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Should I sell my product line to my competitor?

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Should I sell my product line to my competitor?

Old 07-08-2015, 01:28 PM
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Default Should I sell my product line to my competitor?

I would love to get some insight on this. I am debating if I should offer to sell off a part of my product line to my competitor.

I own a brand that I have been developing for over 2 years, successfully. I make a variety of products targeted to a specific market. About 18 months ago I made one of those many product lines. Let's call this product line WIDGET!

Now another company makes Widgets, too. In fact, I use to sell theirs. When their pricing model bombed and there was no profit to be made, I realized I could make it for less, so I did. Their model is B2B, and successful. Mine is B2C and is successful. However, they sell about 6x I do, if not more.

Currently, my WIDGETS account for roughly 10% of the revenue of my 6 figure sales for my entire brand. But, WIDGETS take up more than 10% of my time. It has been brought to my attention (by a few in the industry) that my WIDGETS are now a thorn in the side of my competitor.

The question now becomes....should I offer to sell my WIDGET product line to my competitor? They can grow it or squash it.

Now why would I want to do this and remove a revenue stream? Simple. I make more money off the other 90% of the product line. I spend less time making the 90%. With the potential sales of my WIDGET line, I could buy equipment and inventory to improve the 90%, too. I also see a cap in the market reach with my WIDGETS in 1 year.

Am I crazy to offer to sell?
If not, how do I even approach this or provide a value on selling my WIDGETS?
I am not sure if this would be welcomed or if they would tell me to pound sand.
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Old 07-08-2015, 01:32 PM
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It would be nice if you could find a way to make them approach you for the sale. If not, they may low ball you.
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Old 07-08-2015, 01:32 PM
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I would be cautious about approaching the other organization but mention on occasion that you would not mind parting from the product line for the right price.

This is assuming you are in no rush to sell the product and could keep growing the line to make it more valuable to them.
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Old 07-08-2015, 01:33 PM
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In our business we deal with our competition all the time. We just finished a 300k deal with our largest competitor and it worked out it great and we are getting more business from them as we see this as an on going recurring business deal. I am also friends with the Vice president of the company. It was one of the smoothest projects I have ever worked on. You never no where one deal can take you. I would say if they can't copy you then go for it. Just my .02 worth
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Old 07-08-2015, 01:43 PM
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Why not make it so that you take more of the market share... if you they are B2B and you're B2C... you're cutting out the middle-man... shouldn't it be easier for you?

I ask because I did the same thing. One of my products I bought from a company in the same business... they made it for us and I turned around, packed it and sold it...

Now I mfg. it from start to finish. The only difference is he hasn't had success in the B2C business... no matter how hard he tries...

I wouldn't consider approaching the other guy until I took enough of his business to matter.
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Old 07-08-2015, 01:45 PM
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Hire more salespeople for your line.
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Old 07-08-2015, 01:45 PM
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Finding a way to make them approach you would be best. Can you continue to grow your line of widgets with a specific goal of encroaching on your competitor's market share?

I'm not in services rather than manufacturing and routinely factor in who currently has the contract into my bid. Basically I will bid certain contractual annual services at a lower margin than I normally would if it provides me an opportunity to capture a competitors market share and essentially steal a contract from them. For me, as a small business in a space dominated by much, much larger companies I take every opportunity possible to take work away from them.
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Old 07-08-2015, 01:52 PM
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If the competition was interested enough in buying you, they would approach you.

You won't lose anything by approaching them, except 50-70% of the sales price, if there ever were to be a sale.


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Old 07-08-2015, 02:07 PM
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Approach the "(by a few in the industry)" and casually mention that you are interested in a potential deal, the word will get back to the competitor quicker than you think.
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Old 07-08-2015, 02:24 PM
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Originally Posted by I Love Beer View Post
Approach the "(by a few in the industry)" and casually mention that you are interested in a potential deal, the word will get back to the competitor quicker than you think.
Variant: Make mention to those people that 'someone' has made an offer to buy you out. Get them thinking....
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Old 07-08-2015, 02:28 PM
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Originally Posted by JasonG View Post
I would love to get some insight on this. I am debating if I should offer to sell off a part of my product line to my competitor.

I own a brand that I have been developing for over 2 years, successfully. I make a variety of products targeted to a specific market. About 18 months ago I made one of those many product lines. Let's call this product line WIDGET!

Now another company makes Widgets, too. In fact, I use to sell theirs. When their pricing model bombed and there was no profit to be made, I realized I could make it for less, so I did. Their model is B2B, and successful. Mine is B2C and is successful. However, they sell about 6x I do, if not more.

Currently, my WIDGETS account for roughly 10% of the revenue of my 6 figure sales for my entire brand. But, WIDGETS take up more than 10% of my time. It has been brought to my attention (by a few in the industry) that my WIDGETS are now a thorn in the side of my competitor.

The question now becomes....should I offer to sell my WIDGET product line to my competitor? They can grow it or squash it.

Now why would I want to do this and remove a revenue stream? Simple. I make more money off the other 90% of the product line. I spend less time making the 90%. With the potential sales of my WIDGET line, I could buy equipment and inventory to improve the 90%, too. I also see a cap in the market reach with my WIDGETS in 1 year.

Am I crazy to offer to sell?
If not, how do I even approach this or provide a value on selling my WIDGETS?
I am not sure if this would be welcomed or if they would tell me to pound sand.
Put the price of your WIDGET up to reduce demand but net you the same amount of profit in actual $$; but for whole lot less WIDGET time and material cost.

Mess around with a simple spreadsheet that has price, cost and profit on it. Slide it around a bit. You'll be amazed how few you will have to sell at the new higher price to yield the same or greater net profit with half or less of the work.

