One of my clients phoned me today asking me what the fair markup of pond treatments by dealers is.

He had a small problem with water conditions and approached a local dealer for treatment.

He was advised to treat with General treatment, Health treatment and B-Bac

He received the items and was invoiced as follows:



Inside the general treatment was the invoice from the distributor, indicating what the dealer paid, as follows:



Obviously included by mistake.

Question:

1 Is the more than 80% markup fair in view of the fact that it was purely ordered on behalf of the client?

2 What is a fair markup for a dealer?

3 Are these items necesssary in view of the fact that the pond is mature and 12 months old and are they effective? R 3400.00 is a lot of money?

Your inputs will be appreciated.

Hi Paul

Before one can really answer one would need to know what the water quality problems where.

Whether it is fair or not makes no diffrence as there are no bodies in place governing markups for that industry if i'm not mistaken and its to the company's own discretion.

Now here comes the big whopper .....

If it were me I would have done my homework properly pertaining to the water quality problem and what the various sollutions may be aswell as consult other more experiance water keepers to find out what theire opinions were and draw my own conclusions accordingly and lastly if I were to need a product for treatment I would "shop around" for lack of a better term right now to find out whether or not I can source the product myself, If not I would get prices from whoever the distributers may be and compare before spending that kind of money on a treatment.

Bottom line the two questions are :

1. Did the client do his homework or just listend to the first advice he/she was offerd ?

2. Was the treatment really needed or did the dealer just want to make a quick buck ?

In my opinion both parties are at blame to a certain extent as for myself there is no way in hell I would pay that kind of money for waterquality issues that more than likely I can sort out myself in a mature pond.

Ps. These are just my personal views and I am open for debate.

Hi All

I think a fair mark up for any water quality products ordered by a dealer for a client that can not bought directly from the manufacture is between 10% and 15% (handling fee). This should be one of the services the dealer provides to his client’s.

However every dealer must eat as well and I think a fair mark up on all equipment is between 25% and 45%.

But this is the best one yet, some dealers put up mark up’s on fish between 100% and 300% that means that the dealer is making a killing on the fish they sell and the breeder gets the less money for all the his effort and knowledge. It is no wonder that the general public think koi is only for the rich and famous.

The dealer’s that does this type of thing is normally the fly by knights or some one in financial difficulty and does not last long in the industry. But it is still the client choice if he/she wants to do business with these dealers.

Unfortunately these types of action by the dealers have a knock on effect through out the industry and the dealers and breeders that don’t do it pay for it in the long run.

Collin wrote:

, some dealers put up mark up’s on fish between 100% and 300% that means that the dealer is making a killing on the fish .

I agree with you Collin, but on the fish, it might be a different matter.

To have a markup of 100% on fish is often fair. Even 300% in certain situations.

If I import a fish from Japan, a fish might cost me R 100.00(landing costs). Before I can sell the fish, I have to incur expenses and huge risks.

I have to quarantine it for 6 weeks. If the import was during winter, heatings costs might be as high as 20 of the value;

I have to feed the fish for 6 weeks and thereafter until it sells. I have to pay electricity, water, medication and develop and maintain quarantine facilities and holding facilities at huge costs. It is quite a large capital layout to keep fish until it is sold. Advertisements in Koisa cost me R 900.00 per ad. I have to pay for KHV tests. Then comes oxygen, boxes, bags, stationery, petrol, telephone, postage, freight charges etc etc.

More important, a dealer is running a huge risk.

If your paperwork is not in order when the fish arrives, customs may deny delivery and you loose all fish.

The fish might jump out, have KHV, die a few days later due to stress or other ailment. The possibility to loose fish before you are able to sell it, is quite real, even if you take all possible precautions.

The fish might turn out to be an ugly duckling, and you have to make double profit on the other fish.

If I fly fish, and they are dead on arrival, I take the loss.

I you don't have a markup of 200%, you can't really do business. You often have to sell that same R 100.00 fish for at least R 300.00 to make a profit.

The higher the risk, the greater the markup should be.

However, if you order something like a pond treatment on behalf of a client, you don't even need capital. 80% is a ripoff and kills the industry.

