Wholesale Minimums

[Stephen]

I live in a large metro and want to expand wholesale. It works for me. I would rather ratchet back doing so many shows and build wholesale to fill the void. My production times are improving to the point that it pencils out for me even at 50%. My main wholesale is specialty mugs and the wholesale price is $12. My hiccup is the time it takes to fool around with orders of just a few mugs. I would much rather have a 20 mug minimum. That's a $240 hit plus shipping. This would produce a $35-40 shipping to most shops in my area. There are three additional very large metros within 3 hours of me so if I get interest I figure I can keep expanding my reach until I have the amount of wholesale to meet my needs.

 

I am planning a marketing piece to generate interest and I really do want to pick up accounts so I don't want to be out of the ball park of the small gift/craft shops I will be pitching to. I could try it and see if I get interest with such terms and adjust but I would rather not misfire as this marketing effort, as small as it is, is still a big expense for my little studio and I don't want to waste the money or time pitching unrealistic terms.

 

So I thought I would ask you guys for input. 

[LeeU]

My question is whether $12 wholesale might be too low? 

[Guest]

I would much rather have a 20 mug minimum.

 

Then that's your minimum.

 

Remember, its easier to lower your price than it is to raise it.

[Chris Campbell]

Stephen ... consider investing in some help before you leap into it.

 

The Arts Business Institute offers weekend workshops that will answer all of your questions and many you didn't think of yet!

http://www.artsbusinessinstitute.org/

They have a "Boot Camp" coming up in Philly on Feb 18-19th. I have attended two of these and they are loaded with solid info for any artists considering wholesale. They will save you years of mistakes.

 

P.s. ... I don't work for them or have anything to gain by recommending them. I just know they care about artists being successful. Their website is also full of great articles and info.

[Stephen]

My question is whether $12 wholesale might be too low? 

Ya know $12 works, the retail on this mug is about $22- $24 as it is tri-dipped, large 20oz mug. It takes about 25-30 min total for all the processes now but I think I will get to 20 minutes as I continue to gain speed. Add in shipping and handling time it works out to about $25 an hour for wholesale work when I get there and prob closer to $18-20 now. not great but doable and averaged in to retail shows at about 50-50 then my overall averages will be better. A higher price point I think is really not possible for this mug. 

[Stephen]

 

I would much rather have a 20 mug minimum.

 

Then that's your minimum.

 

Remember, its easier to lower your price than it is to raise it.

 

I'm OK with the price as I think it is priced about right as it does compete with similar production slip cast mugs that cost in the 15-18 range in most shops. have you wholesaled mugs with a similar high or higher minimum?

[GEP]

$12 per mug wholesale seemed like the most common price when I was doing trade shows.

 

Asking for a 20 mug/$240 minimun order is also totally reasonable. I saw minimums range from $200 to $500 for everyday-type pottery, so $240 is on the modest end of that scale.

[Mark C.]

I have a 300$ minimum at one shop. I do not ship these pots in the sense of packing them for ups-I take them myself.

I have a few out of the box deals one is 60/40 wholesale we agree on the selling price. I bill them for a month period what I take to shop. This is at a Organic market selling 4 size mugs and sponge holders -it been a solid gig since August grand opening. Steady 800 plus a month and building for my 60%.

[Guest]

 

Ya know $12 works, the retail on this mug is about $22- $24 as it is tri-dipped, large 20oz mug. It takes about 25-30 min total for all the processes now but I think I will get to 20 minutes as I continue to gain speed. Add in shipping and handling time it works out to about $25 an hour for wholesale work when I get there and prob closer to $18-20 now. not great but doable and averaged in to retail shows at about 50-50 then my overall averages will be better. A higher price point I think is really not possible for this mug. 

 

 

I've seen to many budding entrepreneurs fail because they don't understand what their overhead truly is and neglect to consider their profit.

