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Negotiating with retailers


#1

I am new to wholesale. Please list options when selling / memoing to
shop and gallery owners. So far I did 50/50 consignment. In one
instance, a retailer marked up my items so high that they did not
sell (my necklaces decorated her store for 3 weeks and I took them
back). What is a customary split? Any help will be appreciated.


#2

50/50 split is customary. I have seen 60/40 or 70/30 with the store
getting the small number. Three weeks is not a long time for work
to be in store. As in any retail situation, sales can depend on
season, look, placement, etc. A retailer purchased three of my
resin inly fish pins outright. I visited the store two months later
and had to walk the entire store back and forth to find them. When
I did, they were still sitting there. Since she purchased them at
wholesale, it really isn’t my problem any more, but it doesn’t
create an avenue for re-orders. When I looked around the shop, the
only person that had any on the maker was David Yurman,
which is the only work she sells continuously. I felt like my work,
along with others, was merely window dressing.

What did I learn? If I was doing consignment, I would have been out
of there on the second visit. I think it is up to us makers to work
with a retailer. Sometimes we are so grateful that ANYBODY will
take our work, we don’t look at the big picture. How will the work
be displayed? What will be their retail price point? Would they be
interested in a trunk show so their clients can learn more about us?
Do we provide sufficient about us and the process that
makes the work easier to sell? Is the person selling sufficiently
informed about our work or are they summer help doing their “McJob”.

Marketing our work is just as much our responsibility as the
gallerys’.

-k
Karen Christians
M E T A L W E R X
10 Walnut St., Woburn MA 01801
Ph. 781 937 3532, Fx. 781 937 3955
http://www.metalwerx.com/
Jewelry/Metalarts School & Cooperative Studio
Board Member for the Society of North American Goldsmiths


#3

It would completely depend own your negotiating skill. With some I
would do 100% consignment because I know that they know their
business. Some I would not give a dime even if they have good
credit because they have not gone through that learning curve of the
industry.

Shahid Kinnare
Mega Jewelers
Memphis, TN
megajewelers.com


#4

As a gallery owner, if they can’t make it with the 40/60 split, then
they shouldn’t be in business (just my humble opinion) 60%
consignment, going to the artist. As an artist, I would only do 50/50
wholesale, and cash at that!


#5

Consignment deals are usually 50/50 but sometimes you can get 60/40
which is good (60% goes to you). A little work beforehand can help
you avoid disappointments and misunderstandings with consignments.
If you are considering a consignment deal with an establishment find
out if they do consignments as part of their regular course of
business. If so, see if you can talk to any of their other
consignees.

Selling on consignment means a little extra bookwork for the
retailer. You should expect a monthly accounting of your work that
has sold. You can’t expect the retailer to keep a regular inventory
of what stock you have on hand so keep track of what has sold and
what inventory you have on hand at each retailer. Consignment deals
can be good for both the retailer and the artist if you both work at
it. Signing an agreement is a good idea but don’t expect that
agreement to do all the work for you. Keep in contact with the
retailer. Visit them to see what selling. Ask their sales people
which pieces come out of the case most often. Be ready to replace
items that sell; be ready to replace items that don’t sell.

Also, when selling wholesale or consignment be sure to understand
what price points the retailer is looking for. I have one client who
wants a 5:1 ratio of items under $100 retail and above $100 retail.

Three weeks is not a fair chance to see if your work is going to
sell. I got impatient one time with my work not selling fast enough
and a very helpful and experienced jeweler explained to me that
customers look at jewelry then come back and buy when they have the
extra money or when that special occasion comes along. He was right.
Hang in their and keep talking with your retailers. You may learn
something. I know I sure have!

Rick Copeland
Silversmith and Lapidary Artisan
Colorado Springs, Colorado
http://home.covad.net/~rcopeland/


#6

100% mark-up is pretty typical for retail, so your wholesale price
should be about half of the suggested retail value. This isn’t
always the case, but it’s usually a safe estimate.

