Greetings cards shops margin, display stand supply and what to do about VAT

[Sam James]

I have created a folding card theatre for children which packs into an A5 size greeting card. My first version for example would be sold in museum shops via a existing card rack they have or I supply a flat packed 3D card holder with the first order. I have 3 questions I would really like some help with.

1. What would they expect margin wise. If this had a final selling/value price at £3.99 total to the public what would they consider an attractive price from me to supply them at ?

2. I am creating a flat packed display holder for them which they can use to merchandise them (holds 20) should I make a charge for this separately or is it best to initially supply it within the first order free, the holder calls out the product much more is it in my interests to supply it free?

3. I work for myself as a graphic designer and do ok but not to the extent I charge VAT. Do I just invoice these without VAT making a footnote on the invoice I am not registered or would this look un-professional?

Many thanks in advance !

Sam

 

[Scalloway]

If you are not VAT registered you do not mention VAT on your documentation.

 

[Gyumri]

Can you post a link to your website where one can see the product? As for price a lot depends on what it is going to cost you to make and then you can assess what people might pay for it.

If the cost price is cheap then you might want to pitch the selling price to the consumer so that they sell like hot cakes. Selling 100 per week at one outlet might be better than selling 10 at a higher price in terms of your profit from that outlet.

It's a balancing exercise and one can't say more unless one can see the product.

 

[Deleted member 335660]

Hi Sam,

We run a gift shop and sell greetings cards.

1. We pay £1.25 plus Vat and sell them for £3.50 including Vat.

2. For a cardboard display pack I would expect it to be included in the price for buying 20

3. Even if you are not VAT registered I would allow it in your pricing. If you do not, and then register you would be increasing your prices by 20%.

I would also check VAT regulations for retailers as some may not buy if you are not registered as they will want to claim the VAT.

 

[DontAsk]

3. Even if you are not VAT registered I would allow it in your pricing. If you do not, and then register you would be increasing your prices by 20%.

Or cutting margins, but not necessarily by 20%.

 

[Sam James]

Can you post a link to your website where one can see the product? As for price a lot depends on what it is going to cost you to make and then you can assess what people might pay for it.

If the cost price is cheap then you might want to pitch the selling price to the consumer so that they sell like hot cakes. Selling 100 per week at one outlet might be better than selling 10 at a higher price in terms of your profit from that outlet.

It's a balancing exercise and one can't say more unless one can see the product.

They cost about 95p (inc vat) this includes, a folding theatre surround, a reversible background that slots in, 6 x characters, an envelope, and a cover sheet which shows the product, all packed in a cellophane bag, I cant show a picture at the moment as they are not in the market and have an early patent application in for them. I am approaching suppliers via a visual presentation document to gauge interest . Thanks for your advice !

 

[Sam James]

Hi Sam,

We run a gift shop and sell greetings cards.

1. We pay £1.25 plus Vat and sell them for £3.50 including Vat.

2. For a cardboard display pack I would expect it to be included in the price for buying 20

3. Even if you are not VAT registered I would allow it in your pricing. If you do not, and then register you would be increasing your prices by 20%.

I would also check VAT regulations for retailers as some may not buy if you are not registered as they will want to claim the VAT.

Who pays for the postage when you order your cards, does your supplier charge that on top?

 

[Deleted member 335660]

Who pays for the postage when you order your cards, does your supplier charge that on top?

Hi Sam, Well our new supplier sends every order post free with no minimum charge. However, most suppliers charge postage unless we exceed a minimum order level.

 

[Gyumri]

They cost about 95p (inc vat) this includes, a folding theatre surround, a reversible background that slots in, 6 x characters, an envelope, and a cover sheet which shows the product, all packed in a cellophane bag.

That's a very good price and the product sounds interesting. I can imagine Holmes and Watson, Mrs Hudson, Lestrade, Moriaty and that hound all warming their toes in front of the fire. That's six characters.

 

[Sam James]

Hi Sam,

We run a gift shop and sell greetings cards.

1. We pay £1.25 plus Vat and sell them for £3.50 including Vat.

2. For a cardboard display pack I would expect it to be included in the price for buying 20

3. Even if you are not VAT registered I would allow it in your pricing. If you do not, and then register you would be increasing your prices by 20%.

I would also check VAT regulations for retailers as some may not buy if you are not registered as they will want to claim the VAT.

What kind of quantities do you buy at a time?

 

[MarkOnline]

What kind of quantities do you buy at a time?

There's a big difference between what you describe and a "greetings" card. That price point wont work with the product you have described.

With the right machines you can get your costs right down, but precision and volume are a costly combination in manufacturing especially when you combine that with full colour print.

 

[Sam James]

There's a big difference between what you describe and a "greetings" card. That price point wont work with the product you have described.

Sorry not sure what you meant here?

 

[MarkOnline]

There's a big difference between what you describe and a "greetings" card. That price point wont work with the product you have described.

Sorry not sure what you meant here?

