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Selling on commission basis

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  • Selling on commission basis

    Hi everyone

    Could I have your thoughts on the following problem I came up against a while back please.

    Last year when I gave up curtains & blind making, one of my ex-clients opened a home accessories shop in her village.
    She asked me to make some cushions/padded hearts/garlands etc for her shop but to be sold on a commission basis - ie she didn't have to pay out to get the items in her shop but would pay a percentage on each one sold.
    I didn't mind as it would have helped her stock the shop & kept her outgoings low at the beginning of her enterprise.
    I suggested that I would make the items & put them on display with my price on them & she could take 20% commission - in effect getting a profit for doing nothing. (£20 sale = £4 profit)
    However she said her accountant wanted her to make at least 50% profit on everything she sold (£20 sale = £10 profit)
    I pointed out that I thought her accountant meant 50% on goods she'd bought at trade prices where she could set her own sale price, but she was adament she wanted to take 50% This would mean after I'd paid out for materials etc she would have made more out of my items by doing nothing than I would have by spending hours making them.
    In the end I decided not to let her have anything.

    Do you think I was being unreasonable with 20% rather than 50%, bearing in mind that some items in the shop were from quality suppliers & she was interested in me making similar things but putting a lower price on them.

    I think she wanted to make a good profit but not pay out much (or anything at all) for her fabric items - or am I being too cynical?

    All thoughts on this gratefull received!


  • #2
    commision is normally 30-40percent whole sale is 50% of rrp meaning they buy quiet alot and can't return it.
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    • #3
      Putting your items in the shop at no cost to the shop owner, I would think is a little risky. Unless you have a watertight contract.
      The items will be picked up and looked at by customers and possibly get damaged/grubby - who takes that risk?

      If she wants 50% mark up which is about right, sell them to her at trade, COD then let her charge what she likes for them.

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      • #4
        I definitely wouldn't have given 50% on SOR - only on wholesale, and then only if they were buying in a reasonable quantity.

        I think the woman was being a bit cheeky to expect you to do that, although I also think 20% SOR is a bit low for a shop to accept. As debjeans said, around 30-40% is about right for most.

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        • #5
          I agree with what the others have said, but am baffled as to why this lady expects to sell handmade items for less than the mass-produced equivalent?

          Items should usually sell for a higher price in the right retail shop than they would at a craft fair for example, so it may have been worth upping your prices across the board. If you weren't selling direct yourself it's not like you would have been undercutting her prices anywhere.
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          • #6
            I would have told her the price I wanted to receive for my goods and then let her add her commission on top. I'd also have tried to ensure that all my goods had a label so that customers could choose whether to continue buying from her at the inflated prices or to buy direct from the supplier.

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            • #7
              It may be this woman is not the best business woman, and is misguided.. or she may be a canny shark.. bottom line is, don't beat yourself up about it..

              As someone else said, your goods on "commission only" can get grubby and damaged - what happens if she puts something of yours in the window and it is sun damaged??

              Commission only is fine, and she can charge whatever she wants, you just tell her what your price is, and let her price accordingly, as you would if you were wholesaling..

              I would ensure there was a clear written agreement that she is responsible for the safe return of unsold goods, and liable for any theft/pilfering too


              • #8
                50%? Not a chance!

                I've never parted with more than 25% - anything more than that and your better off sticking to fairs / stalls.

                It can be difficult to stick to your guns price wise - there is always the temptation to go with a less than profitable set up just to get the sales volume / business profile raised. If there was a good outlet wanting to stock my items and take a 50% cut I'd probably raise my initial prices by 25% to cover it.
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                • #9

                  Thanks for all your replies - there are some really good points there.

                  Personally I don't think she was naive as her hubby runs a successful business & she was using his accountants - sounds as if I was the naive one!

                  If I go down the commission route in future I'll definately put my own price on the goods & let the retailer do their own mark up for commission, or sell just 2-3 to them at a trade price so I don't have to take them back damaged. Hopefully they would sell & I could sell them some more!

                  Selling items is totally different to winning orders to make curtains/blinds - what a learning curve this is going to be!

                  Thanks everyone



                  • #10
                    Originally posted by sharon View Post

                    Selling items is totally different to winning orders to make curtains/blinds - what a learning curve this is going to be!

                    Thanks everyone

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                    • #11

                      Last night coming back from late night shopping with my daughter we detoured through the village where this shop was - it's now closed.



                      • #12
                        Im on the path of opening my own shop and hope to sell craft items on a commision only basis. I hope to give crafters an outlet for their work (along with some of my own) and I will be managing and promoting the shop.

                        After reading some of the posts here I wanted to get your opinions on this, And would welcome any feedback you could offer. I intend to catalogue all goods when supplied and add them to stock so they would be insured in the event of theft or damage. I intend to ask crafters the price of the goods and add commision Do you think that a 30% commision is reasonable?


                        • #13
                          How about doing it the other way round. Cost your materials and time and tell her what you want to make on the deal (say you want £17.00 a cushion) leave it to her what she sells it at in the shop, as long as you get your £15.00 your happy and do that with each item you provide her with and simultaneously give her a list of what she has of yours in stock. Cover yourself also, if she puts it in the shop window and it discolours then you will want the cost of the materials paid at least. Advise if she sells quite a lot of them then you may be able to bulk by in the materials and provide her with a better price. Don't worry what she is making on the deal, she has council tax, lights, gas, insurance, liability insurance, legal leases all that jazz to cover - as long as you get what you think is a fair price for your creations and working hours then all is well.

                          You could also throw in that if certain pieces sell well you can bulk buy in materials but you would need her to purchase, say, 20 pieces outright from you.


                          • #14
                            We always sell at trade at a minimum of 2.25 times cost to us, then its straightforward and the shop can sell at its own price. Wonder what would have happened to your items when the shop closed - nice to think they would have been returned but that's probably wishful thinking. Perhaps a narrow escape


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