Wholesale Pricing?

[pottermom]

Hi All!

I've been selling my work at street fairs and studio shows for a few years now and have been doing alright. I'm pretty comfortable with my retail pricing- I believe the prices are fair, and people seem willing and happy to pay them. Here's my problem: I have been asked by some store owners to wholesale and I have no idea what the "formula" is for wholesale pricing. Can anyone help me out or point me in the right direction? If it matters, as an example, my mugs are $12-$14.

Thanks so much!

Allison

[Guest JBaymore]

Hi All!

I've been selling my work at street fairs and studio shows for a few years now and have been doing alright. I'm pretty comfortable with my retail pricing- I believe the prices are fair, and people seem willing and happy to pay them. Here's my problem: I have been asked by some store owners to wholesale and I have no idea what the "formula" is for wholesale pricing. Can anyone help me out or point me in the right direction? If it matters, as an example, my mugs are $12-$14.

Thanks so much!

Allison

 

 

Allison,

 

While it can certainly vary, wholesale in the handcraft pottery field typically sits at around 50% of the retail price. In other words, the store typically marks the item they buy up by a factor of 100% to arrive at the retail price. So your $12 mugs would typically wholesale for $6........ the $14 ones for $7.

 

Terms for the sale usually specifiy a minimum # for an order, possibly a larger minimum set for the first order from a new shop, and the exact payment schedule ....... often looking like 2/10, Net 30. Which means they get a 2% discount off the wholesale price for full payment being recieved within 10 days of the order delivery, with the total original price bill being due in 30 days. Unfortunately in the real world these days....... some shops are not actually going to HIT that Net 30. Prepare for that. Many people do not allow a shop to buy on credit on initial orders and they are done as COD....cash on delivery. Or you need to run a credit check on the shop before extending them credit.

 

It is also important to note here that there is no limit to how much a store marks up any merchandise they buy. They own it, you don't anymore. So if you are underpricing the value of your work and the store thinks/knows it can sell your work for MORE than that 100% markup.... they certainly will do that. So your $6 wholesale mug could become their $25 retail mug.

 

And you should also know that most shops and galleries seriously frown on their stable of artists selling direct to the public (fairs, Etsy, Ebay, and so on) at anything less than the price that they charge in their shop/gallery. Particularily at events that are "close" to them and their market.

 

So getting into wholesale has some "caveats" going with it.

 

Only you can decide it the price you are charging in your direct sales has the appropriate margin to discount it 50% for wholesale. Personally, I think $6 wholesale for a typical sized mug is a VERY inexpensive price for handcrafted work......but of course the nature of that work also has to be taken into consideration. Do you know that you can really make any reasonable PROFIT for your time at that price? (Be careful to not mistake cash flow, money toward cost of goods, overhead costs, and direct labor, as profit.)

 

best,

 

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

[GEP]

Allison,

 

I think everything John said is good advice. Go with 50% of your retail prices. I would also add that it is totally normal to expect your first order with a new gallery to be on Pre-Paid terms, meaning the check or credit card payment is deposited in your bank account before you deliver the pots. During this transaction, you can get a good feel about the gallery's attitude about payments, and their financial health, and if you feel comfortable you can extend Net 10 or Net 30 terms to them for subsequent orders. A legitimate gallery knows that they need to earn your trust before you will extend credit.

 

Sort-of unrelated advice ... wholesaling is a good deal if you manage it correctly ... but consigning is not a good deal! Don't consign!!!

 

-Mea

[Guest JBaymore]

Sort-of unrelated advice ... wholesaling is a good deal if you manage it correctly ... but consigning is not a good deal! Don't consign!!!

 

Excellent point there, Mea.

 

Consigning work is giving the shop / gallery business basically an unsecured no interest loan for the wholesale value of the work you consign for an indefinate period. Would you simply hand them that cash on those terms? You'd better be sure that the business is reputable, and is on solid financial footing if you decide to do that.

 

This practice can at times be good for certain situations...... but usually involves high price point pieces. And good legal paperwork.

 

When consignment galleries have gone under .... many artists have found that their consigned work is taken over by the bank/creditors to the gallery in the bankruptcy. It is suddenly like you did not exist. Make sure that you have a consignment agreement that legally states that the work on display in the gallery is NOT a part of the galleries assets, but full value is retained by the artist and the pieces are "on loan". Many states and arts organizations have "model" consignment agreements you can use.

 

best,

 

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

[pottermom]

Thank you both for the great advice! Alright, at $6 (50% of my small mug retail price) I certainly wouldn't be making much of a profit. Is that a sign that I just shouldn't do wholesale? I feel like my retail prices are fair and accessible, so I'm not willing to raise them at this time. Or is 50% just the standard, and it's possible to offer to sell at 60%??