 

A precise way would be to workup a Hourly Rate for your business but a good starting point would be:

Materials  + Overhead + Labor + Profit = Selling Price

 

Overhead:

You need to include everything, staples, business cards, stamps, masking tape, sandpaper, printed forms, pencils . . .  just make sure you don't leave anything out. Advertising and discounts are a part of your overhead, add them in too.

 

You need to include your rent. Yes, even if you are using a corner in your basement or a spare bedroom you need to figure in this cost. In my area, leases go for $5.00 to $35.00 per square foot. $7.50 is reasonable if you are in your home

 

You should also figure in your utilities. This is easy when you have separate utility bills. If you don’t and you are using your a part of your home consider that a 1,000 square foot home with a full size basement is 2,000 square feet. If your studio is 400 square feet, you are using 20% of your home and you can include 20% of your electric, telephone and heating bills.

 

If you are in business, you need insurance PERIOD.

 

Labor:

This is how much you want to make in an hour.  Consider that some parts of the US minimum wage is $15 per hour.

 

Profit:

This is why you are in business. Every business is in business to make a profit. This is normal. Don’t be scared of it.  A good profit is 30% but does vary from 12% to 60%, even higher in some cases.

 

I can dig up some published articles I have written on this topic if some people are interested in more detail. They are for various different industries and I probably should send them in private messages so as not to enlist the wrath of some of the staff.

[Mark C.]

I suggest a flat rate minimum not just for mugs but as time goes by its for everything. Say $300 or whatever you decide. That way its not just about one style or price of one style of mugs. Just state on your paperwork the minimum order is $300

That way as your products change this covers all sales.

On another note I have never known for 40 plus years what I make per hour.

All I know is what I make very year after the accounting is done.I never have spent anytime figuring my hours out working selling or driving to shows.

I pay self employment taxes so I know i'm making it-I have money left over for the bank.My bills are all paid.

I think you are right on track as far as dollars in this wholesale thing

one last note every few years I look at costs and raise prices-so you can adjust them up if needed-I always do this in January at 1st of year.

I did it last year. I look at all my types of sales -not just wholesale and do the price thought process in January-I;m doing it now.

[Stephen]

 

 

Ya know $12 works, the retail on this mug is about $22- $24 as it is tri-dipped, large 20oz mug. It takes about 25-30 min total for all the processes now but I think I will get to 20 minutes as I continue to gain speed. Add in shipping and handling time it works out to about $25 an hour for wholesale work when I get there and prob closer to $18-20 now. not great but doable and averaged in to retail shows at about 50-50 then my overall averages will be better. A higher price point I think is really not possible for this mug. 

 

 

I've seen to many budding entrepreneurs fail because they don't understand what their overhead truly is and neglect to consider their profit.

 

A precise way would be to workup a Hourly Rate for your business but a good starting point would be:

Materials  + Overhead + Labor + Profit = Selling Price

 

Overhead:

You need to include everything, staples, business cards, stamps, masking tape, sandpaper, printed forms, pencils . . .  just make sure you don't leave anything out. Advertising and discounts are a part of your overhead, add them in too.

 

You need to include your rent. Yes, even if you are using a corner in your basement or a spare bedroom you need to figure in this cost. In my area, leases go for $5.00 to $35.00 per square foot. $7.50 is reasonable if you are in your home

 

You should also figure in your utilities. This is easy when you have separate utility bills. If you don’t and you are using your a part of your home consider that a 1,000 square foot home with a full size basement is 2,000 square feet. If your studio is 400 square feet, you are using 20% of your home and you can include 20% of your electric, telephone and heating bills.

 

If you are in business, you need insurance PERIOD.

 

Labor:

This is how much you want to make in an hour.  Consider that some parts of the US minimum wage is $15 per hour.

 

Profit:

This is why you are in business. Every business is in business to make a profit. This is normal. Don’t be scared of it.  A good profit is 30% but does vary from 12% to 60%, even higher in some cases.

 

I can dig up some published articles I have written on this topic if some people are interested in more detail. They are for various different industries and I probably should send them in private messages so as not to enlist the wrath of some of the staff.

