Working out the cost of a private label product

The catalogue price is not your cost. To it you add customisation fees, labels, packaging, shipping, duty and inspection.

Cost elements

• The supplier’s price per piece.
• Customisation or setup fees spread over the quantity.
• Labels and packaging per piece.
• Shipping, insurance, duty and inspection.

An illustrative example

Price per piece 12, label and packaging 1.0, a setup fee of 300 over 600 pieces which is 0.5, and shipping and duty 2.5. Landed cost = 12 + 1.0 + 0.5 + 2.5 = 16.

Compare quantities

See how the cost per piece changes with quantity: the setup fee spreads over more pieces and falls, but your locked up money grows.

Exercise

Open the private label cost and pricing template and work out the landed cost of your piece at three different quantities.