– Leah
www.michondesign.com
@Leah2


#7

Evelina, I personally do not believe in splits, set a fair price for
your work and let the retailer set his,if it doesn’t work out find
someone else or rethink your pricing, Karel


#8

We are retailers and we are also designer/craftsmen making 2/3rds of
what we sell. I am solicited often by craftspeople wanting to show
in our gallery. After 25 years at it I can say a few things with
certainty: First, unless I can make keystone I am rarely
interested. Twenty years ago, 60/40 was the standard and I still
occasionally do it if I am dealing with exceptionally labor intense
pieces. However, the economic realities of today (my staff
receives paid medical and retirement), dictate that sort of markup.

If you expect serious consideration please don’t show up
unannounced! Seems like two or three craftsmen show up in the
middle of summer, our high season, expecting to show me their line.
Usually they are on vacation and what the hell, might as well do a
little business! This is frustrating because I am not on vacation,
really am interested but, simply don’t have the time.

The most important things to me, aside from the quality of the
pieces on offer is professionalism. Will the craftsman accept
custom orders, are sizing of difficult pieces a problem? Turn
around time should be prompt.

Payment should also be prompt. Particularly for consignments. We
pay most bills Net 30 but with consigned inventory our policy is Net
10. Craftspeople should not have to chase their money and this is
unfortunately often the case. It was my biggest gripe in the bad
old days when I was consigning and selling to galleries. Jewelers
Board of Trade (JBT) the famous red book provides a comprehensive
list of retailers together with their credit ratings. Unfortunately
it costs a bit to belong but if you are in the business it’s a good
investment. The threat of an adverse credit report can be a
powerful tool.

Richard P.S. If you are doing high quality work, come by and see me
but please call first. www.rwwise.com


#9

I’ll still insist on at least a 60/40 split for consignment. If a
shop wants my work at 50%, they need to buy it wholesale. period. As
for marketing, one of my galleries came up with a good idea that I
put into action. All my pieces are one-of-a-kind, and the stone
identification of them can be a little bit tricky for the gallery
sales clerk. I started doing sheets on each piece using
a microsoft access database. On the left is a picture of the piece (I
take them anyway for the website), and a description of the metals,
stones and process used. I also inlude the retail price (which also
keeps the galleries from jacking the price up). On the right is a
brief bio of me and instrucions for the care of the item. There is
also a small picture of me and my contact I’ve had
good feedback on this so far from the galleries and my retail
customers.

Wendy Newman


#10

Hi, Wendy, I was surprised to read in your description of your
gallery info sheets that they include your contact info, and your
galleries like them. Are you sure they don’t just use them for their
own I have never had a gallery that didn’t remove
whatever tags or stickers I put on work, especially ones with my
contact info. Galleries want the customer to reach you through them,
not directly. No profit in letting the customer buy from the artist!
Noel


#11

I’m sorry, but Richard Wise’s post has been burning my butt all
morning. It’s commendable that he pays his staff medical and
retirement, but how many jewelry (and other) artists are able to fund
thier own IRA’s, never mind paying for the rising cost of health
insurance. I have nothing against any galleries making an honest
profit, but I think 50/50% on consignment is outrageous, with the
possible exception of a trunk show or a short-term show. Can you
imagine running a retail store and not having to pay for your
merchandise? It’s a win/ win situation for the galleries and an iffy
at best deal for the artist. Since I do all my work myself, It’s hard
for me to make enough inventory to sell at shows, let alone fill my
galleries. Many would say, “Why don’t you just mark it up a little
bit?”. Well, I’m a firm believer that my work should be the same
price whether it is in New York or in a rural area. There is such
thing as what the market will bear. I’m not going to overprice my
work at my retail shows, just so I can cover myself at 50%
consignment galleries. Nowadays, I think customers enjoy meeting
the artist at a retail show so they can attatch a face and
personality to the artwork, rather than shopping in a gallery. I
noticed Richard does shows as well. I know many of you Orchidians
make production jewelry or “mainstream” jewelry as opposed to art
jewelry. Could you imagine going to a trade show and having a fine
jewelry store tell you “I want $5000 worth of your rings and chains,
but I don’t want to pay you for them until 30 days after I sell
them”, you’d laugh them out of your booth. Why are jewelry artists
the exception? Do galleries expect them to be bad business people,
willing to except any deal just to get into a gallery? I’ve become
sort of an artist’s advocate lately. Here, in Utah, the standard of
living for many artists is terrible, especially for the Native
Americans. I think 60/40% was fair 20 years ago, and it still is fair
today. You new artists, keep your chins up, set firm policies, and
don’t let any gallery take advantage of you.