From what you have described, your product is more intricate/substantial than "just" a greetings card. It sounds nearer to a "pop up" card. To compare the price of the two doesnt give you accurate information as to where your product sits, price wise as you are not comparing like for like.
However your production costs seems high to me, and IMO your numbers wont work. I think you need to bring your cost down.
A google search brings up "pop up" cards at a starting retail price point of £3.95 at that retail price point IMO you should be able to make a decent margin at £1.25 wholesale (volume orders/prompt payment etc.) but you may need more productive machinery to achieve that. A cost price of 95p with a supply price of £1.25 is not workable. To supply at £1.25 I would be looking for a cost price of 30-50 pence depending on offer.

 

[paulears]

If you are not VAT registered, then you have to make your prive what they expect to actually pay, so your £1.20 end price they compare to another supplier who was more expensive including the VAT because it gets recovered. Loads of buyers forget this and refuse good deals from non registered suppliers. They’re just silly. I’ve happily bought stock on ebay whee I cannot recover the VAT, if the actual price I pay is a good one. It’s a bit strange on my spreadsheet, but clearly shows my final margin. If they don’t understand this then it’s their loss.

 

[Sam James]

From what you have described, your product is more intricate/substantial than "just" a greetings card. It sounds nearer to a "pop up" card. To compare the price of the two doesnt give you accurate information as to where your product sits, price wise as you are not comparing like for like.
However your production costs seems high to me, and IMO your numbers wont work. I think you need to bring your cost down.
A google search brings up "pop up" cards at a starting retail price point of £3.95 at that retail price point IMO you should be able to make a decent margin at £1.25 wholesale (volume orders/prompt payment etc.) but you may need more productive machinery to achieve that. A cost price of 95p with a supply price of £1.25 is not workable. To supply at £1.25 I would be looking for a cost price of 30-50 pence depending on offer.

My costs are....
Print and die cut quantity 2000 = £0.69 inc vat, insert (product call out sheets) 2p, envelope 7p, transparent bags 4p packing labour 13p. I am thinking I can sell to retailers at something like £1.90, they will then sell at £3.99 to 4.50.

I can order a run at 5000 bringing print laminate and cut down to £0.44 per set but want to check they are good in the market and correct any feedback before hitting a run of 5000 or more. What do you think of this? The intricate pop up cards I see all over the place sold by "up with paper" sell at £4.99 I am thinking if I have made a playable theatre card that it would be on this price point for sure.

If you pay £1.25+Vat for simple greetings card then £1.90 for folding theatre should be Ok?

Thanks again !

 

[Sam James]

Hi Sam,

We run a gift shop and sell greetings cards.

1. We pay £1.25 plus Vat and sell them for £3.50 including Vat.

2. For a cardboard display pack I would expect it to be included in the price for buying 20

3. Even if you are not VAT registered I would allow it in your pricing. If you do not, and then register you would be increasing your prices by 20%.

I would also check VAT regulations for retailers as some may not buy if you are not registered as they will want to claim the VAT.

My print quote went up considerably after 2021 where paper doubled in price, have you been paying £1.25 through this period?.. did you have any increases?

 

[MarkOnline]

My costs are....
Print and die cut quantity 2000 = £0.69 inc vat, insert (product call out sheets) 2p, envelope 7p, transparent bags 4p packing labour 13p. I am thinking I can sell to retailers at something like £1.90, they will then sell at £3.99 to 4.50.

I can order a run at 5000 bringing print laminate and cut down to £0.44 per set but want to check they are good in the market and correct any feedback before hitting a run of 5000 or more. What do you think of this? The intricate pop up cards I see all over the place sold by "up with paper" sell at £4.99 I am thinking if I have made a playable theatre card that it would be on this price point for sure.

If you pay £1.25+Vat for simple greetings card then £1.90 for folding theatre should be Ok?

Thanks again !

Your main goal is to gauge demand for the product and iron out quality issues etc. Knowing where the price can go is the important bit for your costings. With that in mind, print a small run and gather information as to its wholesale price. Just remember they will take their time paying you, want a promotional price or SOR etc etc.

On a digital press a run of 20,000 pieces of 20 designs will cost the printer exactly the same as a single run of 20,000 pieces and your costs should drop again. which is good and gives you the chance of a bright future (if it sells in sufficient numbers) Good luck, I think the pop up cards are a good line, nice and niche with potential fat margins.

 

[Sam James]

Your main goal is to gauge demand for the product and iron out quality issues etc. Knowing where the price can go is the important bit for your costings. With that in mind, print a small run and gather information as to its wholesale price. Just remember they will take their time paying you, want a promotional price or SOR etc etc.

On a digital press a run of 20,000 pieces of 20 designs will cost the printer exactly the same as a single run of 20,000 pieces and your costs should drop again. which is good and gives you the chance of a bright future (if it sells in sufficient numbers) Good luck, I think the pop up cards are a good line, nice and niche with potential fat margins.

Thanks for your responses MarkOnline, lots of good info here, very helpful, cheers

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