If you have read my articles on this site on Selling Wholesale, some of what you will read in this article will not be new to you (some of it will). But many who have no interest in selling wholesale, have many questions about how to price their crafts or artwork for sale.
Pricing is a difficult issue for many artists and craftspeople. They tend to devalue their work and place lower than market prices on their work. There is a whole psychology of this that we will not go into detail here, but it is important to understand the basics of pricing.
To price an item you need to take the costs of all materials, supplies, and expenses that make up an item and then add that to an hourly rate that you as the artist must determine that your labor and talent are worth. Start with the minimum wage and work up from there. You should certainly be paid the minimum wage. Of course, you should be paid more than the minimum wage. It is up to you to decide what you are worth per hour. Multiply the number or fraction of hours that it took to create your item. Add that item to your costs. The result is actually what should be your wholesale price and not your retail price.
You are not finished yet. To sell that item on your own you may have other expenses. If you are on an internet site that charges fees you now need to add those fees. If you sell at a craft show the table space will cost you money. You need to proportion that into your prices. If you take credit cards or use Paypal you must pay fees. Those fees need to be added into the price. Ideally when you are done you are at or near doubling that wholesale price that you came up with a few moments ago. (See why retailers double your wholesale price - they have these expenses too, only greater if they have a brick and mortar store.) Many craftspeople will feel that their item will not sell at double that initial price and feel uncomfortable about offering the doubled price when they try to sell the item on the internet or at a craft show. Eager to make sales they often offer their wholesale price to the public. This is a problem if you ever decide to sell wholesale. Retail shops do not want to compete with you and want to see that the price that they are paying wholesale is significantly less than your usual prices.
Put all of this together and we get a basic formula that anyone can follow to determine a price for a handmade item:
Cost of materials +
Cost of supplies +
Cost of Expenses (utilities consumed in creation) +
Self-determined Hourly Rate +
Fees to Sell (listing fees, show fees, credit card fees) =
PRICE
There is also a factor that many retailers consider and add or subtract from the price. It is the concept of "what will the market bear". This includes competition and demand. You may come up with a price of $5.00. Other similar items sell for $3.00. You may have to find a way to reduce your costs to be able to make your item for $3 to be able to sell. If you can't find a way to do this you may need to decide that this is not an item that will sell. If you can test market it for a time at the higher price you will be able to know for sure. The other thing to consider is that some things are just not worth the higher price that you want. There is just so much that people will pay for some things. On the opposite end of this, you may find that you can price an item at $20 but other similar items sell for $50.00. You could try to sell your item for $30 less with the idea that you will sell more because you have a better price. But - some buyers will look at your less expensive item and start questioning why is it so much less. They may conclude that it is "not as good" as the similar item selling for more. In this instance you may want to raise your price to keep it in line with similar items.
All of this is not as hard as it may read. Follow the formula and you will get solid prices. Compare your prices to similar items on the sites you are selling on or at the craft shows that you participate in and make adjustments if necessary.
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Sunday, March 15, 2009
Sunday, January 18, 2009
Shipping your Crafts
The most economical way to ship the crafts or art that you sell is through USPS - the United States Postal Service. The rates for small parcels are far lower than rates at U.P.S. and Federal Express. If you are shipping furniture-size items you will want to check the rates and requirements of a transporter such as UPS that is equipped to better handle large items.
Many craft artists starting to sell thief crafts though the Internet or by catalog are confused about how to know what an item is going to cost to ship. Many just estimate what they think the item should ship at by looking at a chart and eyeballing the item. These craftspeople are always shocked when they get to the post office and find out that their item ships for twice the cost that they had estimated and have collected.
There is no reason to lose money shipping an item if you know exactly what to do. You can know the EXACT SHIPPING COST before you list your item for sale.
First, buy a good, digital postal scale. They are available in every chain office discount store. You will not pay a lot for one and without one you cannot know what your item will cost to ship. Trips to the post office to weigh your package in advance is going to annoy your post office clerks. I knew one person who would take parcels to the supermarket to weigh on the produce scale. This all can be avoided by spending $50 or less. You can even buy one at the post office.
Next, go to the USPS website and find the rate charts for both domestic and international mail. These charts are easy to print out to keep as a reference. When you get to these charts on the website you will input your home zip code so that you will get charts from your ZONE to all other ZONES. These vary, so be sure you are looking at the correct chart for your zone. Print out all of the charts and put them in a folder to refer to when you are determining shipping costs. Priority Mail over one pound changes per zone. All international mail changes by country zone. First Class mail - letter or parcel is one price across the US varying only by weight , thickness, and size.