#12

I’m so glad to see this thread, as I’ve been wringing my hands over
just this problem the last week or so. I’ve got a store in LA and the
owner wants to do 50/50% consignment. I’m trying to be firm and hold
out for 60/40% (she has not responded yet to this split). I am new at
selling my work and at consignment in general and cannot decide which
is better – to get my work out there even at 50/50%, to just set a
price, or to hold out for 60/40%.

Do any of you have an opinion on whether I should act differently
because I am new to the market?

Thanks!
Jocelyn Broyles
Designer
jocelynbroyles.com
tel. 506.842.2107
fax. 506.653.0073
jb@jocelynbroyles.comFrom: Fishbre396@aol.com
To: orchid@ganoksin.com
Sent: Monday, July 21, 2003 10:06 PM
Subject: Re: [Orchid] Negotiating with retailers

As a gallery owner, if they can't make it with the 40/60 split, then
they shouldn't be in business (just my humble opinion)  60%
consignment, going to the artist.  As an artist, I would only do 50/50
wholesale, and cash at that!

T h e O r c h i d L i s t
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#13

I agree with Wendy Newman and others on this list- it is not
reasonable for galleries to ask 50% on consignment. 50% is
traditionally the wholesale price break. If the galleries were to
purchase a large portion of the artist’s inventory at 50% that would
perhaps be reasonable, but to take 50% and expect the artist to
carry the receivables for an undefined length of time is not
reasonable.

Personally, I cut my own stones (even rockhound some of them in the
desert,) and do all of my own smithing. Splitting the cash 50/50
with a gallery does not seem to me to be a division of profits
proportional to the division of labor…

Still, more and more galleries are hopping on this 50% bandwagon. So
what are we going to do about it?

I recently visited New Mexico, and saw that some artists there were
taking matters into their own hands, by forming Artists Co-ops. A
recent Googling for Artist’s Co-ops indicates that these
arrangements are proliferating across the US. They basically
function similarly to a food co-op, except that they are organized
and staffed by producers of goods rather than purchasers. Co-op
members jury in the new members. Members donate a day or two per
month to staff the co-op. Financial arrangements differ, but there
is generally an annual fee, and the members get 80% to 100% of the
sales price of their goods.

If we want protection against exploitation, we need to organize!
Establish cooperatives or collectives locally. Figure out what’s
needed to organize and promote artist-run shows. Open and run
galleries for the benefit of the artists. If we can establish
business arrangements which afford artists a higher percentage of
the profits, galleries will eventually be forced to follow suit.

What do you think?

Lee Einer
Dos Manos Jewelry
http://www.dosmanosjewelry.com


#14
 Could you imagine going to a trade show and having a fine jewelry
store tell you "I want $5000 worth of your rings and chains, but I
don't want to pay you for them until 30 days after I sell them",
you'd laugh them out of your booth. 

Actually, Wendy, you’d perhaps be surprised at just how much retail
jewelry is sold by manufacturers at pretty much this sort of terms.
Less now, perhaps, than it used to be, as many manufacturers have
tightened their belts a good deal in terms of financing offered, but
it’s not uncommon to send goods on memo, which amounts to exactly the
terms you describe. And it’s not uncommon for stores to take 30,
60, or more days to end up paying for orders we’ve delivered. The
manufacturer I work for (www.sholdtdesign.com) sells nationwide to a
wide range of stores, and more than a few are in the habit of
ordering just what they need to fill orders, the orders taken from
showcase samples set with cubic zirconias. And then we’re not
uncommonly on the phone with them 90 days later, still trying to get
paid. If Richard pays you within 10 days of the sale, he’s better
than most of our retail stores. Plus, these days, retail markups
are generally more, often considerably, more, than 100%. We may mark
"keystone" prices on our tags when we send them, but most of the
stores mark it up more than that. 2.5 X or 3 X markups are common.
We don’t set retail prices. Only our wholesale prices. Now, this
differs from your situation in that these generally are sales of the
jewelry to the store, not consignment. But for the most part, 60/40
represents a reasonable average of retail pricing in mainstream
jewelry stores. More than a few stores are marked up higher than
that.

