Back to Ganoksin | FAQ | Contact

Wholesale Price


#1

Thanks to all for the pearls of wisdom. I am finally going on the road
more aggressively to sell my work and have a pricing question. I have
marked all of my pieces with my “suggested retail price”. My
expectation is to ask for 67% (2/3) of that price for a wholesale
price to galleries and shops here in South Florida. Am I approaching
this the right way? Some shop owners have offered only 50% and insist
this is customary. I can’t afford to work for such a wage. Should I
up my SRPs? What are your experiences, suggestions?

Thanks in advanced for any help with this less joyful aspect of the
art world…

Lise (Miami, FL)


#2

Lise, Rather than messing with a “suggested retail price” just charge
what you have to (to make a reasonable living) for wholesale. It
will then be up to the galleries to determine if they can sell the
pieces at their normal markups. Legally you can’t set their prices
anyway.

Daniel R. Spirer, G.G.
Spirer Somes Jewelers
@spirersomes
www.spirersomes.com


#3

All of my wholesale customers expect to pay 50% of what I retail my
jewelry. Their have been a few that expect to pay less, they mark it
up 3 times. A suggestion is determine what you will wholesale your
work for and give them that price. Good luck.

Sharon Perdasofpy


#4

Anytime you attempt to mark a product so that you can show it’s
retail price, you will leave yourself open for discussions on
markups. Simply mark them with what you need to receive, covering
your cost, expense, and a fair profit. Leave it to the shop to
decide what markup they need to put on it to cover their cost,
expense and a fair profit. Some shops will and can sell at three or
four x markup while others will have trouble at 1.5. That is their
problem, not yours.

By the way, notice I kept saying expense. It cost you money to drive
to the shops, mail letters, make phone calls, have lights, repair
equipment, buy new equipment etc. You need to make sure your prices
reflect this expense.

Good luck with your line.

Don


#5
Am I approaching this the right way?  Some shop owners have offered
only 50% and insist this is customary.  I can't afford to work for
such a wage. Should I up my SRPs? 

Dear Lise, Since 50% IS customary, you need to rethink the way you’re
pricing your work. Whatever formula you use, it should get you to a
WHOLESALE price and this wholesale price must include a profit margin
(or you’d be right that you couldn’t “afford to work for such a
wage”). Once you’ve arrived at this wholesale price, you double it to
obtain the retail price. Then, when the store pays you 50%, they’re
paying the wholesale price that you have predetermined will pay for
your materials and labor plus a profit margin. This is the only way
you can run a profitable operation.

Beth


#6

I am located in Ft. Myers, FL. and no matter where I’ve gone across
the USA 50% is the norm in most “jewelry Galleries” ( the major # of
these are really retail jewelry stores) . They are used to 50% memo,
be careful however, they have no investment in your merchandise, so
often no enchantment to move it. Then there are art galleries which
many of which will give you 60%-- - - they however, not being
jewelers, often are not familiar with your media - - - a real
conundrum. I have found that raising the srp to accommodate a 50%
mark up will work (even though the price seems a bit on the high
side). If your pieces are in the right galleries they will fetch the
price. Otherwise rethink your creative processes and include the
retail factor before going into the actual building mode. Sometimes
upgrading or downgrading materials on certain projects to get into
the retail “ballpark” works for me. Not a fun aspect of the creative
end of jewelry work, but often necessary. There are other
considerations, but I’ sure someone will hit on them or e- mail me -

  • -Marty

#7

i get a lot of place that triple the wholesale price. my store
prices are 5 - 7 times my cost price- price depending on the piece.
For speciality items that i do not sell anywhere else, sometimes I
only triple my cost because they are a hard sell to begin with but
look really really cool in the shop. When wholesale clients may
comment on my wholesale prices I tell them it cost a little more
because I do not exploit child labor in third world countries to
manufacture my line. That ususally shuts them up!