Also, if the shop/gallery owner came into my booth, seeing my mugs at $12-$14, should I assume that they're fine with me selling retail at that price. I have no plans of discontinuing doing that particular show every year just to not undercut the galleries on my work. OR should something like that be in writing? Does that make sense?

Thanks again,

Allison

[Chris Campbell]

Are you sure you can even come close to making a profit selling that mug to anyone for $6?

 

The galleries will take that $6 mug and retail it for 2.5 to 3 times that price.

If they are asking for them, they believe they can get this marked up price in their stores.

 

Yes, they will be annoyed if you sell them for less.

 

But think about it this way ... if they can get $15 to $18 for your mug, why shouldn't you get the same price

in your booth? Why would you continue to sell them at the lower price?

 

Something to think about.

[GEP]

"Or is 50% just the standard, and it's possible to offer to sell at 60%??"

I would not advise you to wholesale them at 60% of your retail price. The profit margin would be too small for the gallery. However, I am totally in favor of you raising your prices. If your mugs are selling well at festivals, and a gallery is interested in them, then chances are they are worth more than $12 or $14. (I also try hard to keep my pots affordable, and my mugs are $30 retail.)

"Also, if the shop/gallery owner came into my booth, seeing my mugs at $12-$14, should I assume that they're fine with me selling retail at that price."

Yes.

"I certainly wouldn't be making much of a profit. Is that a sign that I just shouldn't do wholesale?"

Bottom line, if you are not ready to raise your prices, and $6 is not profitable for you, then the answer is "yes."

-Mea

[pottermom]

Thanks for the replies! Pricing has always been an issue for me, so I'm not surprised that I'm getting so confused and "worked up" over this. I certainly have a lot to think about...

Thanks again,

Allison

[Guest JBaymore]

Allison,

 

Some stuff to think about here..........

 

All too often when we look at pricing........ we take the viewpoint from our OWN perspective in life. Now not to do some "job profileing" here ....... but all too often potters are not the most affluent people at the party.

 

So as we look at establishing the price for a piece of work...... we project onto that task our personal biases and our own economic realities. A lot of the time....... we tend to think toward the lower end of the financial spectrum.

 

But you have to face it, in this day and age, on the average we are NOT selling work to people who are having trouble finding two nickels to rub together. The market for handcraft is generally pretty affluent to VERY affluent. So what we would often call "expensive" is cheap to absurdly cheap to those people.

 

In fact, the $12-$14 price tag is likely a BARRIER to making sales to a certain segment of the possible market. At that price,....... if it is THAT cheap...... the assumption often is that it is not very good.

 

Talk to experienced artists. You will find that there are constant stories of a piece of work that did not sell and did not sell and did not sell at $XX. Then the artist, in a fit of frustration, priced it about 10 times the original price. It then sold in an instant, and people ordered more. There is a huge psychological aspect to marketing. Many people have little aesthetic training..... and they use price to guide them in making decisions.

 

It is certainly noble to want to make the handdcrafted work accessible to the lower heeled folks. This harkens to the Japanese Mingei movement and philosophy. But you also have to put food on your own kids plates. At $6 apiece gross, at best you likely can buy pennies worth of broccoli per mug, and you might find with a serious cost analysis that in reality..... you lose money for every one you sell at that price. I think that at $12-14 you are really selling "wholesale" to the public.

 

One suggestion, if you have not done so already, look for a small business management course through the local community college or adult ed center. Running an art business is not much different in may ways from running any other small business.

 

best,

 

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

[Leigh@CAC]

Just my 2 cents. $12-14 for a handcrafted mug is very very cheap - i haven't seen a mug that inexpensive in a long time, except at Pottery Barn and Crate & Barrel. I haven't seen mugs going for cheaper than 20, and most are over 30, and ones that have lots of carving or drawing are always typically around $50. In a gallery, that is. Yes, it seems like a lot, but this is the norm for emerging as well as established talent. So really, it feels like you are already selling your mugs at wholesale, and that you should double your price at fairs, etc, and charge the gallery the $12/mug. You should be selling your pieces for the same price at your own studio and at fairs as they will be priced in shops. The shops will certainly sell them for $25 or higher, so you should too!

 

Hope this helps!

Leigh

[pottermom]

John and Leigh, You are both being VERY helpful and I truly appreciate it. Everything that both of you are saying makes complete sense. Any barrier that I have to raising prices is psychological. For example, an acquaintance of mine has been a working potter for 30 years and "technically" is amazing. He is the resident potter at an established arts center and is well known/respected. He sells his mugs for $24-28. So I get a case of "who the hell do I think I ams" if I even start to think about going near $20 for a mug. I also feel like it's disrespecting established potters for someone who has been doing this for only 9 years to have equal pricing. Again, I know I may be thinking into this a tad too much and I appreciate your patience. In case you want to see what I'm dealing with here, for a point of reference : ), my website is www.allisonpottery.com.