If a gallery is selling your work fairly well, by which I mean the
turnover rate is a reasonable number of months, then in economic
terms it doesn’t make as much of a difference to the stores
profitability whether they pay you after the sale, or pay for
purchased inventory before the sale. A matter of months, hopefully.
At today’s interest rates, this isn’t a big difference in costs for
the inventory, and the stores still need to make about the same
profit margin on the sale if they are to survive. Though you, and
other artists selling their own work may be working “closer to the
bone” in terms of making ends meet, it’s not always obvious that the
galleries and stores you sell to often have to also work very closely
to control their costs. Even with high seeming markups, the usual
low daily volume of sales in most jewelry stores (compared, for
example, to high volume stores like grocery stores), mean that the
actual daily profit earned from those sales may not be all that high,
yet must pay all the costs of the gallery. That includes salaries,
rents, insurance, and all the rest. And while you may, as many of us
do, bemoan our own difficulties in getting benefits and insurance and
the like, if Richard didn’t offer it, he’d have a hard time finding
good help, which would mean poorer sales. It’s in YOUR interest as
well, that he treats his employees well.

And as regards controlling retail prices to be the same in different
venues… Why? how to you justify this policy considering that the
rest of the world doesn’t do things this way, nor do customers expect
it. If you go to a lower rent district in a small town, you’ll
expect to pay less than if you go to the posh high rent districts in
the center of the big cities. By asking your large “downtown” big
city stores to sell at the same prices as the small hick town stores,
you’re hampering either one of them, or both. The small rural or
middle america stores pay less rent, and perhaps lower wages, than
some of the bigger better known stores. Shoppers expect to pay more
for the same items in such stores, and may even WANT to, though they
won’t quite realize it. Don’t fight this. It doesn’t help you any
to try and fight the way the world works on this one. Instead,
control your own prices to the stores. your wholesale price. Even
this may change depending on the relationship with the store.
Stores that pay you quickly, and move a lot of your work quickly,
make you more money, and perhaps can get a lower price than stores
that keep your stuff a long time, or take longer to pay. What they
pay for the work is what you should worry about, since it determines
your profitability. Until you get to the point where your own name
recognition among the public exceeds that of the stores where your
customers are buying your work, those buyers are basing their price
expectations on the store, not your reputation. And until you get
to the point where the retail buyers are finding your advertisements
with your standardized prices in them, there’s no reason to try to
control the retail prices. At least, that’s my take on it. Doing so
only places restrictions on your galleries/stores that might reduce
your sales. There are limits, of course. I would think it
appropriate to negotiate what markups a given store will use, and
expect them to stay with it. And things like whether they can offer
discounts, or place your work on sale, etc. But I think it’s not
practical to expect all your work to sell for the same price
nationwide, no matter where it’s purchased. maybe I’m wrong on this,
but it just doesn’t seem practical or needed to do that.

cheers
Peter Rowe


#15

Lee, and all-- I’m not at all opposed to cooperative galleries, but
my experience with them is not encouraging. I’ve been invited to join
a few, and when I did the math, comparing the value of the time I
would spend there, including travel time, with how much work would
have to sell each month before it became profitable, it has never
come out at a level I realistically thought would happen at that
particular location. No doubt there are some with enough artists and
enough sales to be a good bet, but not one I have found. And, of
course, they are by nature local, which is a significant limitation.
I love the idea, but I think it is very tough to make it work.
Generally, I believe it works better to pay sales people and
managers to do their jobs while I do mine than to depend on artists
to be good managers, bookkeepers and salesmen, especially for work
other than their own. That’s what you pay that 50% for, and you
frequently get your money’s worth, in my opinion. --Noel


#16

I believe someone already said something like this on this thread
but I think it needs to be resaid. As wholesalers (whether
consigning or selling) you need to establish a price that you can
make enough money on to run your business, including salary and
profits (and if you are doing a lot of consigning the cost of
carrying the extra inventory all the time). Once you establish that
price you should simply offer your goods to anyone interested at that
price. Let them deal with how much they want to mark it up.
Incidentally, it may actually be illegal to try to force someone to
sell something at a price you set as well.