DeDe


#8

Lise, Having worked both sides of the counter, I can tell you that it
is customary for most small shops (craft or otherwise) to buy an item
then set the retail price at twice that. However, many shop owners
are realizing that should not be a hard & fast rule. After all on a
$10 item, making $10 is barely going to pay the rent, salaries and
the rest of the overhead…on a $400 item, a lot of owners realize
that accepting a gross profit of $350 instead of $400 isn’t going to
hurt their cash flow if it makes the sale. On the other hand a lot
of shops will sell more $10 items in a day than $400 items.
Therefore, you will probably find that the lower priced your items
are–the more interested the stores will be, but the more insistent
they will be about buying them at half of retail.

The other concern I’ve run into wholesaling my work is the question
of whether customers will be able to purchase the same work the store
is having to sell at $20 for $10 is they purchase direct from artists
or for say $12 at a nearby store which has accepted the item on
consignment and therefore takes only 20% markup. Don’t forget that
the shop owner who buys outright has more at risk then the
consignment shop owner when it comes to inventory.

Because I am very interested in establishing a wholesaling presence,
what I have done is set my wholesale price as the absolute lowest
price I can accept for a piece. When I sell at craft shows and
consignment shops I set my prices to reflect a retail price
comparable to a typical stores markup, so that (aside from sales) the
same item sells for the same price nearly everywhere it is shown
unless a particular retailer feels they can sell the piece for more
in their particular area…in which case more power to them!

I also have found that it helps to develop a “wholesale line” . At a
craft show, I will bring a few of these items, but basically carry a
separate line for shows. When approached about wholesaling these
items…I tell them up front that the retail price IS my lowest
price…again if they feel they can get more for them, they will buy.

Sorry this post was so long…

debW
Reliance Forge
Reliance, TN
http://www.relianceforge.com


#9

You should set your wholesale prices so that they are 50% of your
retail. Then if you encounter a gallery that has a 60/40 split
(which is more common than you think) the extra is gravy.

Dianne Karg
Toronto, Ontario
www.wrapturewirejewellery.on.ca—


#10

Lise, I live in the Ft Lauderdale area and have over the past few
years placed items in a number of shops. In each case its a 50/50
deal. I give them a copy of my inventory with my price on it (what I
want to get), they then mark it with their retail price. Sometimes it
works, sometimes it doesn’t.

Thing is, you have to arrive at a price that will suit your
requirements and then find a shop/gallery that is willing to handle
the resulting retail price range. One shop recently told me they
loved my stuff but the most expensive thing in their store was $49.50
and, selling to the tourist trade, could not justify items up to $200.
Needless to say, we didn’t do business!

But keep trying, you will find the right niche!

Cheers from Don at The Charles Belle Studio in SOFL where simple
elegance IS fine jewelry!


#11

“It cost you money to drive to the shops, mail letters, make phone
calls, have lights, repair equipment, buy new equipment etc. You need
to make sure your prices reflect this expense.”

Has anyone been able to break down, or figured how to determine, the
cost of these items?

Regards,
Alan & Jeanette
A & J Jewelers
P.O. Box 963
Winder, Ga 30680
AlanNett@JewelerMail.com


#12

Normally you would take the cost of materials, labor, etc. and
multiply that by 30 (30%). This is considered "cost of doing business"
which should cover rent, utilities and incidentals (mailing expenses,
letters, phone, etc.). Then you add the profit you want to make to
that figure.

yours,
ellen


#13

If they want 50% so be it . They don’t know what you have so raise
the price to make the money hungry ones happy . 50% 75% just tell
them what you need. What they realty want is for you to GIVE IT TO
THEM ! Most do price there work at 50% . but they can price it
where they wont. your price is only recomened anyway. Don in Idaho.


#14
    "It cost you money to drive to the shops, mail letters, make
phone calls, have lights, repair equipment, buy new equipment etc. 
You need to make sure your prices reflect this expense." 
Has anyone been able to break down, or figured how to determine, the
cost of these items?

Alan & Jeanette, your quote sounds like a statement that I made a
week or so back. When I started my store in 1994, I started it with
the though of “get the revenue coming in then worry about controlling
expenses”. I had been exposed to this thought process in my previous
corporate life as a service cost estimator and I assumed it would
apply to operating a store as well. It took me a couple of years to
find that you need to worry about expenses from the get go. What I
found is there an off the shelf answer for these cost.