Next, take the item that you intend to sell, take the box or envelope that you will ship it in, take all of the packaging that will go into the box or envelope along with the item, and take as many sheets of letter paper that you will use to create packing lists or invoices, and put all of this together. Weigh EVERYTHING together. Write down that exact weight. If you are between two whole ounces you must go UP to the next whole ounce. Make a note for yourself and keep it someplace where you will find it detailing exactly how this particular item will be packed and shipped.
Now, take out those charts and decide how you are shipping - First Class, First Class Parcel, Priority Mail, Express Mail, or International - which also has different classes just like Domestic. When you have the correct chart look at the weight of the package and the rate on the chart - THIS is you EXACT cost of postage. To decide how you are shipping you must know a few other things. If your envelope is larger than 6" x 9" or is over one quarter inch thick, you are shipping First Class Large Envelope. You cannot add Delivery Confirmation service to any First Class envelope rate. The only way to add Delivery Confirmation to First Class is to make the package thicker than three quarters of an inch or make it totally rigid and unable to bend - and you are now shipping First Class Parcel. If your package weighs 13 ounces or more you must ship by Priority Mail (and, by law, you may not put the package in any mailbox - it must be handed to a postal clerk or carrier). IMPORTANT TO NOTE - Priority Mail is NOT faster delivery than First Class. Priority Mail is for heavier First Class packages. If you look at the USPS statement about Priority Mail it says "Arrives in 2 -3 days*" Look at that * and you will see that it says AVERAGE. There is no guarantee and in fact it travels along with First Class and will be delivered at exactly the same time. I have this on the authority of several postal clerks. The post office will be happy to take your money for the additional postage for Priority for light packages, but your package WILL NOT get there any sooner. The only way to guarantee (well, maybe guarantee) a set delivery time is by using Express Mail. This arrives in one or two days - if the person is there to receive it when the mail carrier arrives at their door. If they are not there a notice is left and the package goes back to the post office. If the receiver does not call the post office for re-delivery or go in person to the post office to pick up the package, that package will be SENT BACK to you in five days. Express mail costs a minimum of $16.00. That is a lot of money to pay and have the package sent back. If you are listing an item that must travel by Priority Mail because of weight you must be aware of what the furthermost zone is from you that this might possibly ship to (the same holds true for any International destination). You must look up that zone on the chart and use that zone to determine your total shipping cost - you can always refund money to your customer if they live in a closer zone, but it is bad form to ask for more money to ship - and on some craft sale sites (like Etsy) you are not permitted to do that.
International mail is done in the same way. The weight and the zone and the way you will ship. The charts are just as easy to follow. More about International Shipping later.
Now that you know the exact cost of the postage, what do you want to add in postal services. Delivery Confirmation is a way to track the delivery of your package, but it only really can be relied upon to tell you when the package is actually delivered. If you are using Paypal to handle your transaction Delivery Confirmation is required to be able to use their Seller Protection plan. If you print your postage labels at Paypal you will save a lot on the cost of Delivery Confirmation. At the post office it costs 75 cents. On Paypal it costs only 18 cents - and only on Paypal (and not on USPS Click and Ship) can you add Delivery Confirmation to a First Class Parcel package. Another feature that you can add is Postal Insurance. This starts at over $1.5o for up to $50 insurance and then increases from there. Insurance is the ONLY way you or your buyer is going to get the cost of the item back if the package is lost or damaged. If this is a one of a kind item - always include insurance in the rate that you calculate. Express mail automatically includes insurance in the rates listed. No other mailing rate does. If you want to guarantee getting your money back if something goes wrong in transit, include the insurance. Add these the rates for these features into the total cost of shipping the package.
At this point you have the exact cost that your item will ship for and you know exactly what to list as your shipping cost for the buyer to pay for your item. Remember - if there is any uncertainty add a little more to the cost that the buyer will pay. It is easy to issue a refund for excess postage paid. You cannot ask for more money from the buyer later if you miscalculated too low.
Follow this method and you wil never pay anything out of your pocket to ship an item to your buyer.
Many craft artists starting to sell thief crafts though the Internet or by catalog are confused about how to know what an item is going to cost to ship. Many just estimate what they think the item should ship at by looking at a chart and eyeballing the item. These craftspeople are always shocked when they get to the post office and find out that their item ships for twice the cost that they had estimated and have collected.
There is no reason to lose money shipping an item if you know exactly what to do. You can know the EXACT SHIPPING COST before you list your item for sale.
First, buy a good, digital postal scale. They are available in every chain office discount store. You will not pay a lot for one and without one you cannot know what your item will cost to ship. Trips to the post office to weigh your package in advance is going to annoy your post office clerks. I knew one person who would take parcels to the supermarket to weigh on the produce scale. This all can be avoided by spending $50 or less. You can even buy one at the post office.
