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View Full Version : 230% markup - can this be right?



Milomade
29-10-2009, 10:02 PM
I've got a meeting with a potential stockist tomorrow and wondering whether or not to cancel it. They told me via email that they put a 2.3 markup on all items.

So if my cost price for something is £10 - that's what I'll get, but they will sell the item for £23 getting £13 out the sale.

Is that normal? I think it's a bit much! I#m not sure it will be worth my while.

Any opinions?

Sheltie
29-10-2009, 10:08 PM
When I was starting out I was warned that some mark jewellery up by 300-500%. As a result I pick and choose very carefully.

Those that stock my items only normally work on about 50%, but they are mainly museums and archeology sites

Milomade
29-10-2009, 10:11 PM
I'm not sure it's worth it for me and very tempted to give them a ring in the morning and tell them that. Feel a bit odd doing that though. If I lived in Edinburgh I would go, but as i've got to make a 40 mins train journey and a 20 minute walk to get there, I don't want to waste their time or mine.

Sheltie
29-10-2009, 10:16 PM
Least they have told you before you turn up. I know the temptation is to take all the outlets you can get when getting going but sometimes it is not worth the hassle.

I think I would be inclined to tell them to sling their hook.

Although on second thoughts it might be worthwhile to go and see their shop and see if you want your goods to be there. It may not be suitable or what you feel your jewellery needs (ie to cramped, a lot of stock, jewellery lost in display, etc)

Just some thoughts

mizgeorge
29-10-2009, 10:18 PM
I'd say that was fine as a markup. I think it's easy to have a picture of our retailers sitting there counting the profit, but the reality is very different. Their overheads are huge, from premises to display to staff to rates to advertising and so much more. As long as you have built your own profit into your wholesale price, it's entirely up to them what they sell for. I have less sympathy for people only offering sale or return terms however ;)

Jayne
29-10-2009, 10:23 PM
Hi there
I used to work in retail buying. Those margins are within normal parameters.
If you sell to them at wholesale then your own retail price would probably be close to theirs. The thing that you and they will both want to think about is - Are you selling these designs exclusively to them? They won't want to be undercut by other people selling the same (or similar) thing, or by your own website. Before you meet with them it may be useful to let them know your own retail prices and let them decide.
Good Luck :Y:
(btw you're worth it)
J x

Milomade
29-10-2009, 10:24 PM
I think I'm going to go. I already know the shop and it's in a good location. They've asked to see a range of my stuff, but I think the only way it will work for me is I ask them to just stock one type of item e.g. my button pendants or just my button bracelets. My biggest issue is that I would want to sell these items in my online shop and at my local stockists in Fife - so if in Edinburgh the item is twice as much as it is online or in Fife - are people going to buy it from them?

Milomade
29-10-2009, 10:26 PM
for instance - if I sell my new range of button charm bracelets for £30, I get £30 - if they sell it, I get £13 about - that's not much more than the cost of materials!

Boo
29-10-2009, 10:29 PM
I'm with George on this - having run a shop for several years - not jewellery though. My pricing then was to take then price I paid, double it and then round it up or down depending on what seemed like a decent price.

So if something cost me £1.08 wholesale, I'd retail it at £2.25 or £2.50 if the product could stand it - or maybe only £1.99 if that seemed to much or I could sell a lot of them.

The overheads of running a shop are scarily disproportionate - business rates, insurance, rent, utilities etc. +130% sounds reasonable to me - I'd be surprised if you get in anywhere at much less than that.

Jayne
29-10-2009, 10:36 PM
for instance - if I sell my new range of button charm bracelets for £30, I get £30 - if they sell it, I get £13 about - that's not much more than the cost of materials!

that's the dilemma of selling wholesale ;)
you don't have the headache of dealing with customers, or even finding them, you just produce the stock and supply someone who will do that for you. On the otherhand you make less of a margin.
I get the feeling that your wholesale price may not reflect the true worth of your jewellery - have you included an hourly rate?
Just a thought,
J x

Milomade
29-10-2009, 10:37 PM
I undertand all of that and I know about overheads so if they want to put a 230% markup on the items they stock, fine. It's whether it's worth my while financially to get such a low return on the items as I have overheads too. This is a sale or return deal - not wholesale.

Boo
29-10-2009, 10:42 PM
for instance - if I sell my new range of button charm bracelets for £30, I get £30 - if they sell it, I get £13 about - that's not much more than the cost of materials!
If you're thinking like this, it would suggest that you've got your prices wrong - too low. I'm just the same, hence it wouldn't be worth selling wholesale for me at the moment. I'm effectively selling retail at wholesale prices.