Furthermore, I think those treatments is not worth the money spend, unless you have a new pond, and even then, I rather suggest better pond maintenance and equipment and mature beneficial bacteria from another healthy pond to boost your pond, which is normally free.

There is a vast difference between a mark up and a margin.

If you mark an item up by 60% for example - your margin is only about 40% in reality.

When costing an item out you can work out your costs plus your expenses - everything from time to petrol to phone calls to pens etc. So your "cost", once it includes your actual expenses, rises. Take this away from your selling price and your margin is, in reality not so great.

Alternatively you can estimate your actual costs and simply place a large mark-up on it.

Same with importing koi. Take the price of the koi and you add on for shipping, agents fees, deaths etc. Therefore the actual cost of the individual koi rises considerably. If you tell a customer that a koi cost you R10 and you sell it for R20 - that's a 100% mark-up. Everyone is going to moan. But if you tell him the cost is R15 (all your expenses included) and you sell for R20. That's only a 30% margin. Quite acceptable.

Local breeders have to accommodate expenses when selling locally bred koi - water, electricity, labour, food all add the the "cost of the fish.

I doubt if anyone can make a living with a 10 or 15% mark-up.

Regards,
Chris

Collin wrote:

... between 10% and 15% (handling fee). This should be one of the services the dealer provides to his client’s ...

I agree with Collin that a 10% to 15% handling fee is standard practice when you as a service provider order, buy and onsend goods to a client. In the PR industry a retainer client is charged an even smaller handlng fee.

The said 80% handling fee is a rip-off and I think the dealer should be named and shamed. Even with telephone calls and rebagging the standard handling fee would have been sufficient.

But you will be surprised that a lot of dealers who act this way are not the fly by nights as you suggest.

As Bubbles says: shop around, build up a relationship with your dealer and don't be shy to ask questions when you don't agree with what your dealer is telling you. Take notes, go to another dealer, hop on this forum - do whatever you can to make sure you are not being ripped off and that you are getting the right advice at the right price.

Hi Rezanne

I did not talk about the import of koi. I am doing it for years already and know the risk and effort involved. I talk about local koi where the effort, risk is much less and you don't need to order 30 boxes at a time because you can order every day if need be and you don’t pay for freight if you are close to the farm or pay R350.00 per box to CT.

Collin wrote:

Hi Rezanne

I did not talk about the import of koi. I am doing it for years already and know the risk and effort involved.

Hi

That is the way I understood your post. The risk, effort, added expense etc etc when dealing in imported koi vs local fish are also clearly explained by Paul and Chris.

When I started thinking about my ponds I got quotes and they varied from crazy to outrageous hence my decision to do it myself.

Since then I have seen some scary stuff ... local dealer here charge more for 6kg of Aqua Nutro than what I pay Paul for 4x 6kg plus my courier charges. I told him right up that he actually stealing and will not get anything from me.

I met a "consultant" at my brother's ponds and asked what he charges for a consult. He quoted me R350.00 ... I booked him and he did his visit mailed me a report plus an invoice 3x that.

I am committed to helping people with their stuff and showing them that Koi is not only for the Rich and Famous.

My brother bough 14 fish from a guy that said they are imported from Israel ... he paid R1,000.00 per fish 25cm - 30cm. Later I saw the importers pricelist at a friend who is a Pet shop owner ... cost of the fish was R25.00 per fish. I don't care how much the resident shark tries to explain ... from R25.00 to R1,000.00 is a damn huge jump.

I can tell you a few more but suffice it to say in this Koi industry you better be wake up or you are going to get eaten

Usually the maker or distributor of the goods has a recommended selling price that dealers follow. Is 80% markup unheard off - NO.

For example:

1kg Aqua Master growth koi food retails for around R90+ for the 1kg packs but the dealers buy it from the distributor for R35.

1 x .45 speck pump retails for around R1200 but the dealers buy it for R700.

1 x 30watt UV tube retails for R280 but the distributor sells it to the dealers for R175.

The markup on tosai koi are huge! Most tosai that we buy for R900 to R1500 land in SA for around R350 each - shipping included.

