Whats a average frag wholesale for in your business plan?

Whaledriver

New member
Its kind of a general question but when thinking of a business plan I can figure my growing cost fairly well but not the selling price. I know different prices for different frags but whats the range of price for various frags on a wholesale level?

Another question is how long do various groups of frags take to reach market size?
 
that's a really varying question, especially with market fluctuations, a $100 frag now might be worth $20 in a few months for instance. It depends on what you're growing, and how you're growing it, but expect a minimum of 2 months growout time on all pieces
 
as far as reaching a marketable size. your best bet is to go to various stores and see how big and for how much they are selling the corals you would want to be wholesaling. and base it off that. for example obviously larger colonys would be worth more but is it cost effective to grow them to a larger size in your tank or sell larger volumes of smaller individuals.
good luck
 
Thats too general of a question: a frag of what ? SPS, LPS, softie?

size of frag differes greatly from a postage size or finger nail size to a multi-polyp on a index finger length of base to a designer size major piece with numerous frags.

Also, on average a marketable frag takes 3 mos , or more, yes you can get growth on one 2mos 'old' but not a whole lot of marketability.

Rarity of the frag is a major question, but I wouldnt base a BP price on a rare species that may well not be as rare in six mos down the road,

'badguitarist makes a good point, visit a LOT of retailers and see what they are charging for the general size that you are interested in providing, then divide that in half or by 3, thats the general range of livestock , two to three times cost which also inludes their delivery and other costs.

When figuring your pricing also include delivery and box charges if any. If you are going to deliver to the shops, and exchange boxes you can get real competitive. DONT try to replace other suppliers, they will get big time cut throat with you, find a niche and fill it . And you will never be able to compete with a transshipper, what you can do is provide a good product dependably, but you're not going to provide huge colonys and the rest consistently. Make your niche and fill it. Looking at what shops sell the most of will give you an idea of what you could be producing.
 
So 2-3 times markup is the industry standard?
$10-15 per frag is a reasonable wholesale price?
4 months is a reasonable grow out time frame?
Shipping and packing is extra beyond the frag cost.

I agree that specific wholesale information is not public information. I want to find general information. I have been thinking that $5 is an average but the $10 to 15 makes more sense. I am more the "pay for the hobby" type right now.
 
Most retailers, whoesalers and distributors that I am familiar with use a 2-3Xs markup, that includes all costs, leaving some out is what has made a lot of people go broke.

Factor in raritys which are often sold at much more then normal markup, can seem like a 'killing' but such are needed, often, to carry other business expenses.

By reasonable frag time what kind of rag are you talking about , and to what size ? What is reasonable for a soft colony isnt reasonable for a Hard stony coral.

I preer to sell well started colonys of soft corals, mounted on a good sized rock with coraline growing on it and often some caulerpa. These range from 5-6" long oblong pcs to 6-10" dome shaped caves with multiple colonys started and coraline and macro-algae. These can take 6-7 months to be what I call saleable. For my part I dont bother with the mini- frags.

The little frags you see with 4-6 polyps of soft corals, or 2" stony corals sure take 2-3 months, but the market price to the retailer is going to be barely $5-8 as he has to try to sell it at $15-20.

In figuring your own prices figure ALL costs, and then a 2-3Xs markup. If you dont you're a barely break even hobby.

My advice is to look at over your general market area and get a thorough idea of what the retail market is for what you want to produce, divide the observed retial by 2-3Xs and figure what you can grow for that price, then figure all your costs and see if you are near the break even costs of production.

One thing that you can do is to go to the longer operating producers like Tropicorium, Inland and ORA and see what they are charging for the same type of item tht you want to produce, there will be some variability but overal they are going to come in pretty close to what is a standard. They have been in business and stay in business. Keep in mind that each offers specials, gives them a way to get new biz, hold old customers and blow off stock at good prices, but overal their base prices will give you an indicator at what a real market is. There are a lot of new companys but I would skip them, at least until they have been around long enough to have a track record.

A slight aside, ref: size of sale items, there are unscrupulous people in every kind of business, including retail pet shops, most suppliers give some kind of guarantee, or work with shops to help them, its a tough biz, but I have seen a shop or two that would sell a small frag, then claim it died the next day. This seems a bogus claim to me upfront, if I have grown it for months and a day after I deliver it its dead. And always, "they threw it out". Bigger frags on colonys there is less chance they are going to throw it out, my rocks are worth saving just themselves. So there is advantages to leaving the mini frags to others besides their selling for more..

I also deliver myself, it makes for a personal relationship with the shops and I get far less attempted scams.

