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Laurène

To Wholesale Or Not?

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Min    783

RonSa, if that is your experience and it works for you, I am not going to try to change your mind. But what I said is true, it's not very common in the craft gallery world. Those numbers do not work for my situation. 5% or 2% is too much money to give away, on top of the wholesale discount, when it isn't necessary. Those discounts make sense when the supplier needs the retailer more than the retailer needs the supplier. In my experience, both sides need each other the same, and there's no need for either side to act any differently. It's not like I expected a bonus for delivering my work on time. Also, small and locally-owned is not the only factor. I should have been more clear that craft galleries know they are buying from self-employed artists, not from factories. We don't have many economies of scale, and they understand that. The relationship is different than most other industries.

 

Everyone who is wholesaling, or thinking of trying it, should decide for themselves about this issue.

 

Have to agree with Mea on this one. 

 

This is part of back and forth email last week between me and a yarn shop that carries my yarn bowls;

 

store: We're ready to place another order for your yarn bowls. If we place an order of 60 units would we be able to get any sort of volume discount?

 

me: Re: discount….with handmade work it takes me just as long to make bowl number 60 as it does bowl number 1 and my material and firing costs are the same. My profits on wholesale are razor thin so there really isn’t any wiggle room I’m afraid.

Let me know what you would like to do.

 

store: Thanks Madeleine, that makes sense. We'll send in our order soon.

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RonSa    189

As been said before, there is no reason to wholesale at 50% your normal price, there is nothing wrong with selling it @ 60% to 75% of your normal cost.

 

My 2 bits worth of advice.

 

1) be upfront with the shop owner and tell him/her that the mugs are hand made and there is little wiggle room to mark down your product.

 

2) Its easier to lower your price than it is to raise your price, start at 75% off if they agree to purchase X amount of mugs.

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Min    783

 

As been said before, there is no reason to wholesale at 50% your normal price, there is nothing wrong with selling it @ 60% to 75% of your normal cost.

 

My 2 bits worth of advice.

 

1) be upfront with the shop owner and tell him/her that the mugs are hand made and there is little wiggle room to mark down your product.

 

2) Its easier to lower your price than it is to raise your price, start at 75% off if they agree to purchase X amount of mugs.

 

Absolutely. I don't wholesale or consign anywhere if I don't get 60-65%  Still not giving a discount for early payment though. All my shops pay within 30 days, 2 of them pay on delivery. 1 of them even offers to pay me for materials before I even make the work.

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RonSa    189

Absolutely. I don't wholesale or consign anywhere if I don't get 60-65%  Still not giving a discount for early payment though. All my shops pay within 30 days, 2 of them pay on delivery. 1 of them even offers to pay me for materials before I even make the work.

 

 

Treasure those customers

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Mark C.    1,807

But Min if I want 100 yarn bowls and pay up front can I get 2% off??

 

I'm thinking of putting them in Costco on an end cap can you get that price point down?

Our next order will be 100,000.00 of them

 

I'm putting together a gift basket for retired GM employees and want a piece of pottery in each basket so I need the price point low

how about 1/2 price?

 

I want to sell them my web site so I need them to be very cheap so I can make at least 1/2 myself.

 

Ok these sound far fetched but two have happened to me. You must know your limits-Min it good to know that you have this down

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One thing I haven't noticed addressed here on the subject of net 30: credit references. It's a good policy if you want to do a lot of wholesale to request 2 credit references before you actually extend net 30 to someone you don't know that well yet. This is just the name and contact information of someone in charge of accounts payable at 2 different companies that the craft shop (for instance) also buys from. Contact these two people and ask them if your new client pays on time, or is in arrears. If they are habitually late payers, or are in arrears, do not offer credit. If they are good payers, then you're golden.

 

This was the policy of a giftware wholesaler I worked at for a time. Most people were good, but every once in a while you'd get someone declined.

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RonSa    189

Contact these two people and ask them if your new client pays on time, or is in arrears.

 

If they are in arrears a good followup question would be, "Would you continue offering them net 30?" Sometimes a good customer hits a rough patch.

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Contact these two people and ask them if your new client pays on time, or is in arrears.

 

If they are in arrears a good followup question would be, "Would you continue offering them net 30?" Sometimes a good customer hits a rough patch.

The only observation I'd make about this is if a customer is in arrears to a supplier because they're overextended, extending them credit is risky. It doesn't mean you can't sell to them, it means you shouldn't extend credit at this time. Offer them the option of reapplying at a later date for net 30. (Say in 3-6 months).

It's a cover your ass scenario, and you have to be comfortable with extending credit. If my time is the most valuable thing I have to offer, spending said time chasing someone's delinquent payment is not the best use of it.

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Chris Campbell    1,088

 

 

Contact these two people and ask them if your new client pays on time, or is in arrears.

If they are in arrears a good followup question would be, "Would you continue offering them net 30?" Sometimes a good customer hits a rough patch.

The only observation I'd make about this is if a customer is in arrears to a supplier because they're overextended, extending them credit is risky. It doesn't mean you can't sell to them, it means you shouldn't extend credit at this time. Offer them the option of reapplying at a later date for net 30. (Say in 3-6 months).

It's a cover your ass scenario, and you have to be comfortable with extending credit. If my time is the most valuable thing I have to offer, spending said time chasing someone's delinquent payment is not the best use of it.

 

I agree 100% ... do not make their problem yours.

That does not sound "nice" but you need to stay solvent ... take care of your business not theirs.

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JBaymore    1,432

 Marking up your prices, then giving a discount, seems like unnecessary steps.

 

Works very well for car dealers!  ;)  :ph34r:

 

best,

 

...................john

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RonSa    189

 

 

 

Contact these two people and ask them if your new client pays on time, or is in arrears.

If they are in arrears a good followup question would be, "Would you continue offering them net 30?" Sometimes a good customer hits a rough patch.

The only observation I'd make about this is if a customer is in arrears to a supplier because they're overextended, extending them credit is risky. It doesn't mean you can't sell to them, it means you shouldn't extend credit at this time. Offer them the option of reapplying at a later date for net 30. (Say in 3-6 months).

It's a cover your ass scenario, and you have to be comfortable with extending credit. If my time is the most valuable thing I have to offer, spending said time chasing someone's delinquent payment is not the best use of it.

 

I agree 100% ... do not make their problem yours.

That does not sound "nice" but you need to stay solvent ... take care of your business not theirs.

 

 

What if they pay faithfully net 45 days, would you not extend credit?

 

What if there was an illness in the family and their family came first?

 

What if the owner had a child and is now getting back in the swing of things?

 

There are many reasons why a business may hit a rough patch and depending on the answer you receive you will know better how to proceed. 

 

One of my biggest customers (non-ceramic) was running into financial difficulties. When I talked to them I learned that their accountant embezzled a large amount of money and many of their vendors where afraid to extend them credit. I worked with them and they turned to a big customer, what they ordered in a year they where ordering every few weeks.

 

I know today there is a lot less loyalty among buyers and seller these days and yes, sometimes it is a risk to extend credit. But sometimes you need to take a risk to grow. When I feel there is a big risk I ask for 6 credit references before I proceed.

 

And of course, there are deadbeats that need to be avoided at all costs.

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