Selling through retail outlets

[MarkN1975]

How much of the sales price should I expect the retailer to keep if they sell my furniture?

I'm being offered 60% to me and 40% to the retailer.

I just got my first product into a small furniture gallery/store.

I was expecting to get more for it than the deal they are offering me but I have nothing to go off.

Any ideas?

[Llama]

That is a pretty standard deal.

[Chet]

I have a small awards business that I run out of my home.  At times I do business with another company that sell sports uniforms and screen printing an the like but they do not do awards.  Occasionally they will get a customer that contacts them about awards, in those cases they get a quote from me and if they can still mark it up some with out sticking it to their customer then we go ahead and work together.  If it works out were there is no margin for them then they may just refer the customer to me.  What I have always told them is I am doing the work, all of the work and I can't lower my price to help them make a profit.  If it works it works if not...  Now this is a bit different but I am operating on a pretty small margin to begin with.

 

Personally I think 60  - 40 is slanted in their favor to much, your materials your labor.  Maybe you should tell them sell it for what ever you want but I need X dollars out of the deal.

[JerrySats]

Who is setting the price for the piece ? You or them ,if it's you just mark it up higher to off set the difference. I think 70-30 would be fair.

[FtrPilot]

40% markup for a retail seller is not out of line.  However, in most cases, the retailer buys the merchandise from manufacturers and wholesalers, warehouses it, and carries the risk if the items don't sell. 

 

If you are entering a consignment type arrangement, where you have the risk if the items don't sell, then I believe that 40% is too high.  You should also confirm how they are calculating the markup. In the business I was in, we calculated and reported everything as Return on Sales (ROS).

 

Sometimes, getting your foot in the door is more important than making a killing on your first sale.  If your product(s) sell quickly, then you may be in a position to negotiate a better rate for the next items.

 

Congratulations...

 

Hope this helps & Good luck.

[MarkN1975]

Who is setting the price for the piece ? You or them ,if it's you just mark it up higher to off set the difference. I think 70-30 would be fair.

I tried but they set the price in their store based on what they think it will sell for. I wanted to price it (a live edge console table on black poplar legs) at $1200... They said they will price it at $995.

[mick]

60/40 is pretty standard. And yes they will know their market & what it will sell for.  (if they didn't, they'd go out of business)

[RPCV_Woodworker]

The only place I've tried this at was in Arlington.  They let you set you price, then they just tack on 30% (or more if they think you undervalued it).

 

I did have some pieces at a consignment shop, rate of 60/40, but nothing sold.  I was hoping they could offload some of my practice pieces...

[..Kev]

My local shops are 40% as well.  Needless to say, I don't have any pieces there.  To get what I need out of it plus their 40%, one of 2 things has to happen.  Either I get screwed or the piece is marked up to a point that it's not going to move.

[Chet]

I think part of the problem too is that most people in society no longer put a value on true workmanship or maybe they don't even know it when they see it.  It seems that people want stuff but won't want to pay for the effort it took to produce the quality.

[..Kev]

I think part of the problem too is that most people in society no longer put a value on true workmanship or maybe they don't even know it when they see it.  It seems that people want stuff but won't want to pay for the effort it took to produce the quality.

 

This is a very fair point!  There's a reason that Ikea does so much business!

[treeslayer]

theres a reason i don't do craft shows, your piece with 12 mortice and tenon joints, pegged and 5 coats of finish is setting next a piece of junk that looks like yours at 1/4 the price you don't have much chance of selling anything, most people don't recognize quality furniture, thats why i stick to custom woodwork

[dwacker]

 A lot of guys believe there stuff is special. 9 times out of ten with this sort of stuff will cost the merchant more to sell the stuff than it cost to make. At 40% they are not making squat unless it sells in less than 30 days.

[nginear]

I don't know about the percentages, but I beleive the real question becomes this.

 

At $995, 60% is $597.  Is $597 going to cover your costs and give you a fair price for your labor?  If not, maybe this is not the route to go.

[RPCV_Woodworker]

 A lot of guys believe there stuff is special. 9 times out of ten with this sort of stuff will cost the merchant more to sell the stuff than it cost to make. At 40% they are not making squat unless it sells in less than 30 days.

 

This is true if we assume the merchant could easily replace what you have with something that is guaranteed to sell.  The fixed operating costs (overhead) get paid no matter what is stocked in the store.  Selling a specific item doesn't have a direct cost (except for sales tax), it has an indirect cost (conventionally known as opportunity cost).  Unless stocking an item directly impedes the sales of other items, it has no negative effect.

 

A good example would be tables: Replacing a crappy display table with a custom piece for sale has no opportunity cost, as it has displaced no sale items, and improves the atmosphere in your shop.  If however, you replaced a shelving unit full of chessboards (we'll assume that they sell very well) then the opportunity cost of adding a table to your inventory would be the sales of chessboards...

[dwacker]

This is true if we assume the merchant could easily replace what you have with something that is guaranteed to sell.  The fixed operating costs (overhead) get paid no matter what is stocked in the store.  Selling a specific item doesn't have a direct cost (except for sales tax), it has an indirect cost (conventionally known as opportunity cost).  Unless stocking an item directly impedes the sales of other items, it has no negative effect.

 

 

 

Any good retail model is based on gross profit per square foot. Sales tax itself is not a cost. The only part of sales tax that is a cost is the cost of accounting such as paying the accountant to file monthly returns to the state. An opportunity cost is the loss caused by not using the space in one way or another. For example I know I can make a GP of $20 per sq ft selling widgets but I like this table better. After I sell the table I can calculate opportunity cost. If the table makes a $10 per sq. ft GP then my opportunity cost is $10 per square ft meaning my profit is $0.

[RPCV_Woodworker]

Any good retail model is based on gross profit per square foot. Sales tax itself is not a cost. The only part of sales tax that is a cost is the cost of accounting such as paying the accountant to file monthly returns to the state. An opportunity cost is the loss caused by not using the space in one way or another. For example I know I can make a GP of $20 per sq ft selling widgets but I like this table better. After I sell the table I can calculate opportunity cost. If the table makes a $10 per sq. ft GP then my opportunity cost is $10 per square ft meaning my profit is $0.

 

My point was more that it is an opportunity cost than an actual cost, which is what I thought you were implying in your post.

 

Also, if you sub out widgets for cutting boards, we used the same example, but with numbers