Dear Design Doctor
I run a successful gallery, and I want to share something with you.
I recently discovered that one of our jewellery designers is selling her own work via her own website at only a few pounds above her wholesale price, which is obviously a lot lower than what we are charging for her work in our gallery. We have tried to speak with her on the phone but she will only respond by email.
We are struggling to find the right tone to deal with this as she is a small business, but we are on the point of returning all her work (it’s on a Sale or Return basis). She has loads of different outlets and all the prices we can find online (which is not many) are all selling at different prices.
We asked her if she had a recommended retail price but she declined to answer. She has said it is ‘not her problem’ what other retailers charge for the work and she has indicated our mark up of x2.2 excessive (50% from the retail plus VAT on our commission).
I have thought about sending her a link to your pricing doctor article but I know she will respond badly. Any tips?
‘Thank you so much for your email. It’s great to hear this story from a gallery’s perspective, as so often we get to hear only the maker’s perspective.
I don’t blame you for wanting to stop working with her.
This jeweller sounds very unprofessional in my opinion, as she doesn’t seem to want to learn or listen, doesn’t take responsibility for her actions, and is underselling her work. I think you have tried your best here, and have shown a lot of care and patience.
A commission rate of 220% is NOT excessive
It’s what galleries need to charge to pay for their very high overheads (including rent, staff, insurance, business rates, VAT). If you want to learn more about why galleries and shops charge high commission then click here.
Ideally the retail price would be more or less the same wherever you sell: the work sells for about the same price on your website or online shops, as it does in retail outlets and galleries. There can be a little bit of fluctuation (say 10%) or so, and a maker can charge a little less (for example at a Open Studio, or to compensate for additional postage costs), but only just charging a little more to consumers than you charge retailers is not correct, and not sustainable for anybody – not for the maker, and definitely not for a gallery.
It’s very common for new makers that their work is too expensive to sell via retailers and galleries in the first couple of years, due to this mark up.
Be creative and find alternative ways to sell your work in larger quantities.
- Focus on online retailers who often charge less commission (as the overheads of many online retailers are far lower!)
- Do more of your own marketing and selling to get started. Focus purely on direct selling to consumers in the first couple of years e.g. through craft fairs, selling events, your own site, ‘Tupperware parties’ etc. A big advantage then is that your profit margin can be higher (between your anticipated wholesale price and anticipated retail price) when your are only selling direct to consumers.
- Negotiate a better commission rate with retailers, for example: if you are selling on a Sale or Return basis, or if the gallery or online shop is very new.
I hope this is a lesson for other makers what will happen if you are unprofessional and undersell to galleries:
- You will loose trade clients rapidly (and they are very unlikely to come back to you – ever)
- You will very likely get a bad reputation (with both trade and other designer makers)
- You are not supporting galleries, who continue to play a crucial role in introducing new & existing audiences to crafts
- You are actually undercutting the sector as a whole’
(Postscript: The gallery contacted me after this correspondence, and indeed they have now dropped this jeweller. They were very upset to have to do this, but felt that they could no longer work with her.)
Are you a gallery or shop owner? Have you got similar issues like the one described above?
Are you a maker who sees other designer makers undersell their work? Do you think that galleries and shops don’t do enough to deserve their commission?
Feel free to add your comments below in the comments box: