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First time consignment


#1

I am about to consign to a shop outside my home area (6 hours, so
I’ll be shipping the jewelry to them). I am well-prepared with my
documentation (consignment agreement and all of the supporting
documents). I feel a little iffy about how to do everything and in
what order. Could someone help with these question?

  1. Send the consignment agreement with the jewelry and let the shop
    just sign and send the agreement back? Or send the agreement first
    and get it signed before sending the jewelry?

  2. Pricing? I have a price list. Should I assume the shop will go
    along with it, or is there usually haggling over the consignment
    pricing? The shop has already seen my jewelry in person and agreed
    to handle it, but pricing was not discussed (other than the fact
    that I did originally leave a price list with the jewelry and
    nothing has been said about the prices). I guess what I am asking
    is: can I set my own pricing or does the shop usually have more say
    about that?

Thanks
J.S. Ellington


#2
  1. Get everything in writing before You send any consignment.
    Otherwise, they will have your property without any formal agreed to
    documentation. Make sure there is also specifications in the
    documentation as to the fact that it will be visible to customers!
    We had several pieces at a regional artisans gallery that not only
    could no one locate them, they also would not pay us since they did
    not have them on record as being sold. After several years, they
    were finally found stuffed in the nooks and crannies under the cash
    register - along with rubber bands, staples and other stuff. And yes,
    the silver was ruined from the rubber bands - but they refused to pay
    any damages since they were “returning” it to the artisan unsold.

  2. Let them set the price. You can give a suggested price. You
    set the minimum amount due back to you. Besides, sometimes the
    higher the price, the faster it sells. And you will also find that
    if your work is commanding a higher price - and selling - you are
    more likely to sell more pieces!

Judy Shaw


#3

J.S. Here’s may take on your questions:

  Send the consignment agreement with the jewelry and let the shop
just sign and send the agreement back? Or send the agreement first
and get it signed before sending the jewelry? 

I would send the consignment agreement first. It sounds as if the
store you are dealing with is not very formal in how they deal with
consignment, which isn’t really a good thing since you are not
local. The best retailers realize how costly and difficult
consignment is and take steps to make it an attractive option for
artists.

 I guess what I am asking is: can I set my own pricing or does the
shop usually        have more say about that? 

You need to decide what you want in way of cost. By law the
manufacturer cannot determine the retail price. That must be left
up to the store. So, it is up to you whether you want more than the
wholesale amount of the work since you are consigning it rather than
selling it. The store can then either eat the difference or mark it
up higher.

In the future I recommend making sure all these points are made
known up front when you present your work to a store. This way
everyone knows what to expect before the contract shows up and feet
start getting cold. It is too easy for consignment to become a big
problem and that is not what anyone needs.

Larry


#4
 By law the manufacturer cannot determine the retail price.  That
>must be left up to the store. 

I respectfully suggest that the above statement doesn’t necessarily
apply if the original question was about an artist consigning their
work to a gallery. Since the work being spoken of here belongs to the
artist, not to the gallery, then the artist should determine at what
retail price their work is to be represented. If the gallery buys the
work outright from the artist, then the gallery owns the work and can
set the retail price.

For any artist just starting out and unfamiliar with the market, I
suggest that having a dialogue with the gallery owner or manager
might be beneficial in arriving at a retail price which the gallery
feels will allow the work to be marketable in their venue.

I certainly would not advise anyone to send their work to a new
gallery on consignment without a predetermined agreement as to the
retail price, commission percentage, terms of payment, insurance
coverage, length of consignment, etc.