Someone on Etsy explained the way they do it and the penny dropped for me - it suddenly made sense - you work out a price that covers your costs and time and overheads and this becomes your wholesale price - the price you won't sell below - wouldn't be worth doing so. This is your actual item price.

You then add whatever factor is appropriate to bring that to a retail price - usually a factor of something like +125%. If you sell it yourself, the retail mark up is yours - you have marketed it, paid for your site etc. etc. out of the retail portion of the price - you pay yourself for the effort of selling it. If a shop/gallery buys it at your wholesale price, you get what the item is worth to you to sell it at - the first price you set - and they reap the 125% retail profit for making the effort and their costs in selling it.

So in reality, your bracelets should be a wholesale price of £30 and you/the shop should be selling them retail at £65.

mizgeorge
29-10-2009, 10:45 PM
I'm afraid I can't publish my opinions on SoR here, as I would be likely to offend with my bad language.

If they think they can sell your work, they should be buying it. Simple as that.

Milomade
29-10-2009, 10:47 PM
I agree with you there and I understand what you're saying about having a retail price so that when it comes to selling wholesale I get a good return - maybe my prices are too low - but they're based on what I think people will be willing to spend - I don't want to price myself out of sales as I'm not sure someone will buy one of my bracelets for £65!

Boo
29-10-2009, 10:48 PM
I'd concur, I wouldn't even entertain SoR - I hadn't realised that was what it was we were talking about.

If you do go that route, ensure that you have a good written agreement - what happens if it gets damaged, who insures it, credits on the displays etc.

Milomade
29-10-2009, 10:49 PM
why are you guys so against SOR? just out of interest? My stockists on Fife are both SOR.

Jayne
29-10-2009, 10:53 PM
I'm not sure someone will buy one of my bracelets for £65!

This might be a good way to find out!
If you put it on you website for £65, then the cat's out of the bag and you might not be able to get it back in again (is that an allegory too far?). If you can get a 3rd party to try selling it for £65 then you may just be pleasantly surprised; if it doesn't work you haven't changed your website & it's business as usual ;)
why not give it a try?
J x

Boo
29-10-2009, 10:57 PM
[...] maybe my prices are too low - but they're based on what I think people will be willing to spend - I don't want to price myself out of sales as I'm not sure someone will buy one of my bracelets for £65!
In that case, your pricing model and rationale doesn't allow for selling to shops. If you are happy to sell at £30 as that's what you think people will pay, be happy with it and forget about wholesale (or be willing to sell at ridiculously low prices) - which is what I have done.

My own pricing strategy has priced me out of that particular market at this particular time. I'm perfectly happy with that arrangement. Maybe in future I'll rethink. But I don't think my work can yet command the higher prices I'd need to set i order to work successfully in than manner - just as you're finding.

Milomade
29-10-2009, 11:01 PM
Right I'm going to sit down and re-work out my prices and do as you suggest - cover cost of materials / overheads / my time and that'll be my wholesale price and then add a percentage markup to that to make a retail price - I'll go for 130% for example - that way I'm covered financially.

And you're right it's a good way to test the market out and see if thing will sell.

Problem is, I'm doing my first craft fair next week - so do I use my retail price for that and all the other craft fairs in November or my wholesale price. I'm getting that horrible sinking worried feeling again.

Milomade
29-10-2009, 11:12 PM
ok numerically dyslexic - how do I figure that out?

Milomade
29-10-2009, 11:13 PM
what do you guys have as an hourly rate?

Boo
30-10-2009, 05:37 AM
Sorry, I'd gone to bed.

I'm sorry, but I'm not going to discuss specific numbers in a public forum (or even privately), but if you want help ascertaining your own figure, this free spreadsheet from Chris Parry is really good for working out a number. It's a spreadsheet and you put in your own numbers and over several sheets it gradually works out an item price for you. It's quite an eye opener.

The early and really useful part of it is ascertaining your hourly rate - it starts by asking how many hours a month you're expecting to work, how many will be spent non-creating, the annual income you want to generate etc. That gives you a basic hourly rate, to which you then add other indirect costs you need to cover, like utilities, insurance, repairs, marketing etc. - this then gives a second total to add to your hourly rate in order to cover those costs in the hours you've said you'll work. You then add the direct costs like packing materials, the items raw materials and it works out a wholesale and retail price based on that information and how long you spent making the piece.

And the final figure will be a lot higher than you'd expect. It gives an absolute minimum price to cover costs and time, a wholesale price which gives you some profit and the retail price.

Chris Parry -Bespoke Jewellery: Free Spreadsheet for pricing your work. (http://chris-parry.blogspot.com/2007/12/free-spreadsheet-for-pricing-your-work.html)

Boo
30-10-2009, 05:45 AM
I meant to add, working through the calculations, my own prices are a little above the wholesale price, meaning I'm covering everything I need to - but that doesn't leave enough capacity to go down the wholesale route.

