Wholesale & Retail Pricing

Stephanie_Swanson · August 23, 2005, 3:03am

I was wondering what you all think about my situation- I read this
forum religiously and have posted when I can help. I love the mix of
retail trade jewelers and independent artists, so I thought someone
might be have advice for me. I am a retail jeweler working in the
trade for 13 years. I am an artist first, with that background in
education, and am now home with my two children. I have had a great
response in art shows and am starting to get very busy. An obnoxious
gallery owner came to my retail booth at an art fair yesterday and
was trying to buy wholesale in front of retail customers! You can
imagine how uncomfortable that was… I eventually made it though
with tact, but will never sell to her again due to her rudeness. But
I am in the situation now that I must decide pricing and if I want
to sell to stores wholesale or continue to do fairs and customs until
my children are older. Should I mark up the jewelry for the stores to
recoup some of their commission? I’d like to keep my pricing the same
for continuity, but am finding the customer base will pay differently
in different locations. They would pay more in a trendy boutique than
at an art fair. I just need the money, so I am pricing my product
well enough that it will not be thought that it isn’t something
special, but low enough that I can move it. Does anyone feel
comfortable sharing their experience with me on this subject?

Any suggestions would be greatly appreciated.

Thank you,
Stephanie Swanson
(@Stephanie_Swanson)

Heather_Matwe · August 24, 2005, 2:17am

Hi Stephanie (and Orchid Group),

I have had a similar experience to what you are talking about. I too
have wondered what is the best why to price my work in relation to
selling to retail customer as well as consigning to galleries. I have
had artist groups tell my that I should use the same prices as I
would for galleries, but galleries tend to take a 50 % commission,
causing the retail value to be double. I have priced my work at the
value I need to make back ( labour and materials, plus a 20% overhead
on materials only) and still I feel that I am under pricing myself. I
have had it suggested to me to increase my price from there, bring it
closer to the gallery price but keep it low enough that it pays to
sell to customers my self. I would love to hear also what the general
consensus is about pricing and what others find is a reasonable
pricing system. Look forward to hear from everyone.

Sincerely,
Heather Matwe

dgeller · August 24, 2005, 2:18am

Hi Stephanie

It’s a numbers game. As the manufacturer you are the “low price
leader”. When you get into retail, usually you’re nicely priced as
you MADE IT. If a store buys it from you, they will about double it.
In most cases whatever you’ve been selling retail for will have to be
lower than what you’ve been selling for. Then the retailer marks it
up.

This is the world.

But if it cost you $100 to make and sell it for $200 and you’re
happy, fine. 5 sales a week will net you $500 in gross profit.

If you sell wholesale, you’ll probably sell it for $150 and the
retailer will sell it for $300, lots more than you did. It just has
to be this way.

But run the numbers. At $50 profit per item rather than $100, you’ll
have to MAKE and sell twice as many (10) to get your $500 profit for
the week.

Twice as many units, give or take twice the time (maybe 3/4) and for
sure you’ll buy more supplies.

You might look at the numbers and say

“I can’t sell for less than $175, I just can’t”

Then that’s just the way it is.

And you’d be smart on the retail end to raise your price higher than
$200 also, especially if your work will be in other galleries. You
don’t want a Stephanie piece to be in one shop at $200 and another at
$300.

Try selling retail at a higher markup.

Let’s look at the numbers. If you sell 5 pieces at $200, your gross
profit is $500.

If you sell the item for $300.00, selling 5 pieces grosses you
$1000, $500 more!!!

But what if folks won’t pay (they probably will), but again if you
NEEDED to gross $500 for the week, you’d only have to SELL 2.5 pieces
a week, not 5.

If you sold it for $275, you’d only have to sell 2.85 pieces a week.
So raising your prices means you’d only have to make and sell 3
pieces rather than 5.

More time at home and it would give you the leeway to wholesale.