Next, go to the USPS website and find the rate charts for both domestic and international mail. These charts are easy to print out to keep as a reference. When you get to these charts on the website you will input your home zip code so that you will get charts from your ZONE to all other ZONES. These vary, so be sure you are looking at the correct chart for your zone. Print out all of the charts and put them in a folder to refer to when you are determining shipping costs. Priority Mail over one pound changes per zone. All international mail changes by country zone. First Class mail - letter or parcel is one price across the US varying only by weight , thickness, and size.
Next, take the item that you intend to sell, take the box or envelope that you will ship it in, take all of the packaging that will go into the box or envelope along with the item, and take as many sheets of letter paper that you will use to create packing lists or invoices, and put all of this together. Weigh EVERYTHING together. Write down that exact weight. If you are between two whole ounces you must go UP to the next whole ounce. Make a note for yourself and keep it someplace where you will find it detailing exactly how this particular item will be packed and shipped.
Now, take out those charts and decide how you are shipping - First Class, First Class Parcel, Priority Mail, Express Mail, or International - which also has different classes just like Domestic. When you have the correct chart look at the weight of the package and the rate on the chart - THIS is you EXACT cost of postage. To decide how you are shipping you must know a few other things. If your envelope is larger than 6" x 9" or is over one quarter inch thick, you are shipping First Class Large Envelope. You cannot add Delivery Confirmation service to any First Class envelope rate. The only way to add Delivery Confirmation to First Class is to make the package thicker than three quarters of an inch or make it totally rigid and unable to bend - and you are now shipping First Class Parcel. If your package weighs 13 ounces or more you must ship by Priority Mail (and, by law, you may not put the package in any mailbox - it must be handed to a postal clerk or carrier). IMPORTANT TO NOTE - Priority Mail is NOT faster delivery than First Class. Priority Mail is for heavier First Class packages. If you look at the USPS statement about Priority Mail it says "Arrives in 2 -3 days*" Look at that * and you will see that it says AVERAGE. There is no guarantee and in fact it travels along with First Class and will be delivered at exactly the same time. I have this on the authority of several postal clerks. The post office will be happy to take your money for the additional postage for Priority for light packages, but your package WILL NOT get there any sooner. The only way to guarantee (well, maybe guarantee) a set delivery time is by using Express Mail. This arrives in one or two days - if the person is there to receive it when the mail carrier arrives at their door. If they are not there a notice is left and the package goes back to the post office. If the receiver does not call the post office for re-delivery or go in person to the post office to pick up the package, that package will be SENT BACK to you in five days. Express mail costs a minimum of $16.00. That is a lot of money to pay and have the package sent back. If you are listing an item that must travel by Priority Mail because of weight you must be aware of what the furthermost zone is from you that this might possibly ship to (the same holds true for any International destination). You must look up that zone on the chart and use that zone to determine your total shipping cost - you can always refund money to your customer if they live in a closer zone, but it is bad form to ask for more money to ship - and on some craft sale sites (like Etsy) you are not permitted to do that.
International mail is done in the same way. The weight and the zone and the way you will ship. The charts are just as easy to follow. More about International Shipping later.
Now that you know the exact cost of the postage, what do you want to add in postal services. Delivery Confirmation is a way to track the delivery of your package, but it only really can be relied upon to tell you when the package is actually delivered. If you are using Paypal to handle your transaction Delivery Confirmation is required to be able to use their Seller Protection plan. If you print your postage labels at Paypal you will save a lot on the cost of Delivery Confirmation. At the post office it costs 75 cents. On Paypal it costs only 18 cents - and only on Paypal (and not on USPS Click and Ship) can you add Delivery Confirmation to a First Class Parcel package. Another feature that you can add is Postal Insurance. This starts at over $1.5o for up to $50 insurance and then increases from there. Insurance is the ONLY way you or your buyer is going to get the cost of the item back if the package is lost or damaged. If this is a one of a kind item - always include insurance in the rate that you calculate. Express mail automatically includes insurance in the rates listed. No other mailing rate does. If you want to guarantee getting your money back if something goes wrong in transit, include the insurance. Add these the rates for these features into the total cost of shipping the package.
At this point you have the exact cost that your item will ship for and you know exactly what to list as your shipping cost for the buyer to pay for your item. Remember - if there is any uncertainty add a little more to the cost that the buyer will pay. It is easy to issue a refund for excess postage paid. You cannot ask for more money from the buyer later if you miscalculated too low.
Follow this method and you wil never pay anything out of your pocket to ship an item to your buyer.