Thanks again!

Allison

[Chris Campbell]

OK ... you have inadvertently run into my "Rant # 3" !!! <G>

 

My Rant is with experienced, talented potters who don't get the heck out of the way of new potters price wise!!

 

They assume there is only one customer for any type of pottery and that customer wants a $20 mug or whatever.

The result is that there is NO PRICE RANGE for pottery ... newbie gio and famous gia both charge the same price

so how on earth is a consumer ever going to get the message that there is a difference ... that great pottery is

worth paying more for???

 

In truth there is a market for a $20 mug and for a $100 mug and likely for a $200 mug but you'll never find it

if you don't look for it or even believe it exists. I just paid $150 for a mug and am quite happy with it.

 

If you are a good experienced capable and known potter you should try to spread your wings and find your price range.

 

They should be embarrassed to be charging the same as a newbie ... not vice versa!

 

rant over.

[Guest JBaymore]

Good rant, Chris.

 

Us potters are our own worst enemy, huh. We don't need others to pile on the "art versus craft" thing or whatever to keep clay status and prices down. We do it to ourselves.

 

I was going to write that the guy mentioned above maybe should be charging more..... but you beat me to it, and said it so well.

 

I own $1000 cups.

 

 

best,

 

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

 

 

PS: A lot of potters are "living in the 60's". Somehow they pay $3.00 a gallon for gas, get "change back for their $20 at McDonalds" (I don't eat there but remember the commercials), and pay $15,000 for a "cheap" car........ and still think that $20 for a hand made and well crafted mug is somehow expensive. One merely needs to go to Etsy and Ebay to see a lot of really underpriced pottery.

[Chris Campbell]

The last chart I saw for earnings in the crafts field had pottery at the second lowest ...

bottom was multi media work but they may have caught up since then.

 

We have to be the only group around that gets p'oed when someone in their field makes good money

from their work ... look for ways to tear them down rather than follow in their footsteps.

 

... don't get me started on rant #2 .... <G>

[Guest JBaymore]

... don't get me started on rant #2 .... <G>

 

 

With a straight line like that.......... how can I resist?

 

What is "rant #2"?

 

 

best,

 

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

[pottermom]

Ooh ooh, I'd love to hear Rant #2!!!

 

(And thank you for Rant #1- interesting- I'd never looked at it that way.)

 

Allison

[GEP]

Allison,

 

Just one more tidbit of advice from me ... you do not need to wait for the well-known potter to raise his prices before you raise yours. That would not be disrespectful in any way. His low prices are his own choice, you are not bound by them. I promise you that everyone who matters won't mind. Maybe the people whose opinions you care about will learn something from you (but that's not your responsibility). There will be many many more times in your future when you'll need to assert your value (and test your stomach lining). I peeked at your website, and your pots are really nice. Don't hold yourself back!

 

(Chris, I want to hear rant #2 too!)

 

 

-Mea

 

 

[artist4hire]

I'm really glad I stumbled on this thread!

 

I have yet to start selling pots, but SOON!!!! I have waited about 10 years now and am finally in the process of getting my basement arranged so I can get going. Pricing is something I have struggled with. I've sold some other works in the past (drawings etc.) and wanted to make some money, but never wanted to price myself out of a sale. I entered a piece in the 2008 Cone Box Show and it had to be priced..... I think that was the hardest part of the entire entry........... what to ask for it. It did sell (YIPPPIE) but I have wondered at times "Did I give it away?" and on the other hand have thought "Well would it have sold if I had priced it higher?".

 

This information will be really helpful when I get going.

 

Angie

[AmeriSwede]

... don't get me started on rant #2 .... <G>

 

 

With a straight line like that.......... how can I resist?

 

What is "rant #2"?

 

 

best,

 

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

 

 

Absolutely GREAT Rant(#3), Chris! Like John said .... 'Us potters are (can be) our own worst enemy'

But Chris... Inquiring minds want to know.... I think you need to start another thread with your Rant #2.

