Need Help Understanding Commission When Selling Jewelry in Retail Boutique

by Angie Pinion Kelley.

Need Help Understanding Commission When Selling Jewelry in Retail Boutique  - Discussion on Jewelry Making Journal

The boutique owner asked if I double what it costs me to make my merchandise (actually I do x3) and I said yes.

So she wants to keep 10-20% commission on what it costs me to make it.

If I’m selling a necklace for $30 and it cost me $15 to make(actually $10), at 20%, she’d get $3.

Confusing, yes?

I want to cover myself. I actually mark up x 3 + hourly rate.

Thank you.

by Angie Pinion Kelley

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  • Susan says:

    That’s a very strange set-up for commission. The normal commission for a store owner selling your goods is a mark-up of anywhere from 40 – 75% on your wholesale price. Either this boutique owner is doing you an awfully big favour and taking an extremely small commission, or this is a bonus commission, added on to the first.

  • Karen Robison says:

    Yes, confusing but such a low rate. Most commissions I have dealt with lately take 40 to 50% of your full retail price. I no longer work with any of these places. You should also make sure whether she collects and submits any applicable sales tax for your items that she sells in her store.

  • Jim Horth says:

    As the others have commented, this is a very odd request. Why would a shop owner want to know your costs? Does a grocery store owner ask a dairy farmer how much it costs him to produce a gallon of milk? I would never share my costs with anyone.

  • Rose says:

    Hi there,

    I’ve been selling to a local gallery which has a markup of 35%. That’s rare, and so I have made jewelry for them for 3 years, and have put in over a hundred pieces.

    When I started out, I was just learning and lacked confidence, but as I have progressed my pricing strategy has changed.

    I used (loosely) Rena’s pricing formula, and counted my costs pretty carefully and multiplied it all by 4. But since I work in fits and starts I don’t track my hours per piece. I also went crazy trying to track prices of each component, or length of wire etc.

    So now, I track cost of materials, multiply by 4, add 35% and then stand back and look at the piece for its uniqueness and marketability, asking myself, “In this shop, and in this town, along with things I see at other venues, what will a person pay for this?”.

    A necklace that came to $375 in components plus markup, I’m selling for $525.
    it’s a stunning piece. Another came to $320 , but I sold it for $370. It’s not as striking a piece. It’s an intuitive process.

    I like what a jewelry shop owner told me once, “They’re not paying for the beads, they’re paying for your design”.

    Sincerely, Rose

  • Sandra meuse says:

    I’m new at designing jewelry a friend said try consignment stores so I went to a popular shop in my city.The woman asked what I sold my earrings for.? The small dangles and studs go for $10 and $13 she said she would give me half but had to have an agreement with me that I would never offer what she consigns from me at a lower price anywhere at anytime and she follows social media and knows most consignment store owners and keeps tabs on her customers…wondering what most consignment owners do? I walked out of this shop and would never go there even as a customer

  • Irene Vrbensky says:

    Excellent quote at the end. Thank you. Will remember that quote.

  • Carol Santora says:

    Galleries have contracts for a reason. Most do not want their artisans selling work within a 50 mile radius of their shop. This has been my experience as an artist for over 35 years. As artists we control our retail pricing, and have to price our work so that we are satisfied with 50% of the retail, and of course that it covers our materials and a satisfactory amount of our labor time. When we sell direct to a client it is a bonus that we get 100%. We are undercutting our galleries when we sell too close to their locations and for a lesser amount. It is unethical to sell our jewelry or art for less than what it is in a gallery priced at. You will ruin your reputation if you get known for doing this. A gallery/shop advertises and puts you out there… If an artisan doesn’t like these contracts they would be better off to sell at shows and on the web.

  • Jo L. says:

    This is perfect timing for me. I am going to be the featured artist at a posh boutique. They will be giving me 50%. My prices are generally low when I do a festival. What is a good formula?

  • Responding first to the follow-up conversation, it’s important to price your work in a way that allows your business to grow. That means including both materials and labor in your costs, so that as time goes on you have the option of hiring help or outsourcing some parts of the process. And it means putting on a proper markup so that you can sell wholesale or through galleries.
    Typically, as others have said, that means coming up with a figure for labor and materials. That is your cost. You double the cost to arrive at your wholesale price, and multiply it by four to figure your retail price. (If that seems excessive, remember that your studio overhead, office costs, and wholesale marketing costs all have to come out before you have a profit at wholesale. And don’t forget, you pay for the retail venue, travel, marketing, and advertising when you sell your work directly to the public.)
    Stores that buy wholesale expect to be able to double their money, because they too have to cover store overhead and advertising. (If they take your work on consignment, they don’t have the investment up front in the goods they’re selling. And you are not only sharing the risk, but you’re tying up your own money. So 35 to 40 percent of retail is a reasonable commission for a consignment store.) Galleries may charge a higher commission, but it’s implicit in the gallery concept that they’ll also shoulder a higher level of promotion and marketing, such as an opening reception, mailings, and possibly a catalog.
    With those concepts as background, your wholesale accounts, consignment venues, and galleries are your partners in getting your work before the public. No venue is going to invest money, space, or marketing on your line if you turn around and undercut them by selling for less than the retail implied in your wholesale or consignment arrangement. If you plan to sell at wholesale, it’s your responsibility to set and stick to a retail price that works on all of these levels.
    So to go back to the original question…OP is likely not charging enough at retail to have a comfortable wholesale price point. Your wage should be included in your cost figure, IMHO.
    But the shop owner’s suggested commission is bonkers. Either she’s new, she’s unrealistic about her own costs, or she misspoke in some way. I would simply tell her the retail price of your item and ask her what percentage she takes of retail. Maybe that will clear things up without requiring you to reveal your costs.

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