I know this forum is for art fair vendors, but I'm guessing some of you may have run into a similar situation (although the Wholesale Business category here hasn't had much in the way of posting in a long time, but thought I'd give it a try anyway).
I was approached by a representative of an exclusive, luxury establishment who felt my work would be a great addition to their gift shop. I've been in touch with the buyer, who very much liked my work, and would like to give it a try with a handful of pieces for a few months. She wanted to know if I offered wholesale pricing, and of course, I said yes. She asked me to send her a proposal.
Now the question is: how much is considered wholesale? I've always been under the impression that wholesale is automatically 50% off your retail price but in doing some research online, I see anything from 10% to 70%.
How do you determine wholesale if someone asks you?
Wholesale = (cost of supplies + labor) x 2
Retail = wholesale x 2
This supports the idea of figuring wholesale prices first. Then you can easily arrive at your retail prices.
If you have been selling in a retail setting (art show, as an example) for less than retail as figured here, you may be underselling your art. If it better to start out with an idea of wholesale pricing than trying to "back it out" of a retail price which may not support a wholesale price that is pleasing to the artist.
Hoping this made sense.
Paul is absolutely right about retail markup. I took a wholesaling class in February and learned quite a lot. Once a retailer purchases designs from you, they will expect that your pricing will be at least their retail price as it is bad business to undersell from your wholesale buyers. You also are expected to not sell to another wholesaler in the same zip code. Go ahead and make a proposal and be prepared to negotiate if they turn down your original proposal.
Richard offers a good explanation of how to determine the 'cost of goods sold' and establishing prices. You then need to determine a profit margin to get your wholesale price. Depending on type of product I can see a 75-150% markup from wholesale to retail. When offering wholesale, it is also typical to require a 'minimum'. It could be a $ amount or maybe # of pieces? It's really up to you. Just arm yourself with knowledge of what is standard/customary and then work with the individual retailer/gallery. Can you offer them 50% off your current retail prices if they bought enough pieces? How many pieces would they need to buy up front to get that 50% discount? How many pieces for re-order (usually a smaller amt)? Have those answers ready when you discuss. Be flexible but not a pushover. You want them to be successful with your product/art and if they are, you could have a consistent revenue stream with very little marketing on your part. Good luck!
I use an Excel spreadsheet that calculates my retail price using 1.5 to 2.5X material costs depending where leather gets used in the chain, and $70/hour labor. I can plug in various % discounts to see what my labor rate is and if I want to accept it. It's usually no less than $50/hour and around 30% less than retail. I also require an initial minimum order. Special orders coming from the same account are retail less 20%. That has worked for me for 40 plus years except back at the beginning there was no Excel.