 

 

Hey thanks for the offer, no need for me but others might take you up on it, I do get what you are saying. I have also run non pottery related businesses in the past, one actually was fairly successful with a couple dozen people and I ran it for a decade. We had investors, bean counters, board rooms the whole works. I do know my way around a set of financials. If I was consulting on a typical one person pottery startup I would have a hard time understanding why anyone would want to do it to be honest with you. Its certainly not for money or because its a great business opportunity. Open a pizza parlor or software company if that's the motivation. It really is just turning a passion into a paying job.

 

The gross projected on my wholesale mugs is actually $36 an hour and I allocated $25 of that for my labor and was saying I'm comfortable with that from this revenue stream. I am hoping to expand my wholesale to 50% of my total revenue and combined with retail through shows and consignment both of which will have larger hourly returns (after cost) than wholesale. I do hope to hit my magic number of $50 and hour for studio time when the dust settles. All kinds of ways to P&L a one man pottery business but with no investors and just myself and my lifestyle to consider it really is more of a 'make all I can make' and figure it all out for taxes after Xmas kind of business for me right now probably the next few years. But yeah I am running it like a business and do run spreadsheets and try to make informed decisions based on as accurate of a set of assumptions as I can piece together. Not a budding entrepreneur just an older guy that wants to make a dramatic shift in his life and earn my living from making and selling pots from his home. It might end of being a stretch but I am all in ;-)

 

That's why I wanted some input on minimums because wholesaling on this expanded scale is new to me and I immediately see a problem with putting together tiny 2-5 mug orders for shops without it hurting my numbers and I wanted to make sure I wasn't being unrealistic with my approach to correcting it. My previous business was route based and we had over a thousand retail business partnerships and there is definitely a set of norms for every business space. When new businesses entered our space and tried to set their policies and procedures that went against what was accepted practice they ALWAYS  paid a price and often that meant getting no traction and they were gone fairly quickly. I have a finite market I am fixing to pitch too and I want to make sure that my terms are considered customary and not overreach.

[Guest]

Sounds like you are on track Stephen, Good Luck

[Mark C.]

One last note-I meant a dollar amount for the minimum not a mug amount . That way as time goes by your prices of mugs will change (this is a truth) and the dollar amount is that which your customers need to play ball.$300 is very reasonable.

 

I often myself have thought about having a mail order minuimum especially on the day I pack up little 100$  plus or minus orders like I did today. 

The truth is I do like to service my existing customers when they break stuff or want more. I feel you never get paid enough to pack up pots for your time and I'm super efficient about it.I always charge more for mail order pots and I charge the UPS full price to them not my 20% discount from the potters council so I do get something back for that time.I never buy packing boxes or materials so thats also a savings .

My business is not internet based but I still end up shipping many many boxes. My driver comes every week almost as stuff is coming in for going out.

[Stephen]

I want to thank you all for all the great advice, Will be adding $300 minimum to by invoices and sales literature. Excellent point Mark on dollar amount instead of pot count.

[GEP]

Sounds like a good plan, Stephen.

 

Just one more thing, the big buying months for crafts are February and August. So get your materials done and into the hands of buyers by the end of January. By the end of the trade show season in February, their budgets will already be spent. Repeat your outreach efforts in July.

[Stephen]

I had no

 

Sounds like a good plan, Stephen.

Just one more thing, the big buying months for crafts are February and August. So get your materials done and into the hands of buyers by the end of January. By the end of the trade show season in February, their budgets will already be spent. Repeat your outreach efforts in July.

I had no idea, thanks so much for the heads up. I am working on it now but now that I know it is time sensitive I will get it done and out.

[Callie Beller Diesel]

Another thing to consider is an initial minimum order vs a minimum re-order. A minimum first order should be large enough for a shop to make an attractive, abundant looking display, and will usually be larger than the order to replenish a sold down display that needs a touch up. Both order sizes should be of a size that it's worthwhile for you to sit and make efficiently.