Bottom line, know your market in your area, and know what you can sell in that market without losing money. Dont try to undersell the big established places, you'll go out of business. Sell a good product at a competitive price and add in service and availability as your competitive edge.
 
For the most part industry standard is around 3 times mark up. So you have to figure out if it is worth it to you to sell corals at that price and cover your costs. As far as lfs selling goes your ''average corals/frags'' are more of a staple. Not all lfs have a market for rare and expensive frags or the systems to keep them in. Cheap frags such as star polyps, button polyps, mushrooms, pom pom, ect.... will genarally move a little faster. You could sell your rarer stuff on forums or something else to get your moneys worth.
 
<a href=showthread.php?s=&postid=7965908#post7965908 target=_blank>Originally posted</a> by Whaledriver
So 2-3 times markup is the industry standard?
$10-15 per frag is a reasonable wholesale price?
4 months is a reasonable grow out time frame?
Shipping and packing is extra beyond the frag cost.

I agree that specific wholesale information is not public information. I want to find general information. I have been thinking that $5 is an average but the $10 to 15 makes more sense. I am more the "pay for the hobby" type right now.

This is all correct but let it be known a $16 frag is large ... or Rare (tort, echinata, acan lorn, Micromussa, etc.) If you look at the frag and say "I would pay $48 for that " then you have the right price... It only takes one time to get burned by a farmer and that store will no longer do business with them. I dont want to sound mean but all of the stores want good deals to make money on.

Good luck with your business plan and figuring out your COGS. I never keep receipts.

Brian
 
Jake,

With that amount of growout time (12 weeks) and expense(water changes, supplements, utility costs) along with the expense of your custom rocks, are you able to break even with your pieces. It seems when you figure in all of the above even 8-10 seems like it would be break even.

My basis may be off (I have not started yet but have tried to work up good financials), but it seems that from my plans for what you are selling I would have to get atleast 12-15 to make a 25% profit with the manufacturing basis at $7.50.

I would also think that a piece like you describe could easily go in the 25-30 range.
 
raaden, one strategy is to price all your frags the same price all the time. Reward better customers with a better mix of frags. This might be a way to insure you cover your costs and to drive larger purchases to increase volume.
 
Hi Raaden

My rocks are various sizes, the smallest are on 4-6" rocks with multiples, I make them to retail at 36-49, some larger, the caves can retail from 49 on up.

The rocks arenot expensive to make, .25 to 1.50, I use well water, not city so dont have big water bills, I dont use supplements, marine water changes are ~ 10% per month, or less, LFS-worker is right, stores have to make money or wont be around, one reason why I dont sell small frags, they get a well started colony on a cured rock with coraline algae, macroalgae and seeded with pods, its in every sense a live rock , I mount my cuttings on rocks that are already saleable themselves,

I really dont think I'd be interested in any break even situation, I amnot a large producer, dont want to be, so that gives me time to make the pcs that will sell well, if you watch customers in shops that are moving stuff customers will glance at the little frags and then go to the bigger pcs, just human nature.
 
WhaleDriver,

That is a good point. In talking with Alti and Philliproot they brought up similar points. Don't price your bottom line or basis, price the optimal situation and give lots of discounts and freebies. One way to picture this is similar to what Jake is describing. A nice rock with growth on it, rather than a frag rock that is bare will definitely make more. I am not sure whether the volume concept can apply to what I am looking at (distributing locally only). A single store probably can't really move a "volume" amount. Also with the exception of the idea of unique pieces for specific retailers (taken from the business plan) I am not sure you could really give a certain mix to a certain retailer based on their volume. My greatest concern is in the mindset of the retailer. Becoming their first choice for livestock to the point where they only go to the ****shippers/distributors when I don't have something.


Jake,

I apologize I misunderstood what you were saying. I thought you were suggesting that your pieces as ornate as they are would still only command a pricepoint of ~20-25. I agree that a piece like that should easily go for the prices you describe. It also seems like, when you factor 2.5x, you still have a good margin on the basis I listed above.

I certainly wouldn't want to dispute the LFS' right to make money without them there would be no hobby. I am actually trying to work out some ideas so that they can make more money. I think there is a huge potential for the LFS to benefit greatly from aquacultured stock. I have posted them other places so won't get into them here, but the LFS owners also have to realize the potential as well.

Breaking even doesn't sound so good to me either :) , in a large or small operation. Agreed on the larger pieces definitely garnering more interest but inevitably, and I am sure LFSWorker can vouch for this, themajority of customers move back to the smaller pieces when they are ready to pick something up. There is definitely a market for more ornate arrangements and there is not much on the market like that.
 