Wednesday, February 27, 2008
Selling Wholesale - Part II
We continue the article on Selling Wholesale - Look in our archives for Part I.
When you sell wholesale you are going to sell in quantity. You determine that quantity. It may be determined either in number of pieces or a minimum dollar amount. For example - wholesale order is a minimum of 12 pieces. This means the retailer must by 12 pieces from you at the same time. If your work is uniquely one of a kind for each piece then these 12 might be completely different. If you make earrings and bracelets you may require that the order be 12 pairs of earrings or 12 bracelets, but not mixed. If you wish to offer them mixed you might do that as well. If you can duplicate items and make several the same then you could offer the order as 12 of one design. This is all up to you as the wholesaler. You set the terms. The other example is by dollar amount - wholesale order is $100.00. The retailer may buy anything that they want from you at wholesale as long as they purchase a minimum of $100 in merchandise.
It is this bulk buying that can make it easier for the craft artist to lower the price needed for any item. Often you can make two items in the same time that you can make one. You have the same tool and work area set up time, the same equipment to set up, etc. but you now can use that one set up for two items - you have just cut your labor time by a significant amount. Sometimes you can make three or four or even six items in almost the same time as you could make one or two. Now you have decreased your labor time even more. Supplies in bulk often cost much less than supplies purchased a few at a time. You have just reduced your materials costs to fill a bulk order. See where this is going. Of course, with some things you are not going to save very much time or expense money, but whatever you can trim on your end will help you offer your work at a wholesale price that is attractive to a retailer. Also keep in mind that the time that you put into selling your work is time that may not be compensated for. By selling in quantity you are putting much less time and effort into selling a dozen items at one time than selling each of the 12 one at a time. Here it is worth your while to make that wholesale sale - even if your prices are a little lower than you would like. (Don't lose money, however. No sale is worth losing money over.)
Now that you have established good wholesale prices you are ready to make wholesale offers. I am not going to go into finding retailers to sell to here. Rather, I am going to concentrate on retailers who find you and ask if you will sell your work to them wholesale. Before we go on, understand the difference between wholesale and consignment. A wholesale sale is an outright sale - you receive the money for the goods up front, deliver the goods, and the transaction is over. A consignment arrangement is not a sale - it is the opportunity for a sale. When you sell "on consignment" the retailer takes your goods and you get no money until each item sells. You will then get a percentage of the sales price - which is generally 40 to 50%. You need to offer your work to the consignment shop at full retail and then you must be satisfied with the 60% or 50% of that price as your sale. Consignment is a whole other complex area and we will go into it in detail in a future article.
So, a retailer contacts you and says that he/she would like to buy from you wholesale. What do you do? First, you want to make sure that this wholesale offer is from a legitimate retailer with a sales venue - either a brick and mortar store, an established catalog, or an active internet sales site. You want to verify that this is not someone who is just looking to buy your work at a discount. If this is a store that is local to you visit it. If this is a catalog retailer, get a copy of the catalog. If this is an internet site, check it out. When you speak or email with this shop get as many details up front as you can. Always be polite. Never be demanding. Try to be as diplomatic as possible. Flatter them and be discrete at finding out what you need to know. If this is a brick and mortar shop and you can see it you do not need to ask anything - your proof of legitimacy is in the concrete - as long as it is a store that actually sells the things that you are wholesaling. If you sell jewelry it is unlikely that a plumbing shop is going to be selling jewelry retail. So just be cautious and you won't be scammed.
When you are satisfied that you are in a legitimate situation, present your wholesale pricing and minimums to the retailer. If this is a local shop you might answer the initial inquiry by making an appointment and going in to meet with the wholesale buyer. If not, then you are doing this by email, mail, or over the telephone.
If you are dealing with a retailer in your state and you are in a sales tax state, you are going to also present to the retailer that you require a signed copy of their business's sales tax form. This will cover your wholesale sale obligation with your state's sales tax requirements. If the store buyer has a problem with this there is something seriously wrong with this transaction. This is standard retail buying procedure. It is expected and any buyer who is unaware of this or refuses to provide this is doing something wrong. This is a warning signal to walk away!
When you present your prices also present your shipping and "handling" prices. This should not surprise the retailer either. They are seldom offered free shipping and expect to pay shipping costs as a day to day cost of business. Shipping in bulk is cheaper than shipping one item at a time. Know what it will cost to ship your items before hand including the costs of your packaging. You may be able to "sweeten" the deal by offering free shipping if you need something to close the sale. Keep in mind that what you establish on the first order may effect future orders so if you cannot afford to offer free shipping do not - or establish up front that future orders will require shipping charges.
