Pricing For Wholesale And Retail

When I started teaching makers how to sell their work to shops, I realised that two things spark a great deal of anxiety: pricing for wholesale and retailers’ mark ups.

Let’s talk about pricing for wholesale first.

One of the reasons for its air of peril is that most artists and makers know that wholesale prices are much lower than retail prices. That can be hard to get your head around.

“What?” you might say. “This vulgar little shopkeep wants to buy my precious work, the items I put my heart and soul into creating, and they want to PAY LESS THAN THE STANDARD PRICE?”

THUD.

The thud was you fainting onto the parquet. Don’t worry, the butler will fetch the smelling salts.

The point is that yes, your wholesale price should be lower than the price you charge when selling your work directly to the public.

In fact, your wholesale price should be the absolute minimum you’re happy to part with your work for.

Hang on!

When I say absolute minimum, I don’t mean rock-bottom, not-even-covering-costs.

Your wholesale price is made up of four parts.

The direct costs of making your product, a percentage of the overheads associated with selling your product, recompense for your time and labour in making the product, and a dash of straight-up profit.

There’s more to say, but that’s the basic structure. When a retailer asks for your wholesale price, this is the figure what they want to see.

Remember, all your material and overhead costs are covered by this price, you’re being paid for your labour and profit is built in. This figure should not send you on a one-way ticket to the poor-house.

If it does you can’t afford to sell your work at wholesale, which means you need to go back to your calculator and start again.

Or you need to put aside the idea of selling your work to shops for now. There’s no middle ground.

You can either make it work or you can’t.

Your wholesale price should be your friend – it should provide buoyancy to keep your business afloat, not drag you into the depths.

So that’s pricing for wholesale. Now let’s talk about the practice of wholesaling.

The major difference between me buying your product for my shop and me buying your product for my Mum is she’s unlikely to want fifty of your screen-printed tea-towels in a choice of colours.

If I’m buying for my shop, I certainly do want all those tea-towels and probably a few other things besides. It depends very much on the product, of course, but in general retailers like to buy in bulk.

So this is where things balance out for you.

You’re selling your work to a retailer for less per item, but we’re ordering larger quantities of items.

That’s your wholesale business in a nutshell.

So “wholesale” doesn’t mean something scary, dirty or unspeakably evil. It just describes a particular kind of selling arrangement.

What about mark ups?

A mark-up is what the shopkeeper adds to your wholesale price to arrive at their retail price.

In general, to get their retail price, most shopkeepers will multiply your wholesale price by at least two.

So if your price is £10, your lovely thing will go on sale in their shop for at least £20.

Sometimes we multiply by more – 2.4 or 2.8, for example – but overall that’s what’s going to happen.

Now, before you faint again out of sheer outrage, let’s have a look at what the retailer’s mark-up covers. Then you can swoon into the bronzed and muscular arms of Hargreaves if you really want to.

I know I do.

Let’s see: rent, electricity, card machine fees, taxes, employee wages, property maintenance, carrier bags, tissue paper, stickers, office supplies, water, marketing, website maintenance and hosting, licences, accountancy fees, alarm maintenance, attending trade shows, different kinds of insurance and stock purchases.

I’ve missed many out but that’s an idea of how far that £10 mark-up has to stretch.

You’ll also note that this is before any salary or wage for the shopkeeper has been taken into account. Most of us don’t sleep on piles on money. Waking up with a 2p coin stuck to your cheek gets old fast.

Like you, independent retailers are simply business owners, trying our best to stay afloat in a choppy economy.

We’re not dirty, scary or unspeakably evil either.

Well, not during work hours.

One more thing.

When you sell direct to the public, you should be selling your work at its full retail price.

Not the wholesale price, not some half way point, but the full retail price.

If you don’t, you’re undercutting your stockists and expecting them to swallow it. That’s not cool.

Think your customers on Etsy, Folksy, at craft fairs or on your own website won’t pay that much? You need to find different customers who will. That’s what your stockists have to do, right?

Pricing can be confusing but here’s your takeaway:

Wholesale definitely isn’t evil, shopkeepers usually aren’t evil and you should try very hard not to be evil too.