By Meaghan Danielson on Feb 12, 2019 9:09:08 AM
One of the most common questions that we get asked is about how to interpret the term sheet that we ask you to sign prior to setting up your store. With that in mind, let's take a closer look at the fee structure and what each of the financial clauses mean for your business.
The first clause references goods that GetHealthy fulfills for you. This fee structure will apply to all the products that we add to your GetHealthy.store where GetHealthy is responsible for sourcing and fulfilling the products ordered. This could mean Thorne products, NuMedica products, Sauna Space products, etc. How the compensation works on this is as follows:
- Example: one order containing all Thorne products that the client pays $100 for. The wholesale price of these products would be $50 (for the sake of easy math), so the Net Revenue associated with this order would be $50. Your practice would make 60% of the $50 Net Revenue - or $30 on that order.
The second clause references products that you fulfill from out of your office. This fee structure will apply to any sales that your clients purchase through your GetHealthy.store that you fulfill out of your own inventory. How the compensation works on this is as follows:
- Example: one order containing $100 worth of private label supplements that you inventory in your office for your clients. GetHealthy.store would receive a $5 fee on this order ($3 payment processing and $2 convenience fee) for aiding in the sale of this product. Your practice would receive the other $95 since you already covered the cost of the products and the cost of shipping/fulfillment. This will only be applicable to items that you sell through your store that you fulfill. This will not be an extra fee on top of the other clause agreements.
The reason that we align on Net Revenue as opposed to Total Revenue is so that we can offer a wider variety of product categories without changing our fee structure. Saunas, water filtration systems, food products, beauty products etc all have much different margin structures than vitamins and supplements, so we chose to align on Net Revenue for the simplicity of the model. In addition, what is nice is that we help to shoulder the net revenue cost of discounting. Since we align on net revenue, then for every dollar that you discount we will take that out of the net revenue but still apply the same percentage breakdowns.
For example, in our example above where you sold $100 worth of Thorne products, let's say that you offered your client a 20% discount on that order. In that case, the price paid would be $80, the net revenue would be $30 and the split would be $18 to your practice and $12 to GetHealthy.
Hopefully this helps explain the term sheet with real life examples. If you have more questions, don't hesitate to reach out directly to your sales person or your account manager.