Your retailer may ask you about reorders. Some wholesalers offer no minimums on reorders. Some offer no minimum on reorder but raise the wholesale price if less than X is ordered. This, again, is up to you the seller to determine what you will offer. For example - on one item that I wholesale I offer free shipping on quantities of six but on reorders if less than six are ordered the price is slightly higher and I add shipping charges. It is worth the retailers while to reorder six or multiples of six at one time.
When should you get paid? If the retailer is a major business - a large department store or a known business you should be safe accepting payment by check after the shipment is received. With a big business you know that they will not run away and they really cannot hide from you or your attorney (if it ever came down to that). To protect yourself always have something in writing - a sales agreement that they sign and return to you (with that sales tax form) or an email that clearly states the agreement of the sale and the name of the person who is making the arrangements for the store. Get this no matter how big the business is! Your agreement in writing is what is known as a "Letter of Credit". This is something else that real businesses are fully aware of and have no problem with.
If you are dealing with a small business - even a brick and mortar store - especially one that is out of your local area, get paid up front before your ship. Tell the business that it is your policy to be paid on all first orders (or all orders) before delivery. If they have a problem with this, find out why. Do they not trust you? Should you then not trust them? Do they not have the money right now? You are not in the business of making loans. Be sure that you are paid - and when you get the check, deposit and make sure that it clears before you send your shipment to them. You may also want to place into your written agreement that bounced checks will require a $25 fee. Your bank is going to charge you a fee if you deposit a check and it bounces. Cover yourself in advance. Stores have no hesitation to have this policy when they take your check.
What happens if you are dealing with a local brick and mortar store and they want to hand you a check when you hand deliver the items. For the most part you are going to just take the check and hand over the merchandise and take a chance. Here is another example of knowing absolutely where they are and that you and your lawyer can find them if need be. Let's hope that shops have some integrity. Most do!
So you have made your first wholesale sale! You now know what to do and the best thing is that usually you will hear from that shop again wanting more!
When you sell wholesale you are going to sell in quantity. You determine that quantity. It may be determined either in number of pieces or a minimum dollar amount. For example - wholesale order is a minimum of 12 pieces. This means the retailer must by 12 pieces from you at the same time. If your work is uniquely one of a kind for each piece then these 12 might be completely different. If you make earrings and bracelets you may require that the order be 12 pairs of earrings or 12 bracelets, but not mixed. If you wish to offer them mixed you might do that as well. If you can duplicate items and make several the same then you could offer the order as 12 of one design. This is all up to you as the wholesaler. You set the terms. The other example is by dollar amount - wholesale order is $100.00. The retailer may buy anything that they want from you at wholesale as long as they purchase a minimum of $100 in merchandise.
It is this bulk buying that can make it easier for the craft artist to lower the price needed for any item. Often you can make two items in the same time that you can make one. You have the same tool and work area set up time, the same equipment to set up, etc. but you now can use that one set up for two items - you have just cut your labor time by a significant amount. Sometimes you can make three or four or even six items in almost the same time as you could make one or two. Now you have decreased your labor time even more. Supplies in bulk often cost much less than supplies purchased a few at a time. You have just reduced your materials costs to fill a bulk order. See where this is going. Of course, with some things you are not going to save very much time or expense money, but whatever you can trim on your end will help you offer your work at a wholesale price that is attractive to a retailer. Also keep in mind that the time that you put into selling your work is time that may not be compensated for. By selling in quantity you are putting much less time and effort into selling a dozen items at one time than selling each of the 12 one at a time. Here it is worth your while to make that wholesale sale - even if your prices are a little lower than you would like. (Don't lose money, however. No sale is worth losing money over.)
Now that you have established good wholesale prices you are ready to make wholesale offers. I am not going to go into finding retailers to sell to here. Rather, I am going to concentrate on retailers who find you and ask if you will sell your work to them wholesale. Before we go on, understand the difference between wholesale and consignment. A wholesale sale is an outright sale - you receive the money for the goods up front, deliver the goods, and the transaction is over. A consignment arrangement is not a sale - it is the opportunity for a sale. When you sell "on consignment" the retailer takes your goods and you get no money until each item sells. You will then get a percentage of the sales price - which is generally 40 to 50%. You need to offer your work to the consignment shop at full retail and then you must be satisfied with the 60% or 50% of that price as your sale. Consignment is a whole other complex area and we will go into it in detail in a future article.
