Surfboard manufacturer pricing formula

Just about all industries have some 'rule of thumb' for pricing finished goods. Retailers typically like a keystone (100% markeup), etc.

Greg Loehr manufactures Resin Research epoxy and has been around board manufacturing for aggggeeeessss. He noted in the "industry" forum over on Sway's that a good rule of thumb for pricing for a manufacturer/retailer was 300% of direct costs, and better was 400%.

So the gross profit % would be in the range:

Sales 100% 100%

Cost of Sales 33% 25%

Gross Profit 66% 75%

I wonder if anyone is hitting those numbers?

The last post on 1/4/2010:

http://www2.swaylocks.com/forums/best-combination-core-and-skins?page=2

I think you forgot the middleman(shop) in your figures because what that's the average markup but the shaper only ever sees a fraction of it. The shops are the only ones making money off boards.

Point of clarification, it's not my formula, it was suggested by Greg Loehr in the post referenced above. The formula doesn't differentiate between retail or wholesale sales, "perse", but like you point out caskimmer, it would be tough to wholesale a board at $800 (and thereby allowing a shaper to hit those numbers), because the retail price then becomes $1,600 for most retailers. I can't imagine there is much of a market, at that price, for wakesurfers.

I can't see how anyone can build/buy, in the USA, and hit those numbers at wholesale, as caskimmer suggests.

i have seen most surf/beach industry manufactures use the keystone pricing towards the retail shop buyer, then the retail shop can sell product at or below msrp.

(Message edited by brewkettle on January 08, 2010)

I was thinking about this. As far as the high end boards are concerned, not the price point boards...I'd bet that the normal shop owner is getting 200-250 per board markup. The importer/manufacturer is getting an equivalent amount at wholesale and they are paying around $200 per unit FOB some West Coast port. More profit if the boards are from China, less if from Thailand.

A PuPe board, where NOTHING is outsourced is maybe doable at $200 for direct material costs, as GL points out, in the USA...maybe closer to $400 if anything is outsourced and $300 if it's Epoxy/Eps and nothing outsourced and they aren't too far from a blank source. Those folks are having to compete with the 400-450 wholesale cost from imports.

Thin margins for manufacturing in the states.

(thin margins) yes they are, but you dont have to spent big bux up front for a container full of boards THAT MIGHT NOT SELL. You just make them as needed

I have not followed the math exactly but here is what I have found,

I have purchased three Inland Surf boards directly from them. The first was a Red Tide in 2006 for $225. End of year and change of board next year. My guess this was close to their Wholesale cost. This is what they sold their boards to dealers for. Their profit was still there. This year a purchased two other of their boards both were right around $300 and they charged $50 each for shipping. I would guess these prices were around wholesale. Each of the boards I purchase this time had retail prices around $585.00. My guess most dealers make between $150-$250 per board. IS must make $150 per board. The production plant must make some(I have no idea). material cost and labor must be around $125.00.

$ 585 retail
<250> Profit
$ 335 wholesale
<150> IS profit (complete guess)
$ 185 Cost to IS
<65> profit and overhead MFG
$125 labor and materials

I maybe way off but it looks like it would be very hard for a US company to compete with this price structure.

you r about right , then X that by 250 boxed per container= 46250.00 fob

this is what a china board manufacturer told me at the 09 surf expo

I know just the glassing cost is about $100.00 to $150.00 depending on the shape, We use Timmy Patterson, on our Poly Boards our Epoxy are glassed in House , Quality materials add to the costs . The sad part is the Shaping Which is the most important part & that is what is the cheapest cost of the build

@ brewkettle - was the 250 the mininum order quantity, or just the minimum shipping per container? 250 as a MOQ is pretty large.

@ JL - yeah if you outsource any part of the production, it's pretty much impossible to compete on price.

I was reading an article on the 421 case brought against the Chinese tire imports.

"A 25% to 35% tariff on passenger and light truck tires imported from China went into effect on Sept. 26, 2009 and is set to expire after three years. Two weeks earlier, President Barack Obama had said that the United States would levy the tariff to account for a market disruption caused by an increase in imports.

The move signals the first time the U.S. has invoked a special amendment to the 1974 Trade Act that grants the U.S. the right to pass new taxes to mitigate a surge in Chinese imports."

I wonder if some of the larger surfboard manufacturers will band together to have tarriff's imposed on boards imported from China. I can't find it now, but I thought I remembered reading that some like that was in the works.

Jeff ,
they said 250 per container , so it must be the min.

I have been working for the last 6 months on the possibility of marketing a new wakeboard boat product (not a surfboard). After really researching it, it is difficult to see how any small players can make a living in the wakeboard boat industry. The market is so small and the potential sales volumes are so low that it is discouraging.