Jersus would charge you $80K for that nugget.
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Old 07-08-2015, 02:42 PM
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Originally Posted by Johnny Dreamer View Post
Put the price of your WIDGET up to reduce demand but net you the same amount of profit in actual $$; but for whole lot less WIDGET time and material cost.

Mess around with a simple spreadsheet that has price, cost and profit on it. Slide it around a bit. You'll be amazed how few you will have to sell at the new higher price to yield the same or greater net profit with half or less of the work.

Jersus would charge you $80K for that nugget.
What does that scenario do to market share %?
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Old 07-08-2015, 02:52 PM
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Wow, I did not expect so many replies so fast! Good input there.

I am in absolutely no rush to sell off the WIDGET line. Just looking at the potential. The thought crossed my mind and I am mulling it over.

I would not see them buying it to make and sell it as a B2B or B2C. Likely they would close my WIDGET line down to eliminate competition. They are the king and queen of the industry, and I am at best a knight on this chess board. With me gone, they would have about 99% market share, as they did 18 months ago. Right now I say they have 80-85%.

I will admit it is a small market, but there is no other real competition out there, not even close. I found the niche, but there is no way I am getting rich off it.
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Old 07-08-2015, 10:00 PM
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Originally Posted by OldPete View Post
What does that scenario do to market share %?
That depends on how easy it would be for the consumer to switch to a competing product for the same or lower price point for the same or better perception of quality.

If your question was rhetorical, then yes, one would expect his market share to decrease. Why wold he care? He doesn't like working the line and doesn't care about market share. If he did he'd drop his B2C price to that of his competitors B2B price and then knock 30% off that to get his B2B price and go after that market too (or something slightly less aggressive). That would certainly get his competitor's attention.
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Old 07-09-2015, 05:30 AM
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Originally Posted by Johnny Dreamer View Post
That depends on how easy it would be for the consumer to switch to a competing product for the same or lower price point for the same or better perception of quality.

If your question was rhetorical, then yes, one would expect his market share to decrease. Why wold he care? He doesn't like working the line and doesn't care about market share. If he did he'd drop his B2C price to that of his competitors B2B price and then knock 30% off that to get his B2B price and go after that market too (or something slightly less aggressive). That would certainly get his competitor's attention.
My guess is if he's asking about approaching his competition to buy him he likely wants to sell it... so why not force their hand by increasing the pressure?

If nothing else, after he gains a significant market he'll either be approached or he can slowly raise prices to the point where he's happy to do the work.
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Old 07-09-2015, 05:59 AM
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Originally Posted by JasonG View Post
I would love to get some insight on this. I am debating if I should offer to sell off a part of my product line to my competitor.

I own a brand that I have been developing for over 2 years, successfully. I make a variety of products targeted to a specific market. About 18 months ago I made one of those many product lines. Let's call this product line WIDGET!

Now another company makes Widgets, too. In fact, I use to sell theirs. When their pricing model bombed and there was no profit to be made, I realized I could make it for less, so I did. Their model is B2B, and successful. Mine is B2C and is successful. However, they sell about 6x I do, if not more.

Currently, my WIDGETS account for roughly 10% of the revenue of my 6 figure sales for my entire brand. But, WIDGETS take up more than 10% of my time. It has been brought to my attention (by a few in the industry) that my WIDGETS are now a thorn in the side of my competitor.

The question now becomes....should I offer to sell my WIDGET product line to my competitor? They can grow it or squash it.

Now why would I want to do this and remove a revenue stream? Simple. I make more money off the other 90% of the product line. I spend less time making the 90%. With the potential sales of my WIDGET line, I could buy equipment and inventory to improve the 90%, too. I also see a cap in the market reach with my WIDGETS in 1 year.

Am I crazy to offer to sell?
If not, how do I even approach this or provide a value on selling my WIDGETS?
I am not sure if this would be welcomed or if they would tell me to pound sand.
Originally Posted by JasonG View Post
Wow, I did not expect so many replies so fast! Good input there.

I am in absolutely no rush to sell off the WIDGET line. Just looking at the potential. The thought crossed my mind and I am mulling it over.

I would not see them buying it to make and sell it as a B2B or B2C. Likely they would close my WIDGET line down to eliminate competition. They are the king and queen of the industry, and I am at best a knight on this chess board. With me gone, they would have about 99% market share, as they did 18 months ago. Right now I say they have 80-85%.

I will admit it is a small market, but there is no other real competition out there, not even close. I found the niche, but there is no way I am getting rich off it.
Do you want the long or short answer?
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Old 07-09-2015, 06:01 AM
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Originally Posted by OldPete View Post
My guess is if he's asking about approaching his competition to buy him he likely wants to sell it... so why not force their hand by increasing the pressure?

If nothing else, after he gains a significant market he'll either be approached or he can slowly raise prices to the point where he's happy to do the work.

Market share means nothing if you are not generating cash flow from it.
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Old 07-09-2015, 06:03 AM
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Originally Posted by Johnny Dreamer View Post
Put the price of your WIDGET up to reduce demand but net you the same amount of profit in actual $$; but for whole lot less WIDGET time and material cost.

Mess around with a simple spreadsheet that has price, cost and profit on it. Slide it around a bit. You'll be amazed how few you will have to sell at the new higher price to yield the same or greater net profit with half or less of the work.

Jersus would charge you $80K for that nugget.
Dreamer is close, but left out a few strategic issues that will pop up as well.

oh, and that nugget would only be 50K, but the follow up would be another 40K
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Old 07-09-2015, 06:07 AM
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Is there a way you can leverage your competitor and turn them in to a partner?
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Old 07-09-2015, 06:31 AM
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Target their B2B business. May scare them enough to throw some cash your way.
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