Look what ORA sells frags for.... With a 300.00 fish order and a limit 2 of any one type... Look at what they charge for xenia. and 50% of the time they are sold out.....
 
an lfs in my area already said that they would buy corals from me if they were aquacultured and did it legaly.

also raaden is right..

the lfs i work at somtimes breaks coral durring shipping.. messing in the tank. or if it jsut dosnt look good
these 'frags' sell long before the mother colony and usualy fetch a nice price ( 20 bucks for a small common montipora 1 inch when the mother coral is about 10 inches and only asking 50 for it) btw. in that example the mother coral is still at the store. price slowly dropping and slowly regrowing the broken piece. yet if we broke it up more i bet it would all be gone in a few days

anyways to sum it up

lots of small stuff moves fast then a slightly higher priced large one
 
Zenia is kind of a funny item.
When things are right it grows like a weed.

When things are not right it melts away. Its kind of the Canary in the cave for a aquarium. Thats part of the problem and solution for a LFS to sell it. They should sell the first frag as part of a bundle of test kits, CA,ALK,MG. Unfortunatly alot of people cant keep it alive for a long time. I am still amazed at how hard it is to find at a LFS. My guess is that most stores dont keep their water within paramiters for it to survive before it can sell.
 
we got xenia spreadin across the rocks. and there is a guy who comes in every 2 weeks with a huge xenia colony for us lol cant kill this stuff...

yet in my tank it melts away
 
Right now I have four stores interested in all I can provide, and can live with them, its going to mean dedicating much of a day twice a month to visit them all, and will cover ~280 miles so my biggest expense is gas for delivery. So they will get my medium and larger pcs, I'll make them some specials of the smaller ones, and am thinking of giving a cave on every $150 dollar order. The bottomline is that its going to be good for them to do business with me.

I know from past experiences, and present, that stores remember who gives them freebies, on my present freshwater stuff I bring a couple bags of hornwort, nitella and other floating plants for nc, and every dozen fish is actually a 15 count, and also bring them larger fish then their distributors stock, sometimes bring some jumbo breeders nc.

This costs me little and makes me welcome when I walk in the door, plus gets me discounts if I need something. I get better then wholesale prices, but they get far better products.

It'll be the same thing with the marines, probably sample bags of caulerpa and sea lettuce and maybe chaeto. Thinning it every couple weeks needs to be done anyhow.

Looking over my costs on the rocks, last purchase was 3 bags of cement, four of sand, 2 of oyster shell and 2 bags of water softener crystals, this came to just under $40 with tax. (40-50lb bags)


To date I have made just under 300 rocks, and have about a 1/3rd of the material left. Mostly medium sized. I am curing the rocks now in tupperware 30 gallon tubs, am going to pick up two more next week as I want to get a lot of rocks made before cold weather comes, my garage isnt heated right now. About 20% of the rocks are caves or other large pcs, including some 'platter ' types to stand up against a back wall, these look great with green stars or anthelia growing up them.

btw, I have seen anthelia in 2 of the stores I go to labeled as xenia. Also another which I wont be going to, they got p.o.'d when I told them, and when I brought the freshwater samples said they were great but never ordered any, in contrast to other stores which immediately ordered. I'll leave them to themselves.

Raaden, no problem, this is a good discussion and its interesting to hear what others with similar plans are doing. Long ago when the world was young a business instructor said " the best deal is one in which everyone makes a profit". Thats one of the few things I really remembered from school.

If I bring stores something that they can make a good profit on its good for me if I can bring it at my own profit margin. LFS Worker knows a guy who doesnt mind paying a price if he can make his. He has one of the two most successful shops in the Rochester NY area. Also one of the oldest now. Seems funny, I still think of him as the kid who just got his own shop. But he thinks outside the box, how many guys you know who have their own miniature tugboat for touring the NYS canals?

Find people like them to deal with, not those who get ****ed at being corrected on a mislabeling(assuming it was unintentional, if it was intentional make a wide berth around them) .

Building a customer network takes time and effort, no-one is going to burn your phone line out while you sit home with all of those fabulous pieces.

Xenia is one of those marginal species for me, takes excellent light, beyond my VHOs, water changes and supplements and currents, if I put it on top just under the water surface not far from a power head it works, if I dont skip the supplements, but I can grow three times as much anthelia in the same area and time. Without the supplements.

This whole thing is almost based on what each of us can grow well under our conditions and water. It just doesnt pay to try to grow stuff that doesnt like our conditions. And in a high kilowatt priced area I amnot going to be using halides and the like.

One other major point, I DONOT want to make a big profit, I just want to pay for my hobby and have the money to fund the other pursuits within the hobby. Along the way it would be nice though to generate enough income to help on the remodeling expenses converting my garage to a fishrm. Then I am going to indulge myself on some breeding attempts.
 
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