Wholesaling
Arts & Crafts
The Kentucky Artisan Heritage Trails program is dedicated to increasing
the retail sales of your craft. However, diversification of your selling
base is extremely important to the success of your craft business since
tourism traffic in Kentucky declines between November and May. Therefore,
you will want to consider wholesaling your products to other retailers,
such as galleries, gift shops, or catalogers as a source of supplemental
income.
This module discusses the differences between wholesaling and retailing
your crafts and provides you with basic terms and “do’s &
don’ts” for selling to the wholesale market.
Wholesaling Terms
1. Wholesale customer is a cataloger or store owner who purchases your
products for resale to their own direct retail customers.
2. Wholesale price is the price for which you sell your products to wholesale
customers.
3. Retail price is the price they charge their retail customers for your
product. Typically, this is double the wholesale price. The mark-up covers
their costs, such as overhead, shipping, and selling costs.
Pricing Your Work for the Wholesale Market
It is extremely important that you take the time to calculate your wholesale
price. You want to make sure that your costs are covered and that you
are paying yourself a livable wage for your labor. In addition, a profit
should be realized. The following formula will assist you in determining
your wholesale price.
Wholesale Price = Materials + Labor + Overhead + Profit
Materials: All materials used to produce an item, including shipping costs
to procure them.
Labor: The value place on the time you or someone else spends producing
an item. This includes payroll taxes, breaks, paid vacations, and sick
time.
Overhead: These are the indirect costs of doing business and include all
costs not directly related to production, such as rent, utilities, phone,
equipment, and selling expenses. Calculate how much is costs to be in
business per hour by adding up all of the indirect costs for a year and
dividing that number by the number of hours you work. Then multiply that
number by the number of hours it takes for you to make one piece.
Profit: What you take to the bank above and beyond your labor.
Determine your wholesale cost and then double that for a retail cost.
Next, you must consider the market—some items will be too costly
to sell at a wholesale market. You do not have to immediately abandon
the idea. Instead consider the following issues:
*Can I find less costly materials?
*Can I work more efficiently?
*Can I lower my indirect costs?
Remember, some items can’t be brought to the wholesale market profitably.
It is best to recognize this early on!