So, a retailer contacts you and says that he/she would like to buy from you wholesale. What do you do? First, you want to make sure that this wholesale offer is from a legitimate retailer with a sales venue - either a brick and mortar store, an established catalog, or an active internet sales site. You want to verify that this is not someone who is just looking to buy your work at a discount. If this is a store that is local to you visit it. If this is a catalog retailer, get a copy of the catalog. If this is an internet site, check it out. When you speak or email with this shop get as many details up front as you can. Always be polite. Never be demanding. Try to be as diplomatic as possible. Flatter them and be discrete at finding out what you need to know. If this is a brick and mortar shop and you can see it you do not need to ask anything - your proof of legitimacy is in the concrete - as long as it is a store that actually sells the things that you are wholesaling. If you sell jewelry it is unlikely that a plumbing shop is going to be selling jewelry retail. So just be cautious and you won't be scammed.
When you are satisfied that you are in a legitimate situation, present your wholesale pricing and minimums to the retailer. If this is a local shop you might answer the initial inquiry by making an appointment and going in to meet with the wholesale buyer. If not, then you are doing this by email, mail, or over the telephone.
If you are dealing with a retailer in your state and you are in a sales tax state, you are going to also present to the retailer that you require a signed copy of their business's sales tax form. This will cover your wholesale sale obligation with your state's sales tax requirements. If the store buyer has a problem with this there is something seriously wrong with this transaction. This is standard retail buying procedure. It is expected and any buyer who is unaware of this or refuses to provide this is doing something wrong. This is a warning signal to walk away!
When you present your prices also present your shipping and "handling" prices. This should not surprise the retailer either. They are seldom offered free shipping and expect to pay shipping costs as a day to day cost of business. Shipping in bulk is cheaper than shipping one item at a time. Know what it will cost to ship your items before hand including the costs of your packaging. You may be able to "sweeten" the deal by offering free shipping if you need something to close the sale. Keep in mind that what you establish on the first order may effect future orders so if you cannot afford to offer free shipping do not - or establish up front that future orders will require shipping charges.
Your retailer may ask you about reorders. Some wholesalers offer no minimums on reorders. Some offer no minimum on reorder but raise the wholesale price if less than X is ordered. This, again, is up to you the seller to determine what you will offer. For example - on one item that I wholesale I offer free shipping on quantities of six but on reorders if less than six are ordered the price is slightly higher and I add shipping charges. It is worth the retailers while to reorder six or multiples of six at one time.
When should you get paid? If the retailer is a major business - a large department store or a known business you should be safe accepting payment by check after the shipment is received. With a big business you know that they will not run away and they really cannot hide from you or your attorney (if it ever came down to that). To protect yourself always have something in writing - a sales agreement that they sign and return to you (with that sales tax form) or an email that clearly states the agreement of the sale and the name of the person who is making the arrangements for the store. Get this no matter how big the business is! Your agreement in writing is what is known as a "Letter of Credit". This is something else that real businesses are fully aware of and have no problem with.
If you are dealing with a small business - even a brick and mortar store - especially one that is out of your local area, get paid up front before your ship. Tell the business that it is your policy to be paid on all first orders (or all orders) before delivery. If they have a problem with this, find out why. Do they not trust you? Should you then not trust them? Do they not have the money right now? You are not in the business of making loans. Be sure that you are paid - and when you get the check, deposit and make sure that it clears before you send your shipment to them. You may also want to place into your written agreement that bounced checks will require a $25 fee. Your bank is going to charge you a fee if you deposit a check and it bounces. Cover yourself in advance. Stores have no hesitation to have this policy when they take your check.
What happens if you are dealing with a local brick and mortar store and they want to hand you a check when you hand deliver the items. For the most part you are going to just take the check and hand over the merchandise and take a chance. Here is another example of knowing absolutely where they are and that you and your lawyer can find them if need be. Let's hope that shops have some integrity. Most do!
So you have made your first wholesale sale! You now know what to do and the best thing is that usually you will hear from that shop again wanting more!
Wednesday, February 20, 2008
Selling Wholesale - Part I
The question often comes up from new craft artists. What do I do if I am asked to sell wholesale? This is the ultimate in craft sales. This is what every craft artist should want! At wholesale you will sell in quantity and you will have the potential for continued wholesale orders - if your item becomes popular at the retailer's shop.
I have had success at selling wholesale to shops and to catalogs. It is a wonderful feeling to know that your work is being sold in stores. To sell wholesale there are a few things that the craft artist must know.
In anticipation of any wholesale sales the craft artist needs to determine the wholesale pricing of their work. When a retailer sells an item the retailer generally doubles the price paid at wholesale for that item and that becomes the retail price. Some retailers triple their items. Amusement parks are known for tripling wholesale prices on souvenirs and other things that are sold in the park. When a retailer is looking to purchase items at wholesale the retailer is looking to see that your prices are able to be doubled (in the industry this is called "Keystoning") and that the wholesale price that you are offering is below the price that the item is currently selling for to the general public. Pricing is a difficult issue for many artists and craftspeople. They tend to devalue their work and place lower than market prices on their work. There is a whole psychology of this that we will not go into here, but it is important to understand the basics of pricing.