Koi is a luxury hobby, or so it is viewed. I do not see anything wrong with a 80% markup or even a 800% markup. If you are willing to pay the price for the goods then it must have been acceptable for you at the time. I know 80% markup sounds crazy but it happens more that you think. Yes it is not nice to discover what the dealer pays for it actually but hey thats life.

I would personally like to know how much the markup on Hikarii koi food is. I would love to use it but do i pay the price...no, cause its to expensive in my opinion.

Getting back to the issue at hand. Nobody forced the individual to buy from this dealer, why did he not shop around? or was it maybe that this dealers prices was inline with everyone elses.

I would personally think it wrong to name the dealer on this forum.

The past 18mths I have experienced extreme price differences and motivations for extreme mark-ups and in some cases just plain BS

I am in the retail business and believe that all retailers, dealers should demand a fair price for a good service rendered. All the actual cost to deliver the product and or Koi to the client should be calculated and then a reasonable and fair mark-up should be added to maintain our Business model. Dealers should be able to demand a reasonable and fair profit, after all that is why we are in Business and the reason why we are taking the risk of running a business. If this was very easy, everyone will have a business. Running a business takes dedication and hard work to succeed.

Having said this when I look at the Koi Industry (so called niche market) some dealers are acting if every sale is the last sale and or every sale should cover the month rent. If I look at dealers in general it seems that their is very little growth in the market place and very few successful dealers due to this go for broke sales attitude in the Koi industry. Quality will and should always be at a different price tag and the person that wants the quality will pay this premium and not feel cheated.

In my opinion this industry must re-look the so called niche market policy and charge a fair markup after expenses. This will increase sales, make it more affordable to the hobbyist and more importantly grow the volume of sales. The minute their is growth in sales due more reasonable pricing the need for the 100% markups will no longer be required and more importantly the hobby will grow.
I am of the opinion that the small number of successful dealers are due to the general niche market theory, putting the hobby beyond the reach of the man in the street, therefore seriously reducing the amount of potential customers. People are finding all kind of short cuts to avoid paying the over the top prices and its hurting the industry and not growing the Koi hobby.
I need to state that I am of the opinion that the Koi I bought from my local dealer have all been reasonably priced for the quality I required at the time of purchase.

Bobby,

ek kon dit nie beter gestel het nie!

Hikari margins are confidential and reflect the market environment in SA. To suggest dealers should survive on a 15% handling fee is so naive as to be not even worthy of a response.

Saki Hikari, when you consider that you can feed upto 50% less of it with better health for your Koi and with filter systems that are far less stressed you have a no brainer when it comes to purchasing a quality Koi food. We have a number of customers who have commented on how far the good goes because they can feed less - and how much cheaper their Koi ponds are to run in terms of time spent cleaning filters, replacing dead Koi and so forth.

There is a lot. lot more behind the benefits of Saki Hikari than just the price tag upfront and more and more people are switching to this food because the Big Picture Helicopter View of the total Koi pond is what they are seeing. We would use it even if we didn't import it - we cannot give it a stronger endorsement than that.

Hi William, I agree with all your statements regarding the bigger picture of Hikari food and seeing I am using it myself I can confirm your viewpoint on the value of Hikari 100% in my opinion. I even agree that the 15% markup is not feasible.

But what has this got to do with a fair markup on any product for that matter? When a product is allocated sole distribution rights, it removes all competition, all checks and balances in the market place, and will always be viewed the by consumer with suspicion.

An example of such control measures and exclusivity could be Carrol Boyes manufactured and designed in SA, distributed world wide, has a selling policy that all retailer has to buy into contractually at a mark-up that is not mentionable.

I repeat my earlier statement, business is entitled and should demand a fair mark-up for services rendered.

Bobby wrote:

I repeat my earlier statement, business is entitled and should demand a fair mark-up for services rendered.

Amen, brother B!

What is a FAIR mark-up?

Let's not talk about the imported koi - that's a different kettle of fish (pardon the pun).

The start of the post was re a add-on that the purchaser of the product regarded as too much.

Yes, he should have shopped around.
Yes, he should have done all the everybody suggested.
Yes, he has the option to use another supplier.
And so on and so on.

But what would have been a fair mark-up?