David Geller

JewelerProfit, Inc.
510 Sutters Point
Atlanta, GA. 30328
(404) 255-9565 Voice
(404) 252-9835 Fax
david@JewelerProfit.com

Noah_Ark · August 24, 2005, 2:24am

Stephanie,

My suggestion is that you price your pieces equally no matter where
they sell, because, as you say, they will sell for more in some
locations. If a gallery wants to carry your work, they can either buy
it at going price, or write a commission contract

Peace Richard

Dennis_Loss · August 24, 2005, 2:30am

Stephanie, this is always a hard nut. Can you make a living selling
at wholesale prices? Can you fill order after order knowing that
someone else is making the major profit off of your labor? Do you
want to deal with rude clients like the gallery owner? OR do you
like selling your work directly, and meet the folks who buy your
work?

Wholesale is just that, you sell at half price. Most galleries mark
work up 2.1 to 3 times what they paid for the pieces. They need to,
in order to pay the rent, salaries, etc. However, they often get rich
at the same time at your expense. IF the gallery or retail shop
treats you well, pays on time and moves a lot of your work, then
perhaps they are worth it. I have worked as a artist jeweler and have
worked in a couple of shops. My experience was that the owners
thought of the ‘artists’ as dirt. They didn’t pay on time and didn’t
bother to show the work well. They made more money selling major
lines that had branded images. They only had ‘artists’ work in the
stores for show and to look more ‘arty’ than they really were. People
in retail are just that they are merchants. There is nothing wrong
with it, but don’t expect to find your next best friend. It is
business.

Therefore, you have got to look out for your best interests. Go up on
your prices, sell as high to retail as you can. If they want to buy
your work they will because they know their market and they can
decide how much they can sell, by deciding their own mark up. If you
haven’t sold wholesale yet and are making a living, then don’t shoot
yourself in the foot and allow someone else to skim off your profit.
You have to control how much money you can make off of your work and
how much work you can produce. Don’t be flattered that someone likes
your work enough to let you sell it in their store. They like it
because other folks buy it and they think that they can sell it. I
hope that I don’t sound too mean spirited, the jewelry business is a
business. Retail works buy buying cheap and selling high. Art jewelry
is often another breed all together, it is one of a kind or small
series work. Meant to be appreciated by a few. If you can keep doing
that and make a good living don’t change. If you need to make more
money, try the internet first or find a product that you can make
cheaply and quickly as 'bread and butter’to sell to stores. Moving
more money around is not the same thing as getting to keep more
money.

Good luck Dennis

jennifer_friedman · August 24, 2005, 2:30am

Stephanie,

I am so glad you brought up this issue. This has happened to me
before and I just don’t know what to do with wholesale gallery owners
who want to talk business in front of retail paying customers. I have
asked them to please call me when I am in my studio and their answer
was either I am buying now or not. so, I let them go. I just don’t
understand the lack of professionalism here and their insistance on
making a point of the “wholesale price” in front of the retail
customers.

So, like Stephanie I am asking for help with this too.

Jennifer Friedman
@jennifer_friedman
in Ventura, CA

Ed_Cleveland · August 24, 2005, 2:33am

I’ve begun selling retail (vs wholesale only) and both revenue and
profit has tripled this year. The business may have folded otherwise.
However, I feel keeping the price structure is important. Pietersite
is our retail winner and markup is 100% - 150%. Most trade members
are familiar with the word ‘keystone’ so if the public is present
during the sale it is easy to convey your message.

Many well recognized gemstone dealers are selling both wholesale &
retail and their pricing difference in many cases is a poor 10% or
20%. I would like to know if this is affected business? I do know
this traditional separation has become very cloudy. I suggest finding
a comfortable profit margin/pricing structure and keeping things
consistent. This will help prevent mistakes and cause less stress on
the mind.

All the best,
Ed Cleveland
303-882-8855

John_Donivan · August 24, 2005, 2:52am

Oh, what a wicked web we weave —etc. I didn’t actually read a
question in your msg. I get the point, though. I have written this
before, but it bears repeating.

The formula I was taught for pricing is this -

 cost (COGS) times 4 = retail. 
 1/2 of retail = wholesale. 
 1/3 of retail = jobber (high volume). 
 cost + 20% = very high volume.
 cost plus 20 works out to 30% of retail.