To price an item you need to take the costs of all materials, supplies, and expenses that make up an item and then add that to an hourly rate that you as the artist must determine that your labor and talent are worth. Start with the minimum wage and work up from there. You should certainly be paid the minimum wage. Of course, you should be paid more than the minimum wage. It is up to you to decide what you are worth per hour. Multiply the number or fraction of hours that it took to create your item. Add that item to your costs. Your wholesale price should be the result.
You are not finished yet. To sell that item on your own you may have other expenses. If you are on an internet site that charges fees you now need to add those fees. If you sell at a craft show the table space will cost you money. You need to proportion that into your prices. If you take credit cards or use Paypal you must pay fees. Those fees need to be added into the price. Ideally when you are done you are at or near doubling that wholesale price that you came up with a few moments ago. (See why retailers double your wholesale price - they have these expenses too, only greater if they have a brick and mortar store.) Many craftspeople will feel that their item will not sell at double that initial price and feel uncomfortable about offering the doubled price when they try to sell the item on the internet or at a craft show. Eager to make sales they often offer their wholesale price to the public. This is a problem when it comes to selling wholesale. As I said earlier, retail shops do not want to compete with you and want to see that the price that they are paying wholesale is significantly less than your usual prices.
TO BE CONTINUED!
I have had success at selling wholesale to shops and to catalogs. It is a wonderful feeling to know that your work is being sold in stores. To sell wholesale there are a few things that the craft artist must know.
In anticipation of any wholesale sales the craft artist needs to determine the wholesale pricing of their work. When a retailer sells an item the retailer generally doubles the price paid at wholesale for that item and that becomes the retail price. Some retailers triple their items. Amusement parks are known for tripling wholesale prices on souvenirs and other things that are sold in the park. When a retailer is looking to purchase items at wholesale the retailer is looking to see that your prices are able to be doubled (in the industry this is called "Keystoning") and that the wholesale price that you are offering is below the price that the item is currently selling for to the general public. Pricing is a difficult issue for many artists and craftspeople. They tend to devalue their work and place lower than market prices on their work. There is a whole psychology of this that we will not go into here, but it is important to understand the basics of pricing.
To price an item you need to take the costs of all materials, supplies, and expenses that make up an item and then add that to an hourly rate that you as the artist must determine that your labor and talent are worth. Start with the minimum wage and work up from there. You should certainly be paid the minimum wage. Of course, you should be paid more than the minimum wage. It is up to you to decide what you are worth per hour. Multiply the number or fraction of hours that it took to create your item. Add that item to your costs. Your wholesale price should be the result.
You are not finished yet. To sell that item on your own you may have other expenses. If you are on an internet site that charges fees you now need to add those fees. If you sell at a craft show the table space will cost you money. You need to proportion that into your prices. If you take credit cards or use Paypal you must pay fees. Those fees need to be added into the price. Ideally when you are done you are at or near doubling that wholesale price that you came up with a few moments ago. (See why retailers double your wholesale price - they have these expenses too, only greater if they have a brick and mortar store.) Many craftspeople will feel that their item will not sell at double that initial price and feel uncomfortable about offering the doubled price when they try to sell the item on the internet or at a craft show. Eager to make sales they often offer their wholesale price to the public. This is a problem when it comes to selling wholesale. As I said earlier, retail shops do not want to compete with you and want to see that the price that they are paying wholesale is significantly less than your usual prices.
TO BE CONTINUED!
Sunday, September 9, 2007
Featured Artist of the Week
Our featured artist of the week has a shop called Handmedowns - but don't let the name fool you - this is all original work.
Here is our interview with the artist, Carrie -
Describe what you make?
I'm a photography student by day, a knitter and bookmaker by night! I make photography using a large format camera (the kind with the accordion looking bellows) and negatives that come in 4"x5" or 8"x10" sheets. Often I print them in the darkroom using traditional or historical processes, but you can also find more affordable digital prints in my etsy shop. I knit all kinds of things in my free time. I love knitting baby items because they go so quickly, but I'm also a huge lace knitter. The finer the yarn the better! I began making handmade books to store some of my photography because I felt nervous about the archival quality of plastic portfolio sleeves and every day books available in brick and mortar stores. I'm really nuts about the beautiful papers available that are of the highest archival quality!
What mediums do you enjoy working in most?