Your expenses will be unique to you, so you alone can determine what
the right mark-up will be to cover them. If you are just starting
business, talk to anyone that is already in business, jewelry or not,
and see if they can give you some that may apply to you
situation. Rent , insurance, and utilities are somewhat common. If
you have been in business for a year or more, you should already have
the you need, if you have been keeping good books.

This group of expenses that you ask about is referred to as “Fixed
Cost” This means that it doesn’t change much if you sell $1000 or
$100,000 worth of goods. It is easier to cover it your sales are on
the high end, difficult to cover if you are on the low end.

Lets take an example. The last full year that I had my store open,
my “fixed cost” were around $45,000. That included rent, insurance,
electricity, phones, alarm system, cleaning, repairs, office cost,
postage, bank charges, loan interest, etc., Etc. Etc.

Now lets take a look at your “variable cost”. These are your job and
sales related cost. If you don’t sell anything, you don’t accumulate
any cost. This would include the cost of your supplies such as
solder, gas, gold, stones, etc.

Ok now lets do the math. I need a “profit” on my variable cost to
cover my “fixed cost”. I design and manufacture a piece of jewelry.
The cost of the gold, the stones I used, etc cost me $350.00. It
took me about three hours to put this piece together. I put it up
for sale for say $1000, but I know that I will need to be able to
discount it for a special customer or clear it out at a real price of
$700. I’m going to make $350 profit on this piece. Not bad, $50.00
an hour for my time and investment. I sell one of these every other
day. I am doing well. AM I?? Well if I can sell three of these a
day I am. If I can sell one every other day I am not. I will need
yearly sales of $90,000 ( this is $300 per day for 6 days a week and
50 weeks a year) just to cover my “fixed expensed” at a Keystone
markup. Oh yes, I haven’t paid for food and home for me yet, so at
$90K sales, I’m going broke fast.

So what do you need to be well. Lets assume that in your area, if
you were working for a wage, you could have a house, a car, and food
on the table for say $40,000 a year. By the way, if you are
employed, you get vacation time, medical benefits, unemployment
insurance, and your employer pays into your FICA . So when you add
in all of these “givens” for an employee, your actual profit needs
from your business is around $55,000 a year to have the same real
salary as an employee. (please note that these are not actual
numbers, but an example. you will need to determine what the "real"
numbers are, but they are close)

Now we are at the point of needing sales of $90K to cover expensed,
and an additional $110K (Keystone sales) to cover a living wage for
one. Your sales need to be around $200K per year to keep healthy.
As soon as you add employees, bigger store, Etc, up goes the break
even point again. Oh yes, do you want to grow the store, add new
inventory, change the show cases?? Some body has to pay for that
too, and you are looking at that somebody in the mirror every morning
when you get ready to go to work. More sales revenue please. These
are the things you need to consider when calculating your cost.

One more point. Just remember that $100 in the cash register isn’t
$100 in your pocket. The good Governor wants his sales tax and he
will not be put off. The President wants his income tax as well as
the self employed tax and FICA taxes and he too will not be put off.
These need to be subtracted from your “sales”.

As I said before, your cost will be unique to you. If you are just
starting out, put together as comprehensive a list as possible of
your estimated cost and then add an additional 20 to25% to cover
surprises. And there will be surprises

What I am pointing out here is not a bleak picture of our business.
It is a fact in any business. If you don’t acknowledge these facts,
you will go broke and go out of business. If you understand them,
you can manage your expenditures and cost, stay in business, and in
good time thrive. Knowledge is power. A business isn’t a lottery.
Luck plays only a little part in it’s success. Oh yes, I closed my
store after five years. I didn’t go broke, but I didn’t thrive
either. It was a lesson well learned I think, and a most enjoyable
experience. One I would do again if I were younger.

An interesting side note. You can take classes in Gemology, Jewelry
Sales, Goldsmithing, etc. All of the technical aspects of the trade
but none of the major schools that I know of teach the business
side. Humm, an opportunity here??? Paul??

