The amount of profit a store owner will make on a bar of chocolate will vary based on several business factors. When it comes to chocolate making and selling, you need to understand that numerous factors are bound to influence gross profits.
The same is true for a store owner who functions as the last level of distribution. Retailing is an interesting field of business that involves the sale or distribution of consumer goods to end-users. For retailing to be possible, there need to be clear incentives in the form of profit margin for goods sold.
Have it in mind that a store owner can earn approximately 20% to 45% gross profit or even more from the sale of a chocolate bar. In terms of dollar value, this profit margin will translate to about $7 to $10 per pound. On the surface, such figures may seem inconsequential; however, they will add up when computed as cumulative yearly sales.
From the rates noted above, the yearly turnover made from chocolate sales alone can be quite massive as long as the store can draw in steady customers. While this is true, note that the level of profitability isn’t uniform across the board. In other words, numerous factors will most definitely influence profitability.
Factors That Will Influence How Much a Store Owner Can Make on a Bar of Chocolate
Certain vital factors will influence how much a store owner can make on a bar of chocolate. These factors include;
Table of Content
- Cost of Goods Sold
- Price Points
- Product Mix
- Inventory Management
- What is the Cost Price of a Bar of Chocolate?
- What is the Selling Price of a Bar of Chocolate?
- What is the Profit Margin on a Bar of Chocolate?
- Hand out samples
- Stock up on what sells
- Know what Chocolates attract the most sales
- Understand customer movement
- Attract foot traffic
- Different price levels
- Become a sponsor
- Checkout displays
- Focus on holidays
- Connect on social media
Cost of Goods Sold
This is the first and most vital factor that will dictate how much a store owner can make on a bar of chocolate. Note that the cost of goods sold is more or less the combination of the cost of production on a bar of chocolate. This will include the costs of hiring labor, purchase of raw materials, coupled with storage, and other things.
The manufacturer will determine the value of the product based on these contributing costs of production. As a store owner, note that gross profit increases when any components of the cost of goods sold are reduced.
Note that price point remains one of the most critical factors that will influence a customer’s buying decision. For instance, the price of a bar of chocolate will influence a customer’s decision on whether or not to purchase the product.
As a store owner, you will also have to choose a practical price point that also covers your costs. Ideally, you will want to strike a balance with your chocolate bar prices in a way that serves all parties (customer and seller) involved. While the price point may seem less profitable for a bar of chocolate, have it in mind that if set properly, can lead to maximizing overall profits for the product in the end.
This particular factor has to do with whether or not you sell chocolates exclusively in your store or have other products you sell. For instance, if you only sell chocolates, then you will most definitely experience price volatility more than a store owner selling multiple products.
To protect yourself from price volatility, it is recommended you adopt the product mix strategy where other product types are sold in addition to chocolate bars. Note that this offers you the opportunity to learn the gross profit margins of different product types and then choose the ones that offer the most profits.
This is another top option to consider when determining your gross profits as a store owner. To make more profits and draw in more customers, the type of goods included in your inventory should be those that sell fast. As a store owner, you must be strategic in selecting the goods you sell alongside your chocolate bars.
In addition, note that certain types of chocolate products are known to be preferred over others. This is very critical especially since the cost of storing and displaying products is likely to impact either positively or negatively depending on what strategies you adopt.
What is the Cost Price of a Bar of Chocolate?
It can be really hard to ascertain these figures especially since they can vary across the board. For instance, the cost price of a bar of chocolate in the US has varied over the years. Before 2019, one kg of chocolate was sold to retailers at $4.98 and $5.08 in 2018.
In 2019, the export price changed to $5.15 per kilo, by 1.298%. However, in 2022, the approximate cost price ranges from around $5.15 and $ 5.08 per kilogram or between $ 2.34 and $ 2.3 per pound (lb).
What is the Selling Price of a Bar of Chocolate?
