Shops' Mark-ups - too much?

[Daesul]

Today I visited a couple of local shops with pictures of my work, hoping they might be interested in taking some of my items.

The first shop was very friendly, and seemed genuinely interested. I think they will definitely be giving me a call later.

In the second shop, the guy looked completely bored and was kind of off-hand. However, he agreed my stuff was nice and said he'd take some mugs on Sale or Return next Easter, when the tourist season starts. I said I wanted £7 per mug, which I think is very reasonable for completely hand made items. He said he'd put them on sale for £14.99.

That means that I pay for all the materials, electricity for firings and put in all the hours, for just £7 per mug. He sticks on a label and puts it on a shelf, and gets £8 per mug.

Would I be the mug here if I went for this deal?

[greannancrafts]

Don't forget that the shop has to add 15% vat to your £7, a paper bag/carrier bag plus all overheads and staff.- shops can charge what they like and have to make a profit.

If you are happy with £7 there shouldn't be a problem?

Jane

[AniccaJewellery]

Shops will always mark up at least 100%, some i sell to mark up 125%! That is why it is really important to make sure you cover all your costs when working out your wholesale prices.

Good luck with it!

[ejralph]

I agree with Jane

Shops have a huge number of overheads. I think artists and craftspeople often think that shop-owners are somehow greedy for thier mark-ups, which in my experience are nearly always 100 percent.

But I think it is very unfair to look at it that way. They have to pay shop rents or mortgages, business rates (these alone can be staggeringly expensive!), they need to add on VAT, pay shop staff, pay electricity, insurance, advertising etc. No doubt countless other expenses too before they can make a profit.

A 100 percent mark up on the items they sell is very normal.

The main thing you need to think about is if your own pricing structure is worked out correctly and can allow for their mark-up. I wrote a detailed article on this very subject, as it is quite confusing. ( http://www.ejrbeads.co.uk/pricingjewellery.htm )


If your trade price of £7 covers your time, materials and allows for some profit, then that is all well and good. It could be the gallery will reach customers that you yourself couldn't reach anyway and you will just sell more work.

One thing you should consider though - if you are going to sell through other outlets, you need to be selling your work at retail prices too when selling direct. Otherwise, you put yourself in direct competition with your outlets if you sell to the public at the same price you sell to them.

If your prices are worked out right though - really you should be making a good enough price on your work selling at trade prices to these shops. What they then sell the work on for really is there business to a degree. So long as they get the sales and put in repeat orders, in theory, everyone should be happy.

Good luck with the sales - it sounds like a good opportunity. By the sounds of things, the guy wouldn't have agreed to take them if he didnt think he could sell them.

[C Hupfield Ceramics]

I always tell the shop/gallery owners how much I would be happy to receive per item, then it is up to them how much they mark up, and it doesn't overly matter to me as long as I get my amount for it. and as stated above, the shop owner must think he could sell them if he agreed to take your mugs. He should know what sells from the current items he sells in the shop.

Try it out on a sale or return basis and see how it goes? Good luck!

[Daesul]

Thanks for the advice everyone. I haven't sold through shops before so didn't know what was the norm.

I'm just a bit worried because if I were a customer, I'm not sure I'd pay £14.99 for a mug. But as you say, that's his problem, and if I do them on sale or return I have nothing to lose.

The artists' market I go to on Sundays during the season is just around the corner though, so maybe I'll think about putting up my own prices there to avoid competition with the shops.

[Cuckoos Nest]

He sticks on a label and puts it on a shelf, and gets £8 per mug.

This is really unfair. The 'shelf' you mention doesn't just materialise out of thin air.

We used to have a shop where we sold our pottery and the work of other local craftspeople. The problem we often came up against was they thought we were greedy to want a 30% markup (sale or return) or 50% (bought outright).

However talented and artisitic people are, they often don't realise that it COSTS to sell - rent, business rates, business bank charges, telephone charges, heating and lighting, credit card charges, packaging materials, insurance, advertising - and the shop is open 6 days a week 8 hrs a day even when there are no customers.

People often expected us to provide all this service for a 10/20% commission and looked affronted when we told them our rates. But this insn't a business of high turnover/low profit margin.

Unfortunately the overheads eventually killed us off - we ended up in debt but the craftspeople were just able to take back their stuff and were no worse off.

We're now back producing / selling just our own products, older and wiser - and a lot happier :-)

[ejralph]

I think this is where it pays to be quite businesslike when it comes to selling your work, and often craftspeople will rush into selling before taking this stuff into consideration.

If you want to sell your work through shops, everyone in the chain needs to make money.

So, you need to understand pricing. You need to know what your trade and your retail prices are.

Trade prices are the lowest you can afford to sell at and still make a profit. (At its simplest, that means your costs - including materials, overheads and labour, plus a little profit.)

Retail prices are what the work then sells for to the general public, allowing whoever is making that sale to also make a profit. Whether that is you selling the work or another outlet.

So often I see craftspeople only working out one price for their work, then they go to craft fairs, set up websites etc and sell their work at those prices, without realising they had been selling at their trade prices all along.

Then, when it comes to the point where a shop shows interest, they have no idea how to factor in the shops profit. Either the shop takes the lead and says "oh, I expect a 50 percent discount please for trade) and the craftsperson will then lower the prices they are already selling at.

Or they sell to the shop at the same price they have sold their work already elsewhere and feel that the shop owner is suddenly marking up their work to outrageous price. This helps no-one because if the shop or other customers see the maker selling the work at trade prices elsewhere, it is embarassing for all and the shop unlikely to order again.

This is just a common mistake that happens when makers do not really understanding how pricing works if they forsee selling through shops and galleries as part of their business model as well as selling direct.

Emma

[C Hupfield Ceramics]

Even if your mugs don't sell, they are still being seen and your name will be getting noticed. It would also be a good experience for you.

Let us know how you get on!

[matt.chatterley]

Would I be the mug here if I went for this deal?

As others have said, shop mark-up is almost always huge - its because of all the costs involved.

Similarly people often ask why our prices are higher than those offered by their neighbours kid who has just finished an IT course at college - to which the answer is typically "Tax, Insurance, Training, Equipment.." plus the rest of a long list.

If you're happy getting £7 (not sure what your profit is on that, but try to work it out and I'd suggest you need to be making at least 30% net, treating your time as a cost - if this is something to be commercially viable) - then go for it.

If not, then seek alternative channels! We are working on providing one such channel to locals here via Jersey Market (very bare at the moment) but we haven't quite gotten as far as taking over every location

[ejralph]

Daesul, I am really sorry if my post came across as having a go at you at all. That really wasn't my intention, but if it sounded that way I am really sorry.

Emma

[justk]

as long as you are happy with the price the shop is paying you I wouldn't worry - just keep your fingers crossed that they sell some of your mugs & then you collect the money from them.

[glassbug]

There is an up side to this, the shop thinks that your work is worth £15 and they can sell it for that much. We all have to take in to account the uniqueness of our varied crafts, there on the whole one of a kind and have not been bulk produced. I know we’re going through hard times with the economy but people are willing to pay more for well crafted goods, and can be put off if they are to cheap.

It all comes down to confidence in yourself at the end of the day and this could be the boast that you need. You are that good, go with it.