I am gradually adjusting new prices higher for 2 reasons, one of which is that I simply think they're too low at present and in the coming months my jewellery sales are going to be more important to my income as I'm already under notice with my day job as the contract is concluding in the New Year - and I can't survive longer term on current prices - as some of my costs are covered by other work at the moment, but won't be in future.

I'm off out this morning for an early appointment, but I'll return later.

Solunar Silver Studio
30-10-2009, 07:31 AM
If you're thinking like this, it would suggest that you've got your prices wrong - too low. I'm just the same, hence it wouldn't be worth selling wholesale for me at the moment. I'm effectively selling retail at wholesale prices.

Someone on Etsy explained the way they do it and the penny dropped for me - it suddenly made sense - you work out a price that covers your costs and time and overheads and this becomes your wholesale price - the price you won't sell below - wouldn't be worth doing so. This is your actual item price.

You then add whatever factor is appropriate to bring that to a retail price - usually a factor of something like +125%. If you sell it yourself, the retail mark up is yours - you have marketed it, paid for your site etc. etc. out of the retail portion of the price - you pay yourself for the effort of selling it. If a shop/gallery buys it at your wholesale price, you get what the item is worth to you to sell it at - the first price you set - and they reap the 125% retail profit for making the effort and their costs in selling it.

So in reality, your bracelets should be a wholesale price of £30 and you/the shop should be selling them retail at £65.

Thanks for explaining that so well Boo....but...OMG...it's scary!!

Milomade
30-10-2009, 07:39 AM
thanks for all the help. I made a conscious decision to make a new price list for my work based on all your suggestions - thanks Boo for the spreadsheet - that's going to be a great help. I'm wanting to spend more time on Mil;omade next year and less time web designing so like yourself I need to reconsider prices too.

shelliem
30-10-2009, 07:40 AM
I don't know if it's too late to add to this thread but I used to work in the Gift Industry selling handmade wooden toys which were to be honest not that great quality but looked good and very unique (which is why I left because morally it didnt sit with me).

However, because the products were so unique people used to pay the price for them which I certainly wouldnt have paid - knowing how much they cost and the quality of them.

One of the issues we used to get from our customers (the retail outlets) was that our retail website was undercutting their website, so the company had to make a decision about whether to ultimately sell via the website and lose the retail business from the customers complaining or do something about the website.

They chose to change the prices on the website to a retail price and the extra money that they charged more than covered for the loss of business they recieved from some of their online customers. We still sold at trade prices at fairs etc.

Also I'm not sure how you would do this but we used to have something listed in the shop which generated repeat business, which also gave us an excuse to call our customers every month and retain business and shop space - which in this case were letterboards which had letters for childrens bedrooms, the shop needed to keep them updated or they would have wasted their original start up cost of it and customers used to love them. I'm not sure how I feel about the ethics of this however most of the shops would have generated more profit from these letters than the other items they sold from the company.

Maybe some food for thought ?

Solunar Silver Studio
30-10-2009, 07:44 AM
The pricing spreadsheet looks really interesting too.... Thanks!:Y:[]

Milomade
30-10-2009, 07:51 AM
right I'm off for my meeting - quite nervous now - don't want to come accross as a bumbling numerically dyslexic idiot - but I've got 40 minutes on the train to have a good think and calm down.

Petal
30-10-2009, 08:00 AM
I've sent you a PM !!!!

Good luck Evie

Love

AlexandraBuckle
30-10-2009, 08:33 AM
Good luck at the meeting Milo.
I don't have much to add about the pricing that others haven't already mentioned. But i'm happy to discuss my prices etc via PM if you need more help :)

Jayne
30-10-2009, 09:03 AM
what do you guys have as an hourly rate?

There's a thread called:

'Things learnt from my event & feedback'

it might be helpful :) (sorry - don't know how to do the linky thing)

Good Luck today:Y:
J xx

Solunar Silver Studio
30-10-2009, 09:26 AM
http://www.cooksongold.com/forum/general-jewellery-chat/1128-things-learnt-my-event-feedback.html#post16327

At the top of each post on a thread...the dark blue bar...there is the word 'permalink' If you click on that and then copy the url from the address bar, when you paste that into your post the link is made. If you want to connect to a single post within a thread then I think you click on the post number - next to the permalink and then copy and paste that url. Well - that is how I do it anyway... There might be an easier way but I found that one out by trial and error!!

