should i take on a wholesale contract?

[satinstitchery]

Hi group. I was at a craft show this weekend, and I had some framed embroidered lighthouses for sale. I was approached by a man who runs a gift shop at a lighthouse national park, to ask if I could supply the shop with merchandise at a wholesale rate. WOW! I'm pretty new to this business and haven't made many sales yet, so the prospect of a steady customer is pretty great. He wasn't real specific about what he might want or how much...just wanted me to come up with a proposal including whatever I could supply that would relate to his specific lighthouse - he liked the framed but also liked some table linens I had. I won't offer tshirts or clothing, as stuff like that is already available elsewhere - I'm going for something less commonly seen. Well, I have a couple of designs and could do work like I had at the show and could reduce the price some in exchange for multiple orders.(not a lot, I'm pricing pretty close to the bone now; maybe I could offer them 10%-20% lower than my retail price and still come out with some profit)

So, I guess my questions relate to how to make sure I'm getting the right deal in front of this fellow. Do I specify that they need to buy a certain quantity in order to get a price lower than my show or website price? If so, how do I decide what that quantity might be? Which makes more sense, a single price quote no matter how many or a tiered structure (more orders, more discount)? How many options should I offer him or should I keep it simple (ie, if I'm doing framed, I could offer a selection of 3-5 different frames or mats, or I could just pick 1 and say this is all I have.) Do I ask him to limit sales only to the gift store or allow web sales (which would directly compete with my website? I'm not sure they do websales, but I wonder about the implication.) And what else is important for me to address in a proposal like this?
Thanks, all.
Toni
www.SatinStitchery.com

[Impressive Threads]

Toni,
I do wholesale work for a little general store. I charge them the cost of the garment plus 25%. For the emboridery I use pricing based on volume just like my retail customers. I know this particular wholesale customer has a small profit margin so I work with them to make sure we both make money. One of the agreements we have is that I can not use any of her designs for my personal sales. That is something you have to figure out since they are your designs to begin with. If you are going to continue to sell them yourself, I would stipulate that the lighthouse customer can not sell them on line, only in his retail store and that no one else can duplicate them for him.

Hope this helps and good luck.

Cindy in Phoenix

[signman]

I not only have the graphic shop, but have owned a 'retail' business over 30 years now. Originally I did all the sterling jewelry, then switched to doing graphics not only as a separate business, but to sell wholesale and retail.
There is a 'three tier' system to pricing.
#1- your own 'net' bottom line, absolute 'cost' of producing the item and making a profit. This is the rock bottom-no lower than this amount of money you would take if you were desperate.
#2- wholesale...this is the price for VOLUME (quantity) production. YOU need to make at least 25% over your bottom price-and then figure in a commission for a sales person. Whether or not you use a salesperson, FIGURE THIS PRICE IN. Usually at least another 25%. So a 'normal' wholesale would be 'double' your bottom cost.
#3- retail. This is the item a RETAIL customer would pay for ONE item in a store. Stores have overhead-electric, rent, insurance, taxes, wages, etc. etc.-that you may not have. If they cannot at least 'double' your 'wholesale' price-they cannot make a profit. I have lines in my store that are 'marked up' anywhere from 200% to 400%...and we sell out all the time.
So, look at your product as a consumer-this is a 'finished' product-a framed embroidered picture. How much would you pay to buy this, bring it home, and hang it on your wall? Be realistic-you are a little old lady that is gaagaa over lighthouses...(hey, so are we-got one of Nubble Light in Maine?) and then do the math-will YOU and the store make a profit at that price?
As for 'wholesale' and quantity...most suppliers will not give 'wholesale' pricing for less than $150 orders, or '3 per item' or whatever...make SURE that you have a large enough 'minimum' order for wholesale to make a profit on all your time!
And, variety is the key to sales...a trick-offer the same lighthouse but with different 'seasonal' backgrounds, etc.!

[Maggie21]

It is very nice to see a note from "signman". I hope everything is well with you Roland. Welcome back.

Maggie

[satinstitchery]

Hey Roland. Welcome back, and thanks for the info. I ended up quoting them a discount off my retail price. I have such a hard time still making sure I put the proper value on my work that I tend to want to underprice things. Anyway, my retail prices are close enough to the bone that I decided my best option was to offer them a discount if they buy in quantity. No answer yet. It may be too pricy, I haven't been in this gift shop so I just don't know what they might have. I plan to go, but it's 3 hours away so I'll have to wait until I get a couple of days off.
As to the Nubble Lighthouse, too bad, I'm so sad, I don't have that design. I don't do my own digitizing or I'd offer to make you one. But Embroidery Library has loads of lighthouses, including several from Maine. West Quoddy? Pemaquid Point? I gotta go look those up just to see where the names came from! But hey, I can make you a deal on a clock with a lighthouse! ha!
Anyway, thanks for the info, very informative.
Toni
Satin Stitchery