Don’t forget that you are two people - you are labor, at your bench,
and you are sales out on the road. Part of cost is labor, and you
need to price it as though you were paying someone for making it -
this is proper, plus it could happen that you will pay someone
else, down the road. After you apply the formula, then you look at
the piece and ask “Is that a good price?” We’re not a slave to the
math, it’s just a tool, plus it makes your pricing consistent. Next,
I can appreciate your not wanting to deal with a rude store owner,
but you should have no guilt about selling wholesale no matter who is
around. The criterion is possession of a resale licence, of course,
and then after that it is legitimate business.

Finally, the reason for my opening quote. My advise would be to sell
your work for the same price to everybody - it costs what it costs -
then nobody’s going to see it for 1/3 less somewhere else and hate
you and slur your name around and the like. And yes, you don’t pay
the salesman’s commission, the retail buyer does. Do add in the
consignment fees and the like.

taulbee6 · August 25, 2005, 2:50am

As a budding art jeweler, I too would like some on
prices. But please proceed with caution. I covered the FTC as a
journalist for several years, and those folks don’t like people
within the same industry to talk about pricing.

FTC looks for llike businesses who are “requesting, suggesting,
urging or advocating that any competitor raise, fix or stabilize
prices or price levels.” Several times a month they issue
injunctions barring specific companies from entering into any
“agreement or conspiracy to fix, raise, or maintain prices.”
Depending on the action, these civil charges can mean big fines,
too. A lot of you probably know this already, but I thought a
friendly reminder might be in order.

I’m not bragging, but I’m not a lawyer so this is not legal
advice. You can get more at www.ftc.gov if you’re
interested.

PS – I just joined a few weeks ago and am learning sooo much.
Thanks folks!!

Pamela Taulbee
Rockville MD

Marianne · August 25, 2005, 3:07am

Galleries/shops don’t want their customers to see the same work that
they sell available anywhere else for less; including from the
artist. My personal choice has been to stay retail based. That way I
can successfully sell my work at a price that allows me to earn a
living while not pricing myself out of reach just so that I can
afford to accept only half of the selling price from galleries. (
been a long day in the studio…even I cant tell if that sentence
makes sense). I do selectively show with a gallery or two when it
seems advantageous or interesting in some way. Hope this adds to
your info base…you need to decide what feels right for you…save
the time and expense of retail shows by selling to retailers ( you
can make more pieces, but you get less for them)… or; keep the full
price of your work and do shows … expensive, time consuming but
rewarding in personal contact and feedback.

Marianne Hunter

judyh · August 25, 2005, 3:46am

    An obnoxious gallery owner came to my retail booth at an art
fair yesterday and was trying to buy wholesale in front of retail
customers! You can imagine how uncomfortable that was... I
eventually made it though with tact, but will never sell to her
again due to her rudeness.

You never have to tolerate a rude customer - no matter what. Try
simply saying that this is a retail show and wholesale accounts are
handled by appointment after the show. In my experience, rude so
called gallery owners are often brash regular customers that want to
buy a few pieces on the cheap. Professional gallery owners don’t
behave in such a manner. They would prefer to look at your line in
their place of business at a planned time. I sometimes get cards
from gallery owners requesting an appointment. I then check out the
gallery. I’m amazed at how many represent themselves as gallery
owners, and then the conversation reveals that they are opening a
gallery - maybe.

    I am in the situation now that I must decide pricing and if I
want to sell to stores wholesale or continue to do fairs and
customs until my children are older. Should I mark up the jewelry
for the stores to recoup some of their commission? I'd like to keep
my pricing the same for continuity, but am finding the customer
base will pay differently in different locations. They would pay
more in a trendy boutique than at an art fair.

