax
- Cost of shipping
- Cost of warehousing if using FBA or 3rd party warehouse
I am here to let you know that you wont get a 100% accurate price. Before you curl into a ball and give up, there is a positive side to this.
You will be able to get really close.
You should also have a healthy margin to absorb 1-3% of margin.
This final cost is important to understand a couple of things:
- What is going to take to get the project off the ground?
- What is your profit margin?
- When get can you get a return on your investment?
This is just product cost. You will need to also account for marketing, ads, reviews or social proof and if you are using Amazon, losing your money on PPC
Getting a product launched can be cash heavy in the beginning.
For now, I am going to concentrate on getting a final cost for a product to get to you.
To get a final cost, I like to amortize all the cost into a final price.
That means I take all the items above and break them down into a cost PER PIECE of the product.
Here is an example below:
Metal straws @ 5,000 units
- Cost of product – 0.65 usd
- Sample fees – 0.00 usd
- Cost of moulds or set up fees – 200 usd
- Cost of Qc – 0.065 usd
- Cost of testing – 1200 usd
- Cost of packaging – 0.00 usd
- Cost of duties - 2% HS code 7323.93.00 00
- Cost of Trumpy tax – 0%
- Cost of shipping (AIR) – 2675.00 usd
- Cost of warehousing if using FBA or 3rd party warehouse - 0.00 I ship directly to customer
We break this down as a per part price to understand our cost.
This is the true cost of a product reaching you with all the steps included.
The cost of the aluminium straws is 0.65 cent but the all-in price is about 1.55 usd.
To the EXCEL SHEETS!
What are you looking at here?
This is the information you should be getting from the supplier.
You are filling this information.
How do we get these numbers?
See this handy dandy video -
Find HS codes here:
Doing this at first will be slow. It is good to know how it works first, then move on to getting a great VA to do the heavy lifting for you. I can get into that in another post about how to hire people overseas.
If you need some help or have some questions, drop me a line - Jamonmichaelyerger@gmail.com