The Truth About Wholesale Pricing

Want to do ongoing business with wholesale gallery customers? Here’s how to price for a win/win relationship.

 

Buyer at a Trade Show

 

What is wholesale price?

Wholesale price is a 50% or greater discount off the artist’s retail price. The practice of not discounting to a true wholesale price puts you in direct competition with your retailers when you are selling to the public, but at an unfair advantage. This is called “undercutting.”

Let’s say you have an item that you sell for $40 retail, and you discount it 30% to sell at “wholesale” for $28.00 to a gallery customer. She must mark up that item to a retail price of about $64.00 to cover her overhead costs and make a profit (average markup to retail is 2.3 times.)  Meanwhile, you are selling that same item to the public at $40.00. Doesn’t seem quite right, does it?

Damaged relationships

Imagine how the gallery buyer feels when they see your work listed online or in a retail show at a significant discount over their price. Trust is destroyed. The retailer knows that customers may see your work at her shop (where she has invested money in your line and is displaying it at her own expense) and then go online to buy directly from you at a much lower cost, because you have undercut the gallery on price. This is a lose/lose proposition. The gallery loses a sale, and you lose your gallery account.

Artists who undercut their store buyers on retail price are one reason that galleries go out of business. Gallery buyers also become wary of new artists who approach them to sell wholesale, and it becomes more difficult for everyone to sell their work into galleries.

The result is that many gallery buyers stick with purchasing at trade shows where integrity in pricing is a standard practice, and where exhibitors understand that their businesses grow through repeat orders, which is one result of dealing fairly with their galleries.

Who gets lesser discounts?

A less-than-wholesale discount is known as a “designer’s discount”  or “trade discount” and is sometimes offered to interior designers who buy from manufacturers and also artists. Quite often this ranges from 20 – 30% off retail price. Designers can get a discount on furnishings, home décor and other items for interiors that they purchase for their customers, but they don’t get true wholesale, and here’s why:

Interior designers may charge an hourly rate to their clientele, or they may buy items at a discount from manufacturers and artists and mark those items up – thus making an income. But interior designers don’t buy minimum orders from artists, or necessarily maintain an ongoing relationship. If your work fits well into home or corporate interiors, consider any discount you will offer to designers so that you are ready to do business with this type of customer.

Integrity goes both ways

Artists protect themselves when selling wholesale by requiring a minimum purchase of their work. Trade shows and some wholesale websites also protect artists by requiring credentials that prove buyers are in fact legitimate, and run brick and mortar stores, catalogs or online stores.

Professionalism is how you get taken seriously as an artist, and pricing is an important factor in that professionalism. When you price your work with integrity, you set yourself up to grow your business through long-term relationships built on trust.

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