Advice from the past on Orchid would suggest that you set a retail
price - for everybody – and that makes your wholesale price 50% of
retail. Otherwise you run the risk of customers trying to shop
price - or being really unhappy that the piece they love is cheaper
somewhere else. A trendy boutique has expenses you don’t - that’s
why you sell wholesale in volume to such a place. And you don’t
want to undersell the gallery - they won’t be your account for very
long if you do.

    I just need the money, so I am pricing my product well enough
that it will not be thought that it isn't something special, but
low enough that I can move it.

Try to remember that when you do a retail show, you have expenses
and time doing a retail show that you do not have when selling
wholesale.

In my opinion, if I were raising kids and making jewelry, I’d look
very hard at doing wholesale. Your at home time is more flexible
than having to go to a show and be gone from home for many hours at
a time.

Judy Hoch GG

Craig_Balme · August 25, 2005, 3:46am

I don’t know if it’s true or not but I once heard (or read?) that if
you don’t mark an item up 300% of your cost to make it you will soon
go out of business.

I know everyone is concerned with the cheap items from Asia that
floods the markets but you really can’t compete with that can you?
Can anyone? If you are making stuff similar to what can be bought
for $60 somewhere then you have a concern but if you’re making
unique items then you should be able to price them however you want.

My concern is when I start producing (I’m still getting all my
equipment setup) how to protect my items from duplication. It
appears very easy to stick someone’s design into some rubber and
vulcanize it to make a copy… I really don’t want people doing that
to my items but how do you stop it?

Craig

Craig_Balme · August 25, 2005, 3:46am

 I have asked them to please call me when I am in my studio and
their answer was either I am buying now or not. so, I let them go.
I just don't understand the lack of professionalism here and their
insistance on making a point of the "wholesale price" in front of
the retail customers.

You’re probably better served being aware of these people BEFORE
dealing with them on a business level (due to these actions). Would
you really want to work with a person who does this type of thing?
Does this happen at retail shows or ?

Craig

Amery1 · August 25, 2005, 4:09am

Stephanie…

I wholesale and do very few (if any this year) retail shows… When
I get around to doing a retail show I double my wholesale. I figure
out my wholesale price by multiplying my cost (including labor cost)
by 2.5-3.5 depending on what I think the market will bear. I also add
15% to this price to pay for my rep fee, if she sells it, or myself,
if I sell it. I do some tweaking based on what I know similar items
sell for in the real world, but it’s usually around x 3.5 from cost.
This pays me for the materials and my time.

Wholesale works for me, even though you have to sell and produce
more, because of the reorders. I could be working in my studio and
get 2 or 3 reorders one day. Then again, I could get none for an
entire week! But, really, I could get a few in one day which would
keep me busy for some time. And unlike a retail reorder, they are
reordering anywhere from 5-10-15 pieces at a time. I would love to
get to the place where that’s all I have to deal with is reorders!

I would double my wholesale for the retail shows for a few reasons:

It’s much easier when a wholesale customer comes by to say, the
wholesale is 50% of the marked price.
You can explain to the retail customer that the pieces are marked
at the normal retail price- and you can come down on the price if you
like- it makes them feel like they’re getting a deal. I would do
about 10%-20% off the marked retail price.
Wholesale customers won’t feel like you’re underselling them too
much if the price marked is double wholesale- they don’t have to know
you’re giving a discount unless you tell them.
It keeps your prices consistent to have them all marked with the
same mark up.
I will not sit outside at a retail event and sell wholesale- my
time is money- I need to make sure I’m making something for my time.

Hope this helps, just my 2 cents!
-amery

Amery1 · August 25, 2005, 4:15am

This has happened to me before and I just don't know what to do
with wholesale gallery  owners who want to talk business in front
of retail paying customers.

Jennifer,

I have a suggestion for you… if your retail price is double your
wholesale it’s easy- mention the fact that your prices are
“keystone” quietly to the gallery owner- you’d be surprised how many
retail shoppers know what keystone is! You can still write an order
for them at the retail show without discussing prices because
(hopefully) the gallery owner can half the price in their head. This
will only work if you’re pricing your items double wholesale. If they
don’t want to be quiet and respectful of the business you’re doing at
the retail show it might be a good sign that they could be a problem
customer down the line and would you really want to work with them?