[Earthwood]

I am taking in a lot from this thread as well! I am so new to pottery I haven't been able to make a high quality pot (without glaze defects or having passed rigorous testing). Thanks to Chris, I am now re-focusing on making a really good pot first (might take a few more years) but that's more important right now. If I were to sell some of my stuff right now (even the ones that turned out fine without defects but haven't undergone any Q.A. testing), I might feel more inclined to price them low because in actuality, I am not really ready to sell them yet. It is important to have faith/confidence in your own work before you start thinking about selling. I was so focused on getting to the point of selling my work (the added pressure of having a gallery want to show my work didn't help), that I wasn't taking the slow, methodical steps I needed to take in order to ensure I produced a quality piece that could withstand some basic testing (ex: thermal shock, dishwasher safeness, microwave safeness, food safeness, scratch resitance, not to mention good clay/glaze fit), and therefore boost my confdence for pricing appropriately. There will always be more expeienced potters than me, but to have faith in the quality of my own work, I realized, is absolutely necessary before I start pricing/selling. (Now the only trap I have to make sure I don't get myself into as a perfectionist artist, is to set my standards so high that I never achieve them! I think the basic criteria I came up with, though, is a good place to start: good clay/glaze fit - no defects - and passing basic Q.A. testing).

 

- Sam

 

P.S. I'm all ears for rant #2

[Chris Campbell]

As the Rants move up in numbers, the likelyhood of my getting into trouble for expressing these opinions increases !! <G>

But progress has been made ... years ago when I called pottery a "product" that had to compete for consumer $$$$ with everything else

a person wanted, I got flamed ... now, not so much.

 

Rant # 2 involves the notion we should be making pots everyone can afford ... ( isn't that what Wal Mart is for? ) ...

not signing work since we are all humble and the pot should speak for us ( which it always fails to do when a person wants more of them! ) ...

and most controversially ... that these ideas are most often voiced by people with pension plans, retirement funds and steady jobs ....

not by the actual real time potters who are supporting their families from pottery alone.

 

Now you see why I will keep it buried under this topic! <G>

[GEP]

Hooray for Chris! I'm really glad to see an honest discussion of these things in a public forum, instead of the way most potters tiptoe around these subjects for fear of bruising egos. Many potters are operating under misinformation and delusions, we need to talk about these things!

 

The way I see it, pricing is just one component of marketing. And generally speaking, potters are really bad at marketing!

 

I am not university-trained in ceramics, which leads me to wonder if this is being taught enough in university ceramics programs. My college degree is in graphic design, where we were taught a great deal about the professional world, including the importance of marketing oneself. And when naive little smartypants freshmen (like I was) argued that "shouldn't our work speak for itself?" we were promptly dope-slapped on the forehead (figuratively of course). And then we were taught how to do it!!! It's not an obnoxious frame of mind, like some might think. It's about having the confidence to say "I know my value," instead of "I'm afraid to say that."

 

Have you ever met Fong Choo? If you have, you'd say "what a down to earth and friendly person!" even though his miniature teapots are $450. He gets it!

-Mea

[AmeriSwede]

As the Rants move up in numbers, the likelyhood of my getting into trouble for expressing these opinions increases !! <G>

But progress has been made ... years ago when I called pottery a "product" that had to compete for consumer $ with everything else

a person wanted, I got flamed ... now, not so much.

 

Rant # 2 involves the notion we should be making pots everyone can afford ... ( isn't that what Wal Mart is for? ) ...

not signing work since we are all humble and the pot should speak for us ( which it always fails to do when a person wants more of them! ) ...

and most controversially ... that these ideas are most often voiced by people with pension plans, retirement funds and steady jobs ....

not by the actual real time potters who are supporting their families from pottery alone.

 

Now you see why I will keep it buried under this topic! <G>

 

 

 

BRAVO...... BRAVISSIMO........ All of my hats off to you Chris, for sharing that. I would love to read the book of all your rants anytime, any day, as I'm sure it must be packed with your 'shoot from the hips' style of 'truth in-your-face' facts and tidbits. Thank you for being a vital voice on this forum!

[Seasoned Warrior]

On he other hand potters are also subject to the law of supply and demand. The differentiation between the $20 mug and $1000 mug (if there is such a thing) may just be how much people really want what you have. Differentiation is really the key to charging higher prices, if you produce something innovative, something that not everyone else does you can charg more for it. One way to test the market is to take similar items at different venues and charge different prices for them. You might be surprised at the results. Pricing can be very subjective and in the eye of the beholder. If your price is too low you may be perceived as an inferior potter by your own doing. One needs to test the market regularly to see if their pricing is correct. There is such a thing as ostensible pricing: its how valuable people perceived your work to be and has nothing to do with the actual effort or cost of production.

[Seasoned Warrior]

 

Rant # 2 involves the notion we should be making pots everyone can afford ... ( isn't that what Wal Mart is for? ) ...

not signing work since we are all humble and the pot should speak for us ( which it always fails to do when a person wants more of them! ) ...

 

In my opinion Chris, I think that humility is greatly overrated and in actuality does very little to help put food on the table

 

Regards,

Charles