Over the last couple of weeks, I’ve been rethinking things, yet again. My business decisions have meant I’m interracting with yet another sort of person, and encountering more of the old problems coming up again, and some entirely new ones.
I both make and sell my own items, and I used to run a shop selling these items, as well as other items made by other people, or wholesaled from other UK companies. I think, even with my limited success with the shop, I have a good grasp of both sides of this equation.
There’s still a lot of confusion about pricing from people who have just started selling their handmade items. There are tons of great articles – I personally recommend the ones by Kim Lawler and Rowan Grant
If you’re one of those people who can’t be bothered to read long articles about anything, then use my tip – if I’m asked by anyone if the price of their item is right, I simply ask if they’d be happy if I bought it off them for half the price they’re thinking of selling it at – if they aren’t, it’s priced wrong.
That may sound ridiculous – but it’s a really good rule of thumb! If you’re just starting out, you feel the price of stuff people make is too high and you can make it cheaper. You also think no one is ever going to pay the price which comes out when you do the equations suggested in those two above articles.
When I started out, I was underpricing. It wasn’t on purpose. I was basically selling everything at what is now my wholesale price because I was working out the cost of making it, and then doubling it, or more often than not, just adding a bit of what I considered ‘profit’.
I was asked if I wanted to sell sale or return somewhere, and they were going to take 20% of the final cost. I was totally gobsmacked. How dare they take 20%! I’d done all the making, what had they done?
Now I’ve run a shop like this, I can see that they weren’t taking enough, and that’s probably partly why they aren’t open any more as well. I used to take 40% on sale or return items, and if I was buying anything from people who made their own items, I expected wholesale to be 50% (or less) of the retail price, and most non-handmade items, I expected to only pay a third of the retail price.
There’s a lot involved in running a shop, and wholesaling items is risky for shop owners – it might be good for you as a maker, and I appreciate it’s the best way to run for the maker, but if you refuse to offer sale or return, especially to someone who has never stocked your items, then no matter how successful you are, if they’re a very small shop they probably won’t buy anything from you
Shops operate on different methods – shelf renting, commission, a combination, some ask you to work, some don’t. But the best shops which sell your items will take a decent amount off you (whether it’s a large %, rent, or a combination), and you can trust them for that. If they aren’t taking enough, they won’t have money to advertise, and their shop won’t be frequented, so you won’t sell anything.
As a shop, if you don’t do your sums properly, you’ll be the one doing all the work and not getting anything in return. That shop which only took 20% – if they spend a day in their shop, and only sold one of your items and then have to give 80% to you, they’re going to regret it, and it’ll be their fault – I know this, because I have done this.
Before I realised I wasn’t charging enough, some days I’d be really pissed off that someone else was getting the lion’s share of the takings from the day when I was the one who had spent a whole day sitting in my shop, paying for the card machine, the carrier bags, spending the day on social media imploring people to come and visit me….
So that’s why I started charging 40% – if I opened a shop now, it would be 50%. I know of some gallery shops which charge 75% of the final cost, and this is spoken about in hushed tones because it seems ridiculously high.
But when I changed my shop, I also started wholesaling items which weren’t handmade, and this is when I found out that most shops pay a quarter of the retail price – for everything they sell. This is how they manage to hire people to work behind their counters, to do their advertising, to write copy for them, take photos for them…
In order for small shops to survive they need to realise this – you need to charge enough commission from creative people without ripping yourself off, and without ripping them off.
As for creative people, you need to start charging enough that you can give more commission to these shops to keep them open, so you can keep selling in them. I’ve heard people saying they need to put their prices up in order to accomodate the 10% being charged – in my eyes, this means they really don’t understand pricing, and are surviving on passion.
So if you start stocking your handmade items somewhere which is being run by another creative person, and it seems you’re being ripped off, have a good long think. You’ll probably realise you’re really not.