That's really hard to answer because photography and knitting each have a really special place in my heart. I would have to say without photography I feel like half a person. If I go too many days without shooting or printing in the lab, I just don't feel like myself! That can be both a curse and a blessing.
How long have you been creating craft?
I remember being really small and making crafts with my mom and little friends for my birthday party. I would make things with my mom all the time. I can't remember a time when I wasn't crafting!
How did you get started?
I'm so lucky to have been raised surrounded by people I would call crafters. My grandfather is a woodworker, my great grandmother was a seamstress and my mother followed suit, while my grandmother was a knitter. My crafting and creating was always encouraged, and I'm so blessed to have a family that supports and appreciates my need to have a career making photographs. I learned to knit and sew from the women in my family, and obtained a technical aptitude from my grandfather that has certainly played into my success with photography. It just happened.
Where does the name of your shop come from?
I love the idea that people treasure handmade goods, and that often they become family heirlooms or treasures. I wanted my shop to reflect that idea of passing handmade items on like hand-me-down clothing.
What would you most want people to know about your work?
That it means something special to me to make it, and I hope people will see that. I just want to make that connection with one person so that they too will feel something special about what I've made. That's what it means to be an artist: to communicate something using a sensory language. I feel exactly the same way about my handknit sweaters and shawls as I do about my photographs.
What words of advice do you have for other artists?
We can't make everything perfect all the time, and it takes a while to learn how to make things perfect. When you get in a funk or make mistakes, just remember that the lull or the mistakes will surely bring about your next works. A mistake or what feels like a creative block will undoubtedly make your next creations better! Try not to dwell on them... just work through it toward the next thing.
__________________________
Carrie does very nice work and you must go look at Handmedowns.
And while you are at Etsy come visit with us!
Here is our interview with the artist, Carrie -
Describe what you make?
I'm a photography student by day, a knitter and bookmaker by night! I make photography using a large format camera (the kind with the accordion looking bellows) and negatives that come in 4"x5" or 8"x10" sheets. Often I print them in the darkroom using traditional or historical processes, but you can also find more affordable digital prints in my etsy shop. I knit all kinds of things in my free time. I love knitting baby items because they go so quickly, but I'm also a huge lace knitter. The finer the yarn the better! I began making handmade books to store some of my photography because I felt nervous about the archival quality of plastic portfolio sleeves and every day books available in brick and mortar stores. I'm really nuts about the beautiful papers available that are of the highest archival quality!
What mediums do you enjoy working in most?
That's really hard to answer because photography and knitting each have a really special place in my heart. I would have to say without photography I feel like half a person. If I go too many days without shooting or printing in the lab, I just don't feel like myself! That can be both a curse and a blessing.
How long have you been creating craft?
I remember being really small and making crafts with my mom and little friends for my birthday party. I would make things with my mom all the time. I can't remember a time when I wasn't crafting!
How did you get started?
I'm so lucky to have been raised surrounded by people I would call crafters. My grandfather is a woodworker, my great grandmother was a seamstress and my mother followed suit, while my grandmother was a knitter. My crafting and creating was always encouraged, and I'm so blessed to have a family that supports and appreciates my need to have a career making photographs. I learned to knit and sew from the women in my family, and obtained a technical aptitude from my grandfather that has certainly played into my success with photography. It just happened.
Where does the name of your shop come from?
I love the idea that people treasure handmade goods, and that often they become family heirlooms or treasures. I wanted my shop to reflect that idea of passing handmade items on like hand-me-down clothing.
What would you most want people to know about your work?
That it means something special to me to make it, and I hope people will see that. I just want to make that connection with one person so that they too will feel something special about what I've made. That's what it means to be an artist: to communicate something using a sensory language. I feel exactly the same way about my handknit sweaters and shawls as I do about my photographs.
What words of advice do you have for other artists?
We can't make everything perfect all the time, and it takes a while to learn how to make things perfect. When you get in a funk or make mistakes, just remember that the lull or the mistakes will surely bring about your next works. A mistake or what feels like a creative block will undoubtedly make your next creations better! Try not to dwell on them... just work through it toward the next thing.
__________________________
Carrie does very nice work and you must go look at Handmedowns.
And while you are at Etsy come visit with us!
Sunday, June 17, 2007
Craft Show Tip of the Week
Bring change. You are going to need small bills and possibly coins (depending on the prices of your pieces). Stores often start with $40 in the cash register in ones and fives. That is the minimum that you will need at the start of the craft show day. If you sell high price tag craft you may need a lot more to start. You are better off with fives than tens and twenties. You can always use the fives to make change for anything larger. Never rely on getting change from the booths around you - they need their change for their sales!
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