Three Questions with Megan Auman ~ March 2014
Please welcome the fabulous Megan Auman – jeweller, business strategist, artist, designer, brilliant entrepreneur, and my lovely friend. Megan is going to be stopping by every other month to answer three of your burning questions – think of her a little like a whip-smart, no-nonsense business advice columnist.
Take it away, Megan…
1. I see online many line sheets are titled by season/collection. What if many of my pieces are 1- 2 years old and/or good for all year round? Are you always changing your line sheets? I don’t come up with a new collection every six months as much as that would be nice!
While you should be at least tweaking your line sheet twice a year to coincide with the major trade show seasons, that doesn’t mean you have to do a complete overhaul, especially if you aren’t a true fashion brand. (Meaning you aren’t designing two brand new collections a year – and most of us aren’t!)
Retailers want to see what’s new, but they also want to be able to reorder their favourites and best sellers, so you’ll want to strike a balance between the two. Each season, give yourself some time to go through your line and ask the following questions:
- What items sold the best?
- What items didn’t sell?
- What items were most profitable?
- What items were least profitable? (Or not profitable at all?)
And finally, are there any gaps in the line? Are there items that retailers have been requesting? (Such as earrings in a different size or a different metal option.)
With these questions in mind, you can make changes to your line (and line sheet) that keep buyers interested but don’t require the substantial effort of designing a new collection every season.
2. I realize many retailers expect wholesale to be 50% of retail prices. I struggle with this because until now, I have generally done that, but I ‘fudge’ prices on a case by case basis depending on which location/type of boutique I am in. Some retailers want to match my retail so will only buy half price, others will charge more and just ask me for my asking price. In attempts to polish up one price point for the line sheet, I am considering raising all my wholesale prices, unless you think there is some flexibility with the 50%?
This questions actually looks at wholesale pricing from the wrong perspective. Retailers aren’t looking for a discount off of retail, they are looking to mark up a percentage from your wholesale price. That means if you are selling to stores, it’s your job to establish a set wholesale price. From there, your retailers will mark the price up anywhere from 2 to 3 times. (2.2 and 2.3 are also common wholesale markups.) As a vendor, you can suggest a retail price (MSRP), but you’ll likely not be able to enforce it.
Since you’ve been approaching your wholesale pricing from the standpoint of a retail price, it’s very likely that you’ll need to do some new calculations and set new wholesale pricing. It’s essential that you are profitable at the wholesale level. That means your wholesale price needs to take into account your materials, labour, overhead, and profit.
You’ll also want to make sure that if you’re selling retail (on your website or at a retail market) that you’re marking up in a way that’s comparable to your retailers. Every industry is different (jewellery tends to mark up higher than other products) so make sure you ask around so that you aren’t undercutting your retailers.
3. I have many one of a kind (ish) items that could be made again and/or slight variations. I am afraid my line sheet will be way too long if I include all the options. For earring styles that come in different colours, would you suggest putting an image for each different stone, or just one photo with an option list of all the different stones? Also, real gemstones often vary slightly, so one batch of amethyst may be more faceted or dark purple then another. How should I handle this?
It’s important to understand the distinction between true one of a kinds (which are pieces that can never be reproduced again) with items that include options or variations (like different stone choices). While it’s not impossible to wholesale one of a kind items, it does produce it’s own set of challenges and often involves communicating designs to buyers in creative ways.
In your case, you’ll just need to communicate to buyers all of the options that are available for each style. You’re right in thinking that your line sheet will be incredibly long if you showed a full image of each variation. Instead, you’ll want to show one image and then show a cheat sheet of the options, such as an index that shows all the stone options available for your collection.
As far as variations go, that’s completely understandable when working with natural gemstones (or any other natural material) and buyers will understand. Just make sure you note on your line sheet that variations can be accepted. If you really want to ease buyer concerns, let them know that if they don’t love a particular stone, they can always exchange the piece for another one. Buyers will rarely take you up on this, but it gives them enough peace of mind that they’re more likely to place an order!
Want more wholesale advice?
Looking for the basics of selling your products to retailers? Join Megan for a FREE, 3-day online class on Creative Live on June 19, 20, and 21.
Got a question for Megan Auman?
Leave it in the comments below or email it to firstname.lastname@example.org (that’s direct to Megan Eckman, Assistant Editor).