Daniel R. Spirer, GG
Spirer Somes Jewelers
1794 Massachusetts Ave
Cambridge, MA 02140
617-491-6000
@spirersomes
www.spirersomes.com

End of forwarded message


#17

Peter’s recent comment ". . . artists selling their own work may
be working “closer to the bone” in terms of making ends meet . . ."
brought to my mind aniother topic regarding artists, pricing and
galleries. Let me begin by saying it is a privilege to have the
opportunity to hear from the many perspectives represented here. I
respect that there are varying models and needs within our special
community. It is with this attitude that I open the discussion. When
an artist sells their work through galleries they receive perhaps 50%
to 60% of the retail price and must therefore set their wholesale
prices at a profitable level. Galleries expect the artists they
represent who also sell their jewelry elsewhere to charge relatively
the same retail price levels so as not to undercut them. Why would a
client or prospective client purchase your work from a gallery at
full retail when they could purchase it directly from you online or
at a show for less? Artists having no gallery affiliation and
selling their own work from their website or at shows will not have
the same incentives (as gallery-represented artists) to set their
prices at a similar level. Indeed, it sometimes appears to me these
prices may be 25% to as much as 50% lower than prices for similar
work offered in galleries. Such artists certainly have no
obligation to set their prices any higher than they need to get by
while maintaining a website or attending shows.

Conversely not all jewelry artists are able or willing to manage
production and also maintain a website or travel and attend shows to
market their work. I would appreciate hearing about personal
experiences and points of view. about aspects such as: - pricing
rationale as pertains to independently marketed vs. gallery
represented artists - whether the buying public is familiar enough
with galleries to be aware of any pricing differences and what are
their perceptions and expectations - if there are artists now
selling through galleries who feel they might do better without the
"middle man" - strategies galleries use to retain their best artists
and preserve or increase their patrons and collectors Thank you for
your replies. Pam Chott Song of the Phoenix


#18

Hi, Jocelyn-- I wouldn’t say you should act differenty because you
are new. I would say, you have to deal with the real world. I live
in the Chicago area, and have had galleries in an assortment of
other cities, and I have never yet managed to get a better split
than 50-50. Not that I wouldn’t like it! I agree this is a better
deal for the gallery/shop than for the artist, especially when they
don’t keep the things looking nice, so they don’t sell and you get
them back tarnished and fingerprinted and have to rework them. But
the only places that offer 40/60 seem to be the ones least likely to
sell, and 60% of zero is still zilch.

I try to get my work into places that look prosperous, with
well-maintained and displayed work, company I wouldn’t be embarassed
to be seen with, so to speak, with staff/owners who are pleasant
enough and seem to know what they’re doing. If the work then turns
over at an acceptable rate (your judgement entirely), then I stay. I
usually allow 3-6 months before rethinking, unless something goes
really wrong.

As with everything, you can get burned. A fellow-jeweler had a
gallery for a while, and simply failed to return my work when she
closed. Maybe she had sold it and not paid me, I don’t know (it was
a long-distance affair, conducted by phone and mail). She has the
balls to smile ang greet me sweetly when we meet at shows, like she
hadn’t ripped me off. Whew, I guess I’ve been wanting to vent that!

Anyway, the point is, if they treat you right and sell your work,
you can live with 50%, if that’s what there is. If they don’t, the
percentage is irrelevant–all IMHO. Good luck! --Noel


#19
I would appreciate hearing about personal experiences and points of
view. about aspects such as: - pricing rationale as pertains to
independently marketed vs. gallery represented artists

“Independently marketed” means what; You are selling directly to the
public at a craft show, on the web, from home through advertising in
a newspaper or magazine? The fact of the matter is that it costs
money to sell your product. That is why the retailer gets a cut; It
costs money and is (usually) risky to sell stuff. So, if I do a
craft show and risk my money on a booth, travel and time outside the
studio, then I charge the retail price. Same goes for any other kind
of selling to the public. If, however, I sell to a gallery or store
I don’t have to (usually) take the extra risk and so can sell the
work for less.