Good luck,
Amery

P.S. Still interested in taking your enameling class- gotta get my
stuff together first!

Stephanie_Swanson · August 25, 2005, 4:43am

I want to thank everyone that has written me regarding wholesale and
retail pricing. You all have been so kind in sharing your knowledge
with me and I am very thankful. I just hope I can help you in some
way in the future. Much luck in all your businesses and I will still
read eagerly every night!

Thanks again,
Stephanie Swanson

Carrie_Otterson · August 26, 2005, 2:52am

  In my opinion, if I were raising kids and making jewelry, I'd
look very hard at doing wholesale. Your at home time is more
flexible than having to go to a show and be gone from home for
many hours at a time.

I have been wanting to respond to this thread but haven’t had a
chance. Judy’s comment finally got me motivated, though. I have 3
young children and have been in business since my first was born.
Originally I sold solely through my website (and was lucky in that I
learned how to optimize my site so that I did get terrific sales
through it). Since the birth of my 3rd child, I took my business
wholesale and haven’t looked back. The freedom I have with wholesale
I just don’t with retail and it fits into my family’s life so much
better. Retail customers expect the product yesterday. With
wholesale orders I have however much time I need to fill it as long
as I’m clear about the lead-time with my customers up front. What I
have lost in profit, I have gained in volume. There are other reasons
it works better with my family as well, but one of the best for me is
that I have the entire holiday season to my family as holiday orders
are usually over by the beginning of the season (except for orders to
re-stock). Gone are the last minute rush orders leaving me literally
doing nothing but filling (and neglecting to fill my own family’s
holiday bags) until the day before Christmas. I have to say, I love
it. It gives me the entire month of December to primarily work on new
designs, marketing, tax stuff, all the little details that I always
get half-done the rest of the year.

Anyway, I just had to say that with young kids, I find wholesale to
be the only way I want to do business right now.

Carrie Otterson

p.s. I’ve decided to offer basic web development on the side since I
get so many inquiries from artisans about my old retail website
(well, it is still there, but long neglected since I moved into
wholesale) www.wiredjewelry.com. My experience in site design is
creating jewelry and non-profit sites (and can share examples of
other sites I’ve created if interested). I can also offer basic
Search Engine Optimization. If anyone wants to explore it more (at
this point I’m just offering it on a case by case basis since I don’t
plan on making it my mainstay) you can email me at
carrie@wiredjewelry.com

ekrem_cifter1 · August 26, 2005, 3:44am

I really don't want people doing that to my items but how do you
stop it?

Dear Craig,

I also share your concern, but honestly do not know any way that it
could be stopped.

Most of my work involves carving and engraving so what I do is to
carve it so deep so that it is almost impossible to copy and cast.
Another thing is if the piece is detailed, and I have to give it out
for casting, I divide the model in to pieces and give them to
separate casters.

Unfortunately, it is a pity to work for hours, days even months to
carve out a model and then have someone reproduce it with no effort.

Best of Luck,
ekrem.

Octave_Design · August 27, 2005, 2:32am

I know many perfectly reasonable retailers but I do not know many
that are worse off financially than the majority of working
jewellers. The point is they need us - we are their lifeblood not
vice versa. I would’nt deal with any retailer who tried to pull rank.

The obvious retort to this stance is that I can be as haughty as I
like - all the way to poverty. But retailers no longer hold all the
cards. Most of them have not moved with the times and are paying the
price. Ten years ago I only sold to retailers - now I am maker,
wholesaler, salesman and retailer. The quantities I have to make are
smaller, I get to deal direct with the customer and my profit
margins and cash flow are much healthier. Mostly due to online
shopping.

I still get approached by retailers. And if they are really polite I
will supply them - but at my price and on my terms

On pricing generally we work at 500% markup on costs - Don’t
underestimate the costs of marketing.

Our pices are still competitive - I think the answer is only compare
like with like.

Andrew

Octave_Design · August 28, 2005, 3:01am