Don


#15

Hello Don, Now I’m on my soap box right next to yours! You made some
very valid points in your discussion of all the “real” costs of doing
business - ANY business. Your final statement that all kinds of
schools teach the techniques and knowledge for creating jewelry, but
none make it a point to incorporate the necessary business courses to
make intelligent plans and decisions when in business for yourself.
I’ve voiced the opinion that our University business school should
create a couple courses directed to people who are likely to be in
business for themselves. Specifically those in entertainment
(including professional athletes) and fine arts. The initial course
should be an overall view of business bookeeping and taxes, and the
second on management techniques and simple contract law. So far, no
interest. (We need one of our pro-football player alums to come back
and voice the concern - THEN someone would pay attention.) It’s
truely a shame to send fine arts graduates out into the cruel world
missing this relatively simple, but vital knowledge! My $.02 Judy in
Kansas, where I hope that the last frost has froze and we can plant
tomatoes without fear!

Judy M. Willingham, R.S.
Extension Associate
221 Call Hall Kansas State Univerisity
Manhattan KS 66506
(785) 532-1213 FAX (785) 532-5681


#16

Judy, Some schools do offer courses like that! I am currently taking
classes at Columbus State Community College that are focused on Small
Business Management. The school also has the regular business
management stuff but these classes are specificly focused toward
people who want to run small businesses. Almost all of my classes
have been taught by people who run their own businesses. Very
informative!

Shane Morris


#17

Hi, I just took one such course, in San Francisco. It wasn’t jewelry
specific, but for any entrepreneur in business for themselves. It was
a 3 months intensive and was fantastic! Maybe they can give you
on starting a similar program in your area. They’re here:

As far as wholesale goes, you need to set your wholesale price first,
factoring in materials, overhead per hour, labor per hour, plus
profit. That’s your wholesale price. Doubling that is standard for
retail but some galleries will choose to triple it. If you’re not
profitable at your wholesale price, you need to re evaluate.

Amy O’Connell
Amy O’Connell Jewelry
http://LapidaryArt.com


#18

All, This thread on pricing is very interesting , but I think that it
is somewhat oversimplified. The assumption that there might be a
precise formula for mark-up is pure bunkum. Most large businesses
will charge what the market will bear. I had a chat with a very
successful chain owner recently who confided that he marks up SEVEN
times ! Drug stores in our area charge an average of $3.75 for watch
batteries. I buy watch batteries ( top quality ) for as little as 19
cents each in lots of a hundred. I’m quite certain that the large
chains buy them for somewhat less. So here we are talking about
twenty times mark-up or more ! Similar mark-ups are common in the
stone market, especially if you process your own. ( Diamonds excepted
) It would be sheer folly to pass up an opportunity to make a higher
mark-up if the market will bear it ! Looking back on my own
experience, I have always tried to mark up three times using the
formula of 1/3 for cost of goods, 1/3 for operating overhead and one
third for gross profit. This is a simplistic formula, but it usually
works nicely. In the jewelry business you MUST make a decent profit
inasmuch as you cannot expect to do volume business and your
operating overhead is often higher than average. It follows that you
must always seek ways of enhancing your profitability by reducing
overhead wherever possible. You must shop for supplies and raw
materials because the spread varies enormously amongst suppliers. The
mark-up in many consumable supplies ,such as cratex wheels,is
astronomical. You may have observed that many catalogs don’t really
offer a good break on quantity. Other suppliers may not PUBLISH their
quantity breaks and, therefore, you should dicker with them. You will
be surprised at what a little haggling can accomplish ! Many of us
come from the other side of the fence…we grew up with notions
about value and profit that were consciously or unconsciously derived
from a media that beat us over the head with commercial propaganda.
Lying,deception and distortion are an integral part of advertising.
There is no morality when it comes to commerce. It is a simple matter
of whether what one does will keep you out of court. Why else would
many corporations regularly get fined for shady practices !
Telemarketing is loaded with scams and these scams sometimes are
being used by the largest corporations. Unfortunately, when one of
these companies gets into trouble with the feds the resultant fines
are a mere “rap on the knuckles” For those of us who are small time
operators, we value our obligations to other human beings. Our
customers are people like ourselves who want to get a fair shake. Our
customers are friends and, as such, will want to have you
succeed…they will recognize your need for a profit and will feel
good about keeping you in business. This simple relationship is
probably the greatest reward of being in business ! Ron
at Mills Gem, Los Osos, CA.