Do you struggle with the difference between cost price, whole sale price, retail price, consumer price?
You are not alone!
There are a couple of different price terms that buyers refer to, and it is essential that you know exactly what terminology to use, otherwise your professionalism and credibility will take a big hit!
From the lowest price to the highest, there are:
The cost price:
This is your own calculation of how much it cost you to actually produce your products.
It includes your time x hourly rate, material and marketing costs, but also overheads such as studio rent, telephone and transport. Costing your product or service correctly is the foundation of how you will price your work.
You need to keep your cost price confidential, and do not share with others such as your retailers or competitors.
Trade or wholesale price:
This is the price you charge to trade buyers. This is your cost price plus a mark up or profit margin.
As a guideline: this is normally around 2 x your cost price. But if your cost price is relatively high then it’s less. So for example if your cost price would be £150, then your trade/whole sale price would be around £250.
This is the price your publish on your trade price list, and share with retailers or galleries. Do not share this list with the general public or with the media (they might accidentally publish the wrong price!)
(Recommended) Retail price:
This is the price that is displayed on your work or on a price list, and is the price that retailers or you charge to the general public (e.g. on your website or open studio event).
This retail price is normally around 2.5 to 3 x the trade or whole sale price, depending on the mark up of the retailer.
Please note that the retailer really needs this mark up to cover their own higher overheads such as the shop rent, taxes, business rates and staff. Do not undercut a retailer, as they will very quickly stop buying work from you! You can read here a blog post from a gallery owner about what happened when a jeweller undercut them.
If you want to know why shops and galleries charge so much commission, then read this blog post.
Be aware of the margins:
If your cost price is £15, your trade or wholesale price should be around £30, and the retail price will then be around £75 – £90.
Be very aware that the consumer will always pay more or less the same price, but that the trade price can fluctuate.
What about trade discounts?
If you are selling to trade buyers who buys regularly from you, or order larger quantities, but aren’t buying for a shop (e.g. a public art consultancy or an interior designer) then I suggest you offer them a trade discount.
This trade discount is often around 20% – 30% off the retail price, so sits between the trade and retail price in. Depending on your negotiations this can vary.
Want to learn how to start selling to shops & galleries?
Want to become better and more confident about selling to retailers?
In this online course and ebook What Retailers Want design shop owner Clare Yuille shows you step-by-step how to start selling to retailers. She will share her own tips and experiences, and shares with you lots of practical templates too.