A large part of my business is personalised artworks and wooden decorations; but I am developing a trade range for launch next April in Harrogate, which will still be handmade but each individual item should take less time to produce as I will be able to make them in batches. I will also be launching a small range of paper products.
The point is - each of these lines will I need a different pricing structure. I need to start somewhere and necessarily have to start costing and defining margins at the high end rather than the low because that is what came first.
Twitter is fabulous for firing off questions. I'm very grateful to the people who RT ( retweeted) my question and of course to those that DM (direct messaged)
And many thanks to retailer Angela Emery - MyFunkyParty for alerting me to Amanda
I began my career on Notonthehighstreet.com where 25-27% on top of all packing and delivery costs is the norm. From what I can tell this is a normal commission for web only site.
The complication comes when you are supplying a shop that has a web site: what then?
Then the next stage: retailers, no website sales...
Retailers normally expect to double the price you charge them and then add vat; some actually make their retail price x 2.5 what you charge them and then add vat on top!! I found this to my cost when I was asked (before I had barely begun trading) to supply a major chain store in Norwich. My items were too expensive, not as well conceived as they are now and didn't sell. It was a strange situation whereby they made the order without even seeing some of the products and even asked me to come up with prints unseen. One day when I am more prepared I will go and see them again! These items were not personalised, although handmade so ought to have been a mid range product in terms of price.
The consensus with galleries seems to be a 50% +vat margin ; a jewellery designer tells me that she is in the wonderful position of supplying an independent shop specialising in local crafts who only take 20% and their website sales 25%. (That partly answers my own earlier question) This same designer receives 50 % in a shop in the nearest city centre.
Another fellow Twitterer supplies samples of personalised high quality items to retailers at a discount for them to generate orders from. She tends to achieve 30% margins but finds that there are shops that will not go that low, in which case she cannot supply them. 50% margins are just not worthwhile for an artisan personalised product.
It would be interesting to hear from any makers and suppliers to retail whether they achieve a 40% margin ( i.e making 60 % themselves). No one has mentioned that half way point -YES they have!! completely forgot! Nic - sorry. Nic always gets 60% - so retailer gets 40%. Just flung that in so)) :
which to me personally makes sense for hand crafted products that are not personalised but that are of very high quality in small quantities. I like things to be complicated.
As a top accountant I know said "Decide what you want and stand your ground - if they don't want you, you will find others who do" - thanks Mel. Really important to remember that.
Do you know any different? or would you be prepared to share your own experiences - whether seller or retailer? I hope this "article" will help some one. Thanks :)