Selling to retailers

[Rachael Quine]

Hi there,

I am hoping for some advice please on selling to retailers. I launched my small art business in October 2021 selling commissioned paintings. I am currently building a giftware brand hoping to sell my designs on mugs, coasters, cushions, cosmetic bags etc. I will be selling my products through my ecommerce shop in smaller quantities but would also like to approach retailers.

Taking mugs as an example, I will be retailing them somewhere between £12-£14 so I'm looking at a more higher end market. Before I begin to pitch my products to retailers, I wanted an idea of how much they will mark up the price, what profit margin would they want to add on? From what research I have done, it seems it will be 50% plus, I'm sure it will very from retailer to retailer, but I want to be prepared for worst case scenario.

I have been playing around with some figures and taking my costs into consideration I would be currently in a position to pitch something like:
I sell to retailer at £9 per mug (including gift box), they retail it at £14 giving them a profit of 55%, and my profit would be 25%. How do these figures sound?

I have no experience with sales and what profits to expect, so would be very grateful for any advice.

Many thanks.
Rachael

 

[MOIC]

I sell to retailer at £9 per mug (including gift box), they retail it at £14 giving them a profit of 55%, and my profit would be 25%. How do these figures sound?

How will your £9 mug compare to other mugs the retailers can buy for (probably £2 - £3 tops)?

Are your designs sufficiently different to command the prices you want to achieve?

If your looking to charge the retailer £9, they will want to retail it at at least x2.5, giving a retail price of £22.50. I think that's way overpriced.

You should be looking to retail at maximum £10, so charging the retailer around £4.00 maximum. That's also given your designs merit those prices.

Others will have different opinions, especially some gift retailers who are members of this forum.

In any event, I wish you luck.

 

[japancool]

B&M retailers will be looking for a profit margin of around 50%, which means a markup of 100%.

 

[MBE2017]

On your example the £9 mug/gift box would retail at £20 to achieve the profit you mentioned.

You also need to allow for VAT, you might not charge, your clients might have to, which if a retailer is VAT registered would increase the sale price to £24.

You need OP to reverse the calculations, find out what the retail price can be, then work out your selling price and see if it is worth it to you.

 

[thetiger2015]

As others have said, you need to look at some retailers first and then reverse the pricing, to see what the cost price might be.

If they buy at £9, they'll want to sell at £18 upwards, because lots of shops have to pay VAT at 20% on any sales and it looks like your £9 excludes any VAT as you won't be registered yet.

Using your numbers, they sell at £14, pay £2.80 in taxes which gives them £11.20 minus the cost price at £9 = £2.20 profit. Not really enough meat on the bones. Lots of shops give 10% off or also sell online and offer free delivery, so that profit would quickly be eaten up.

To retail at £14, your cost price needs to be closer to the £7 and under - of course, you're not competing with the cheap import products, as you will class yours as an art piece. So, it has a higher value for some retailers, because it's unique and their customers might really love the design and come back for more BUT they're still going to need some profit.

 

[MarkOnline]

Your wholesale price is optimistic, to say the least. Your designs would need to be something special and sell well if you wanted to supply at £5 with a retail price of £12 never mind £9.
Look at volumes and how to get a return hitting numbers rather than trying for optimum profit. Profits will come once you get established and you build a customer base.
The gift space is full of failed designers who over valued their product because they couldnt get their costings right.
Good luck.

 

[Deleted member 335660]

Hi Rachael,

We have a gift shop and sell lots of mugs.

Our most successful brand have been the Italian company Legami. We were buying them for €6.83 and selling them for €11.90.

The Legami mugs were bone China. We have other ceramic mugs and enamel mugs.

We have created our own ceramic mugs using an online print on demand service and selling them at €12.

We also had a well known local artist do his own mugs which we sold on his behalf and took. 20% commission on his €12 mug, but we did not do a lot of sales. People bought his belts, umbrellas and shoes rather than the mugs.

As others have indicated, we are always looking for 100% markup for items we stock.

Your problem is that there are so many amateurs using Etsy that sell them too.

We find that at our shop €12 is the limit, I am trying to get a little more online for unique ( only from us).

The only people I know that charge any more are high branded products like Harrods etc. I am not sure how successful they are, it’s just a side line for them.

If you want high end prices the mugs need to be Bone China and different shapes.

 

[MarkOnline]

And ideally you should invest in a sublimation printer and a mug press, they are easy peasy to make with a little practice. Blank 11oz mug £1 ish ink 5p paper 3p equipment to produce approx £500 and labour cost (you to start with) Why pay 3rd party producers, it doesnt make sense.
I am also in the gift space and dont produce mugs mainly because the space is too crowded for online and the postage cost is too high for the return. I will produce them when I open B&M space.

 

[MBE2017]

I would recommend print on demand until you know if you have designs that sell.

 

[Lucan Unlordly]

And ideally you should invest in a sublimation printer and a mug press, they are easy peasy to make with a little practice. Blank 11oz mug £1 ish ink 5p paper 3p equipment to produce approx £500 and labour cost (you to start with) Why pay 3rd party producers, it doesnt make sense.
I am also in the gift space and dont produce mugs mainly because the space is too crowded for online and the postage cost is too high for the return. I will produce them when I open B&M space.

The biggest downside for the OP printing their own Mugs as a start up is wastage be it poor quality print, cracked mugs - too much heat etc.,

Prices are on the up with a box of mugs from Xpres will now stand you a couple of quid each by the time the vat has been swallowed, a bit of delivery etc. Paper 12p a sheet!

 

[MarkOnline]

The biggest downside for the OP printing their own Mugs as a start up is wastage be it poor quality print, cracked mugs - too much heat etc.,

Prices are on the up with a box of mugs from Xpres will now stand you a couple of quid each by the time the vat has been swallowed, a bit of delivery etc. Paper 12p a sheet!

Aint life a bitch!
AAA grade 11oz mug 95p +VAT (5 min google search) I'm not going to google paper but even at your prices Its a mile behind the £9 quid she's thinking about charging. She wants to do this for a living, so learn her trade. Many today are looking for the easy "as little work as possible" option. Get your coat off and do the things most of the "others" arent prepared to do. Sometimes its not about a "start up loan" for a few grand and an internet marketing course, start at the beginning with your own money and learn your business go out and do some work, take a few small risks, At £1000 to dip your toe in, its not a major investment decision (unless you only have £500 in which case keep saving.
Just my opinion

 

[fisicx]

And even if you do get a batch of mugs printed and packaged, you still need to find someone willing to give you a bit of shelf space. All without knowing if the punters want to buy a mug with your designs. You may end up getting the mugs back in a month.

 

[MarkOnline]

And even if you do get a batch of mugs printed and packaged, you still need to find someone willing to give you a bit of shelf space. All without knowing if the punters want to buy a mug with your designs. You may end up getting the mugs back in a month.

Yep, so get your coat on and go work a couple of street markets with some footfall. If they sell, great, if not back to the drawing board, every day is a school day. If they have anything about them they will work it out.

 

[Lucan Unlordly]

AAA grade 11oz mug 95p +VAT (5 min google search)

From where?

 

[MarkOnline]

From where?

Neil Brothers, even sublimation supplies are only £1.15 for an 11oz. They could probably be bought for even less money if you have some money/space and know how to negotiate. Or you could pay what Xpres want. Personally I would look for better options.