Personally, I have no self control when it comes to making jewelry.
It has taken every ounce of discipline to make a line of work that
stays in the $50 to $250 range, wholesale. That work I will expect
more stores will risk buying. However, the $500 to $4000 (wholesale)
collection is another story. It is really hard to sell the higher
end work at craft shows and on the web (and has been hard to sell to
stores as well the last couple of years). But the higher end work,
especially in the $2000 and up range simply doesn’t sell anywhere but
in a retail store. So, as much as I hate consignment, lately, when
I have a substantial lay over between shows (like now…no show until
the end of Sept) I send my work out to galleries.

I choose my gallery reps carefully. I set a wholesale price and
then the gallery sets the price they need. It’s illegal for the
manufacturer to set theretail price, that’s why it’s called a
suggested retail price. The stores I

sell to are usually in very high traffic, high rent areas that do
lots of advertising, either local or regional. Most of the stores I
deal with either are now or were creative artists themselves who for
one reason or another decided to do retile instead of manufacturing,
bless their hearts, as we say here in the South. In other words they
have a very high commitment to artists. They also have high costs of
business. I don’t expect these stores to give me more that regular
wholesale and I don’t expect them to pay me late either. Consignment
is a partnership and lot’s of trust is needed, and research.

whether the buying public is familiar enough with galleries to be
aware of any pricing differences and what are their perceptions and
expectations

This depends on the work, the store and the buyer. Some buyers will
jump through hoops to get a couple dollars shaved off the price.
Others just want to know they bought something from a gallery with a
prestigious name or locale. Honestly, I would never disrespect a
gallery that carries my work by offering to sell a piece for less to
a retile client, especially if that client is in an area where I have
a gallery rep. It is simply bad business and shortsighted (besides
being rude). This is where your research is needed. How hard does
the store work to present the right atmosphere to the buyer? Does
the store make it more advantageous for a client to buy from them or
is the retailer so inept that the buyer thinks they can get better
service from the creator? I wouldn’t do business with the latter
store.

if there are artists now selling through galleries who feel they
might do better without the "middle man" 

Generally, I want to make jewelry, not sell it. I want to spend
every waking moment thinking about how to make that next great piece,
working out the details in some procedure or sitting at my bench
actually making something. I don’t want to spend my days on the phone
dealing with a client who can’t decide on the $85 earring or the $95
ring! For me to make jewelry in this manner I need to sell my work
in different areas of the country. Because I can’t find clients to
sell to in NJ, I need a rep there who can do it for me.

Locally, I do need some retail to survive. Here’s what I do. I
have a store about 25 miles away who has an exclusive in his local
area. But I have avoided getting a rep with an exclusive territory
in the city where I do a show every year. So the answer is relative.

strategies galleries use to retain their best artists and preserve
or increase their patrons and collectors 

The best thing a gallery can do to retain an artist is to sell lots
of their work and pay on time or early. Sometimes they may do some
advertising of the artist’s work, but this is as much to help
themselves as the artist. What they do to preserve their patrons or
collectors is not my really my concern. I make sure the store has a
strategy and history before I put my work in the store. If a store
has an artist who has sold to lots of people in their area, then the
store could do a trunk show where the artist brings all their work
for a short period of time. But this only works when the artist has
a real track record.

If a store is interested in getting your work on consignment you
have to get references from artists they carry. What is their
experience? How do they pay? Does the store respect the work (not
loan it out or abuse it). Where is the store? Why do the owners
think they can sell it? How much do they think they can sell a
month, year? If you give them $1000 worth of work can you expect
$100 worth of sales per month (really the minimum standard for me)?
Sometimes all it takes is word of mouth from a fellow artist.
"you’ve got to send your work to So and So gallery. They are great"
Other times you really have to research it.

Whew! Goodbye, Larry


#20

I deal mostly on consignment and I love it. I have the freedom to
design and make what I want and the galleries are more likely to
show the more unusual pieces because there is no financial risk
involved, I set my price and they markup whatever they need, they
get to deal with customers all day long and I get to work, and they
get the upkeep on a beautiful store while I only have my (beautiful)
studio to look after. Works well for me, Christine