How to price your product & what it means for your business.

Session 03

Gin €25

You make: €4.55 per bottle

This price breakdown assumes:

60% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 40% abv gin

Liqueur €25

You make: €6.05 per bottle

This price breakdown assumes:

60% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 25% abv gin

Rum €35

You make: €9.00 per bottle

This price breakdown assumes:

60% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 45% abv gin

Gin €25 Liqueur €25 Rum €35

If you haven't got 60% GP you haven’t got the f i repower

to go to market

Y1/2 - Key Market ing Items

Stand at BCB Berlin

€10k

Brand Ambassador

€50k

Bar tender training

€20k

Gift with purchase

€10k

€100K

So i f I want a l l the Key Market ing Items (€100K), how many bott les

do I need to se l l?

Gin €25

23,000 Bottles

This price breakdown assumes:

€4.10 Cost of Goods

55% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 40% abv gin

Gin €35

17,000 Bottles

This price breakdown assumes:

€4.45 Cost of Goods

67% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 40% abv gin

Gin €50

13,000 Bottles

This price breakdown assumes:

€5.55 Cost of goods

73% margin for brand owner

30% margin for off trade retailer

15% margin for the distributor

German sales tax

German duty for 40% abv gin

Gin €25

4,000 x 6 case

Gin €35

2,800 x 6 case

Gin €50

2,100 x 6 case

I need to increase my pr ice!

I need to increase my pr ice , as the h igher my pr ice i s , the less bott les

I need to se l l to make enough money for market ing!

Not so fast , buddy!

0.3%

5.7%3.2%

51.8%

39.0%

Less than 20€ 20-30€30-40€ 40-60€More than 60€

Gin

Total value of category,

Western Europe off-trade:

£771,310,000 (Nielsen, June 14 - July 15)

0.7%0.8%

4.1%

31.8%

62.6%

Less than 20€ 20-30€30-40€ 40-60€More than 60€

Rum

Total value of category,

Western Europe off-trade:

£1,299,643,000 (Nielsen, June 14 - July 15)

1.0%

3.9%3.9%

46.7%

44.6%

Less than 20€ 20-30€30-40€ 40-60€More than 60€

Vodka

Total value of category,

Western Europe off-trade:

£2,579,767,000 (Nielsen, June 14 - July 15)

2.4%9.5%

12.0%

31.0%

45.1%

Less than 20€ 20-30€30-40€ 40-60€More than 60€

Whiskey

Total value of category,

Western Europe off-trade:

£4,281,099,000 (Nielsen, June 14 - July 15)

Gin Rum

Vodka Whisky

0.3%

5.7%3.2%

51.8%

39.0%

0.7%0.8%

4.1%

31.8%

62.6%

1.0%

3.9%3.9%

46.7%

44.6%

2.4%9.5%

12.0%

31.0%

45.1%

All data is Off-Trade only for Western

Europe, Jan to Dec 2015

(Nielsen)

What does i t take to win?

1) Choose a price point e.g. €35 

2) Review your competitor brands at

this price

3) Is my offer better & can i make enough

money to invest

4) Is there enough space in the market to

grow

5) The repeat this exercise at +20% and -20% RRP

DISTILL VENTURES MANTRAS ON

PRICING…

1. Don’t rely on changing the category

2. Don’t launch at less than 50% gross margin and ensure you can get to 60%

3. Be generous not greedy: if you deliver profit all along the chain you give people a reason to sell your product

Introducing the DV pricing tool

thank you