When it comes to chocolate selling, note that the wholesale cost, including all wholesale profits, is expected to be about one-third of the retail price to give room for a 100% markup for the retailer. As a store owner who sells bars of chocolate have in mind that one pound box of fine chocolates can be sold at $30.
For more ordinary chocolate, you might have to charge around $7 to $10 per pound. If there is a special occasion packaging, that will attract an additional 10% to the price.
What is the Profit Margin on a Bar of Chocolate?
In this line of business, the large volume companies tend to have a lower profit margin of around 8 to 10%, while a retail store can make margins within 55 to 75%. However, note that your total profit for a year will vary depending on the volume and type of product you purchase and sell.
10 Tips Store Owners Can Apply to Sell More Chocolates
If you are thinking about selling bars of chocolate in your retail store, then it is imperative you know how to market your products to ensure you sell more chocolates. Nonetheless, here are top tips to consider;
Hand out samples
You must offer potential customers a taste of what you intend to sell to them. Handing out chocolate samples, along with a business card, coupon, or brochure, can guarantee future sales. Also note that you can get creative, sharing samples at amusement parks, carnivals, festivals, parades, and other community gatherings.
Stock up on what sells
It is also important you learn how to prioritize keeping top-selling items in your store. Don’t forget to let your customers know that you have additional sizes and colors available in the storeroom or online with a tabletop sign. If you don’t have a particular chocolate a shopper is looking for, then leverage that opportunity to collect a customer’s email address or phone number to alert them later when the product becomes available.
Know what Chocolates attract the most sales
Note that one of the most viable strategies you have to adopt as a store owner is to find out or note the exact chocolate products that attract the most sales. You will more or less find out when you start selling your products. High-moving consumer goods are known to give the most profits. Another good thing with such products is that they offer better profit margins to retailers. With such products, both the seller and the buyer benefit
Understand customer movement
Also, take your time to understand how customers will move through your store. If you are a new retail business, you must track the path customers take through your space and make adjustments as necessary.
Have it in mind that the layout and distribution of products may seem suitable to you, but you will only be able to tell if things are laid out effectively by seeing customers move around your store and interact with your inventory. If they can’t find what they’re after, they can’t buy it.
Attract foot traffic
Ideally, your retail shop is going to have passersby, whether it’s located in a mall or on Main Street. Owing to that, ensure that potential customers strolling by your window can envisage something to catch their eye. Consider seeking the expertise of a professional artist or local art student to paint colorful images in your windows. It’s also a great venue for calling attention to chocolates, specials, or sales.
Different price levels
Chocolate bars and packages of chocolates tend to come in various sizes and different price points. Making available small, medium and large sizes increases sales as a customer may not want to purchase the large size, but does want to try the chocolate.
Or maybe the customer would prefer to try several different kinds of chocolates instead of just one large one. Consider offering two-for-one deals or say buy the first at regular price, and receive the second at 50 percent off.
Become a sponsor
Have it in mind that you can draw attention to your retail store by sponsoring a local youth sports team, a school event, a business mixer, or a community celebration. Truth be told, sponsorship opportunities are one of the most viable ways to boost your exposure.
Sponsorship opportunities are known to come with special perks, such as access to attendee contact lists, priority exposure, free advertising, and speaking portions of programs. Always make sure you get the most out of your sponsorship dollars.
Agreeably, there is a sound reason why chocolates and gums are always displayed in grocery stores at the checkout counter. According to experts, they tend to boost sales. If your business sells merchandise besides chocolates, place small packages of chocolates and candy at the cash register to take advantage of impulse sales.
Focus on holidays
As a business that sells chocolates, note that you have numerous built-in sales and marketing opportunities. Holidays are known to provide seasonal chances to roll out new chocolates and candies specially tailored to celebrations. Religious observations, kid-centric holidays such as Halloween, and special occasions such as Mother’s Day and the Fourth of July are all wonderful chances to help your customers get into the spirit.
In this modern age, you need to understand that your customers are on social media and your business should be too. It simply entails making sure you have a presence on Facebook, Twitter, Instagram, and other sites that appeal to your target audience.