Etsy's Handmade Blog
The Art of Pricing: Preparing for Wholesaling
Story by bethela
Published on October 31, 2007 in How-To 		Photo by THISANDTHAT2


Beth is an admin at Etsy on the Business Operations Team. She is writing about pricing in a multi-part series, so ask her your questions in the comments below. This week's topic is how to prepare your business for wholesaling.

Wholesaling is yet another factor to consider as you price your work. Wholesaling is when a boutique or another reseller approaches you to purchase your items in bulk, usually expecting a discount for the large order.  The expected discounts are between 30% and 60%, most often settling around 50%.  These discounts are large, which is why it is so important to carefully consider how wholesaling could work for you before you price your items.  As we discussed in Understanding Your Costs, it is critical to calculate your costs and related time and price your work accordingly. Remember that since you would selling multiple items with wholesaling, you may not need the same profit on each item for the economics to work out well for you.



Here are some numbers, for example:

Traditional pricing:
$20 – Total direct costs
$45 – Price (this includes the amount you would like to make for your time)
$25 – Total profit per item

Wholesaling:
$45 – Price
$22.50 – Price per item at wholesale discount of 50%
$20 – Total direct costs
$2.50 – Total profit per item

In this example, the seller needs to consider if $2.50 per item is enough profit to justify the sale.  It may seem low, but it may just be worth the sale.  Depending on the quantity purchased, this profit can add up to a tidy sum.  For instance, if you are selling 10 items, this profit is $20.50 and at 50 items $102.50.    This is a simple example that illustrates the need to walk through your costs, necessary profit and the expected discounts before pricing if you want to consider wholesaling. 

Wholesaling can be a great way to drive more sales, but you need to take care in pricing your work accordingly.  Since each item you sell wholesale is not available to sell for the full price in your store you need to balance the increased number of sales with your ability to stock and sell in your own store.

When working with wholesale buyers, price is only once consideration.  You want to outline the other terms and conditions you need to be comfortable with for the deal to work.  For instance, you may find that it is not worth wholesaling unless the purchaser buys more than a certain quantity. In the above example, the seller may decide that 10 items is the minimum number to make a wholesale order work for them.

Other terms you may want to consider include payment before shipment (received and cleared) and a sliding scale for discounts.  An example might be:  10-20 items receive a 40% discount, 20+ items receive at 50% discount, etc.  Consider what you will need to make yourself comfortable with the deal and protect yourself.  Some put these terms in their Etsy shop descriptions. However, I suggest listing on your front page that wholesale orders are welcome, like Contrary, an Etsy admin, does in her store. Then you can email or convo your terms directly to the wholesaler once you have established contact.



Another way to protect yourself is to conduct your wholesale orders on Etsy.  This can be done a couple of ways:
1) After you've agreed upon a deal with a wholesaler, create one custom listing specifically for all of the items that they agreed to purchase. Make sure to title this custom Etsy listing as "RESERVED" so that some other buyer doesn't purchase it by unwittingly.
2) Use existing or create multiple listings for the items to be purchased by the wholesale buyer (this can also help increase
your sales numbers and feedback). 
Both ways create an online record or "virtual paper-trail" at Etsy which is important to protect yourself.   Etsy Support staff will not be able to help you if you do the transaction off Etsy and something goes wrong.

Wholesaling can be a great way to increase your sales and your reputation. Done thoughtfully, wholesaling can help your business get to “the next level” and broaden your exposure, which is always good for future sales.

Check back in next week, when Beth will be discussing Theories in Discounting. Please leave Beth your questions and comments below!

Tags Art of Pricing, business, How-To, HOW-TO, pricing, Seller Handbook, selling, value, wholesaling
All articles in How-To
Related Items
This article was reported by:
Etsy Admin
bethela
shop . profile . contact

44 comments     Login to add your own!

Oct. 31, 2007 at 2:44 p.m. thefunkyfelter

Thank you for this very informative article on wholesale. I have recently received some wholesale requests, but have had no experience doing this. I think it is an important thing for all Etsy sellers to consider when pricing.

Nov. 1, 2007 at 10:01 a.m. stopsandstarts

I just want to thank you for adding alittlegoodness's bird tape as a related item to your article! I just spent wayyyyy too much money in that shop.