Michael David Sturlin, jewelry artist @Michael_David_Sturl1


Michael Sturlin Studio, Scottsdale Arizona USA


#5

Dear JS,

  1. I would reccommend sending the consignment agreement first and
    having it signed and sent back. However my reasons for doing so
    would be more along the lines of showing that you are a professional
    and to be taken seriously. I used a consignment agreement for many
    years which a lawyer helped me to draft up. My word of caution is
    that when I needed that agreement because I was in a position where
    it was necessary to take a shop to small claims court, I found that
    it was still difficult to enforce. Make sure your consignment
    agreement clearly states the timeline of when you expect payment,
    example : between the 15th and 24th of every month or of every four
    months, depending on turnover. If that is not in there, the paper
    may be somewhat useless as when you go to court and say you were not
    paid, the judge can look at you and say that there is no exact
    payment schedule outlined and so the agreement has not been broken.

  2. The way I have always arranged my pricing is that I have figured
    out my wholesale price, then made the retail or selling price double
    the wholesale. When selling on consignment, I write everything up
    at retail prices and they take their commission off of that. Most
    places charge between 30 and 45% commission and I feel I should make
    that bit extra over wholesale to pay myself for the extra labour
    involved in consignment. For the odd gallery that does a 60/40
    split (they make 60% or over of the selling cost), I once again go
    back to the wholesale and raise my retail.

There are many benefits to consignment because often retailers will
try pieces on consignment which they may not take if they were
purchasing wholesale, but you have to make sure you still get paid
for any extra work involved. Pieces can be returned tarnished or in
need of repair, you often do the labelling for the store, you often
end up paying for shipping. I would, therefore recommend that you
arrange things so that you make a little more than you would if it
were a wholesale deal; this also pushes the store to favor moving
you to a wholesale client at a later date. -Naomi Hunter
Lumsden Pottery and Silverworks


#6
Most places charge between 30 and 45% commission and I feel I
should make that bit extra over wholesale to pay myself for the
extra labour involved in consignment.  For the odd gallery that
does a 60/40 split (they make 60% or over of the selling cost), I
once again go back to the wholesale and raise my retail.  

In my experience doing consignment for the last 12 years, the
current, common consignment percentage is 50%. The traditional
consignment arrangement was 60/40, but it has almost faded out while
the 50/50 split has become dominant. However … the 60/40 split has
always been in favor of the artist, not the gallery. I would never
do business with a gallery that took 60% of my retail price! Just my
opinion.

On the other hand, what I do with most galleries is set a wholesale
price; that’s what I put on my contract and that’s what I expect to
be paid. Generally a gallery will then double my wholesale price to
reach their retail price (known as keystone, in this scenario).
However … a few galleries mark my jewelry up to as high as 125%. I
don’t particularly like it, but I know that their primary reason is
to give themselves bargaining room, so I accept it. If the gallery
is good to work with, if they take care of my pieces and pay on time,
I can live with it. Your mileage may vary.

Beth


#7
 ... a few galleries mark my jewelry up to as high as 125%.  I don't
particularly like it, but I know that their primary reason is to
give themselves bargaining room, so I accept it.  If the gallery is
good to work with, if they take care of my pieces and pay on time, I
can live with it.  Your mileage may vary. Beth 

Beth, Just a quick question - If those galleries who mark up your
work 125% should sell your piece at the higher price, do they pay
you 60% of the higher price? If not, why not? If not, doesn’t this
reduce your cut to about 44%? (OK, I admit that’s 3 questions)- just
curious, Mark

Mark Thomas Ruby
SunSpirit Designs
Loveland, CO
970 622-9500 studio
970 622-9510 fax


#8

Hi Mark,

If those galleries who mark up your work 125% should sell your
piece at the higher price, do they pay you 60% of the higher price?
If not, why not? If not, doesn't this reduce your cut to about 44%? 

You could certainly look at it that way, I suppose, but I choose not
to :-). One gallery owner that carries my work occasionally discounts
it to below keystone to make the sale. I still get the wholesale
price that’s stated on my contract. But if you look at it your way,
in this case it’s the gallery owner who’s getting less than his fair
share. The way I look at it, I don’t get a cut of the selling price;
I get the wholesale price I asked for, regardless of the selling
price. But … if I ever feel that a gallery is taking unfair
advantage by marking up excessively, I’ll stop doing business with
that gallery!

Beth