I am not a fan of wholesale. I have never done it happily in any business I have been in or a part of. I have helped several people get their business of the ground and they always ask me about wholesale and I always say the same thing. It isn't any cheaper or faster for you to make 1 mug as opposed to 50. They all take the same amount of time per mug.
Wholesale of handmade goods is a confusing place to be. In the industry world, whole sale is possible because machines can do the production and factories can be built to handle massive wholesale orders. Factories can be built based upon those contracts and future revenues, thus discounts can be given. That isn't the case in handmade products. However people still want you to massively discount your items so they can sell them at a profit much easier.
I always think of it this way: You want to work X amount of hours for Y amount of dollars per day on average. What ever you can do to achieve that goal is what you should do.
An example: a potter wants to sell $200 dollars a day on avg of pottery no matter what that is. If you sell mugs for $50 each this means you need to make 4 mugs a day and sell 4 mugs a day on average. This of course is a really simple way of looking at things. Which is why I recommend most people doing it. Look at how much you want to make each day in your work week, and think about how much more work you will need to do to make your goal at the prices you will be discounting to.
For example in the above math, you would need to make 8 mugs instead of 4 to make the same amount if you discounted your prices by half.
The next thing to look at is this: Are you currently selling at your goal? If your not then you are eventually going to have to 1. start marketing more aggressively, which means more work anyways. 2. lower your prices, which means more work anyways. 3. some other method to generate income to stand by while you build your business, also more work.
So unless you are making your production goals and profit goals per day on avg currently, then you should seriously consider taking the wholesale account. (as long as everything checks out on the business agreement and contract side, make sure you read the forum post about all the horrible stories and the good stories. there are good and bad things to this). If not time to start aggressively pursuing other options to generate profit, which might not be as simple as the current solution you have in front of you.
It might seem like an injustice to sell your work so cheap, but the end goal of a business is profits. If your not meeting your profit goals you have to find some solution to get to that goal. This could be one temporary solution until you find a better one. Another solution could be to accept the wholesale contract and make a less complex mug for this particular outlet, one that could be made in half the time of the previous one but is still close to as nice. Maybe only carve the top half of the mug and leave the bottom half simple? There are a lot of things you could do to appeal to the price cut, and still sell a very nice product. Maybe if you go into making many many mugs you could setup a better system to cut down on time.
Good luck and let us know how it goes. We are always learning here.
I just wanted to add a few other things. It never hurts to try a deal and see how it goes. Start small with the wholesale and do like 10 mugs or something and see if you think everything is going smoothly. I would never start a deal with something massive like 100+ mugs and get burnt.
Also in the other businesses I have helped people with. I always told them to turn down most of the wholesale deals and instead create more products and do more advertising. Currently none of them have any wholesale accounts and are happy with their profit levels. So it is possible not to have wholesale and do fine. You just have to work a lot harder to get business if your going to turn down easy places to sell products cheaply. Which you choose to do is up to you.