Corporate Gifts Education
This is how the typical professional corporate gifting industry works and the pricing behind it from the manufacturer. Corporate Gifting Reps get a deep wholesale discount price from the brand selling the item, usually 50% off, and then turn around and sell it at full retail price to the company that asked them to find some great corporate gifts for them to give away. The rep makes their money on the difference.
Imagine this example:
Imagine ACME Explosives and Roadrunner Extermination Company needs to buy 100 corporate gifts to give to their top 100 Coyote clients at the annual conference. Their budget is $200 per gift. They tell their corporate gifting distributor this information and that they want just one nice leather gift this time.
Imagine the distributor comes back to them with the regular three options she “found” from her regular wholesale vendors who she has a half price distributorship agreement with. Her wholesale cost for the generic mediocre quality leather portfolio is only $100 each but she tells the ACME Company that they cost $200, which is the same distributorship agreement the wholesale portfolio vendor has with the 9,800 office supply stores like Office Max, Office Depot and Staples.
The decision-maker at ACME, like usual, isn’t too excited about any of the generic-looking leather portfolio options, but the “Great Value Executive Portfolio” is good enough. ACME writes a check for $20,000 to the gifting distributor and they, in turn, write a check for $10,000 to the Great Value Leather Company for the 100 portfolios. The Corporate Gifting Rep then deposit their $10,000 earnings into their own bank account. They didn’t show the decision maker Saddleback Leather’s portfolio that is twice the quality for the same price because they wouldn't make much money if they chose ours. Not knocking the corporate gifting company. It’s not a hobby and they have to make money to keep offering their service to those who are too busy themselves to google “leather corporate gifts” to find cool quality gifts that will impress their clients and that they'll actually keep.
How Their Factory Pricing Works
Keystone Pricing is what it’s called in retail. Generally, everyone doubles their price. The factory calculates their pricing of $25 for bonded leather or some other cheaper leather and $25 to cover labor, lollipops, overhead and profit. So they double that and sell the leather portfolio to Great Value brand for $50. Great Value, in turn, wholesales it to stores and corporate gifting distributors for $100. The stores and reps then sell it to their customers and corporations for $200.
Of course, most of the conference attendees, who receive the leather portfolio, are wondering if they should leave it in the hotel room or re-gift it when they get back to the office. While the younger less dignified attendees are giddy about their new genuine leather portfolio and can’t wait to get home to show mom.
How Our Factory Pricing Works
We have our own factory and don’t wholesale to anybody. We calculate that it costs us $50 for our high quality expensive and durable full grain leather to construct it and then $50 for our skilled labor, overhead and profit. We, in turn, sell the longest lasting most durable premium leather portfolio for $200 to our customers (rounded up for easy math). They’re super impressed and use it everyday until they retire. And then their kids fight over it when they're dead.
The person charged with buying the 100 Saddleback Leather corporate gifts is respected and esteemed for getting such a popular and quality business gift and is congratulated and thanked for doing such a great job within the budget. The conference attendee is elated with the gift and just plain impressed with the company. Finally a gift they’ll keep. Of course, with your company logo in front of them and on the forefront of their mind for years and years to come.