Jayne
30-10-2009, 10:52 AM
http://www.cooksongold.com/forum/general-jewellery-chat/1128-things-learnt-my-event-feedback.html#post16327

At the top of each post on a thread...the dark blue bar...there is the word 'permalink' If you click on that and then copy the url from the address bar, when you paste that into your post the link is made. If you want to connect to a single post within a thread then I think you click on the post number - next to the permalink and then copy and paste that url. Well - that is how I do it anyway... There might be an easier way but I found that one out by trial and error!!

Thanks Barbara :)
I think I've got a steep learning curve ahead if I'm going to have my own website lol :eek:
J x

Petal
30-10-2009, 04:43 PM
I wonder how Evie got on with her shop(s) in Edinburgh. I hope they give her a good price for her lovely jewellery and that she is happy with how it went.....

x

AlexandraBuckle
30-10-2009, 05:06 PM
I wonder how Evie got on with her shop(s) in Edinburgh. I hope they give her a good price for her lovely jewellery and that she is happy with how it went.....

x

Yes I'd love to know how she got on too :)

EmmaRose
30-10-2009, 06:04 PM
good like Milo, for my 2 c- that mark up is low in the market 200-300% more common, in 500% in London due to those rotten overheads and taxes....
I recommend the book Second Steps...it has a great formula for costings and loads more tips.....specifically for crafts people. If you are going to wholesale to people you need to build that into your price structure, and sell yourself at or near the retail price (most people and galleries expect it to be slightly cheaper from designer, say 10%). Don't undervalue your work- the biggest mistake people make!
Em

Carl Martin
30-10-2009, 10:02 PM
I have used a basic formula for the past 13 yrs...it's real easy never fails, never been questioned on my prices, and for what it's worth I'm not cheap, I don't work on an hourly rate never have done. Can't be doing with being bogged down with bloomin spreadsheets. Design it , make it , sell it , it doesn't matter what the heck the formulas are if you miss one of those elements and your work is no good its beans on toast and I'm more of a caviar person.:Y:

MuranoSilver
31-10-2009, 07:27 AM
One of my favourite quotes for business - which seems to apply to all areas...
"Turnover is Vanity, Profit is Sanity but Cash is King"
It basically means that Cashflow is the most important area in any business.

It's no good having high margins ~ if no ones buying.
No use turning over lots of product ~ if it costs more to make than sell.

It's all about balance, how much cash do you need from the back end...
how much are your basic cash needs?
Everything else is just bonus :)

Nic x

Solunar Silver Studio
31-10-2009, 07:30 AM
There is just so much useful advice coming on this thread!! :ta:

amazingbabe
31-10-2009, 09:33 AM
Would love to know how milomade got on in Edinburgh ??

Carl Martin
31-10-2009, 07:18 PM
One of my favourite quotes for business - which seems to apply to all areas...
"Turnover is Vanity, Profit is Sanity but Cash is King"
It basically means that Cashflow is the most important area in any business.

It's no good having high margins ~ if no ones buying.
No use turning over lots of product ~ if it costs more to make than sell.

It's all about balance, how much cash do you need from the back end...
how much are your basic cash needs?
Everything else is just bonus :)

Nic x

Absolutely agree 100 % , well said Nic.

Milomade
01-11-2009, 09:17 AM
Sorry I've been off the radar since Friday - just been busy organising stuff for my first craft fair and trying to finish off some pendants and not succeeding - for some reason yesterday my solder just didn't want to flow and I completely frazzled two pieces out of frustration and perserverance! Hopefully things will be better today.

Anyway - meeting on Friday went well. I didn't use the spreadsheet thing as I dind't have time to go through it and do all the calculations, but I did take a note of all that it was including and on my train journey got my calculator out and did some maths and came up with wholesale prices that I'm happy with, that will cover my cost of materials and overheads and my time. I've decided on an hourly rate I'm happy with too. I then did my retail prices and nade a note of those.

The lady was really happy with my stuff and wants to stock my bracelets, pendants, earrings and spoon/fork rings. She thought my prices were fine and once sh'ed figured out her prices with her markup she was happy with the final totals too and said there wouldn't be an issue selling at those prices in Edinburgh.

The whole process has made me feel a lot more confident in my abilities and also made me realised I was totally undervaluing and underpricing my work.

I had a bit of a crisis of faith, but now I'm back on track and really looking forward to my craft fairs - I'm working on my display today and it's looking good so far.

Thanks so much to everyone for helping me out with all this nonsense and I apologise for all the probing questions. You guys have been a great help as usual and I really appreciate you taking the time to be patient with me and offer your honest opinions.

Jayne
01-11-2009, 06:04 PM
really glad that it all went so well :Y:
J x

Di Sandland
01-11-2009, 06:09 PM
Good for you, Evie. That's another step on the learning curve taken :)