Nov. 7, 2007 at 10:53 a.m. stonz

This is very helpful.
I was contacted by a boutique and I am trying to figure out how to set my wholesale prices for them.

Nov. 7, 2007 at 11 p.m. mulberrymuse

Thank you Beth for the helpful article, wholesale pricing is not easy!
I have very little experience in this and I know in the past I have undersold my items for fear of losing an order, which was foolish!
Many thanks :)

Dec. 11, 2007 at 10:25 p.m. BEADina

I am so appreciative of this as I am trying to get some stores to carry my items. The only issue is all of my items are one of a kind so making a catalog is time consuming. I like your idea of putting items on reserve and and the minimum which I was already thinking. Anyway, Thanks for the great tips.

Dec. 12, 2007 at 12:46 a.m. alkemystic88

We can't thank you enough i have learned so much from the storque and news all of this information is really helping my business, thanks

Jan. 5, 2008 at 11:19 p.m. neelieileen

Thank you so much for the interesting and informative wholesale article. I have been contacted about wholesaling some of my items. Your article helps me to feel more comfortable with setting my prices.
I also like the idea of having a support system from
Etsy as I ventures into the wholesale avenue.

I would like to have more information how to do the RESERVED listing.

Thanks so much.

Feb. 22, 2008 at 5:57 p.m. Dreamwoven

i was just about to write an article regarding wholesaling and the handmade community. my personal take on it is that there really are no rules regarding wholesaling when it comes to artisans that create items, usually one of a kind, with their own two hands. I believe the etsy environment is a perfect situation for etsy sellers to enlighten wholesale buyers about 'handmade'.

People who buy wholesale 'expect' a discount. It is NOT mandatory nor is it always, if ever, beneficial to a seller of handmade goods. The buyer should be able to make their profit from reselling the item to the public in their boutique or shop. They are the ones that understand what their customers will pay. I believe too many times, sellers feel they 'need' to wholesale or deeply discount their items just to make a sale. Obviously this is a personal issue for a seller, but again, what a perfect environment we are in for enlightening wholesale buyers as well as keeping handmade goods in the specialized field it deserves.

March 31, 2008 at 3:46 a.m. joyarte2008

I think many artisans need to be taught first that too many times they are not pricing even their retail prices high enough. When I've skimmed other items listed, it appears to me that too many artisans are giving their work away...they're just not charging enough for their time. When it comes to wholesale, it's not about a seller "discounting" their prices...it's about pricing their work high enough in the first place. Buyers who buy wholesale to resell in a boutique or store want to be be able to double their money or more, so if they buy something for $25, they want to resell it for $50. That's what retail is. Why would a boutique owner want to buy something from an artist at the same price the artist is selling to the public? The boutique owner assumes that the price the artist is selling retail has been marked appropriately retail, and too many times, it is not.
I nearly fell off my seat when I read that a mere $2.50 per piece might be worth the trouble for a 50 piece order!!! That's insane!!! I'm sorry, but an artist's work is worth much more than a $2.50 gross profit margin on a piece that wholesales for $22.50. That won't cover the costs of rent, telephone, utilities or any other expenses in running a business. Please don't forget that many artists do make jewelry for a living. It's not just a hobby. In order for an artisan to sell retail and wholesale, they basically need to have two prices. One that is what they need to cover their costs, labor and make a real profit (that would be their wholesale price), and another price that is double their wholesale (which is retail).

April 24, 2008 at 8:14 p.m. andymathis

yeah, people need to think about their minimums for wholesale orders.

It can be either a number of items, or a dollar amount- like $250, for an initial order, and less for subsequent orders making it easier for the retail person to restock inventory.

Artisans might also realize that some items can't be made fast enough, or at a cost price point, to make wholesaling the items feasible. So maybe not all items would be available at wholesale in that case.

I think it looks bad, for sellers, to see wholesale orders and dollar amounts in their etsy store, from a buyers perspective. Some buyers will feel like they are being overcharged for retail purchases.

May 7, 2008 at 8:43 a.m. serendipity2wenty2

Thank you for this wonderful read on wholesale etiquettes. I fully agree on having a minimum for your handmade items, and including your 'design' fees is equally important.

Following on to this, I've been approached by a boutique on consignment orders. Will someone be able to advise best practises for the discounts given to buyers?

May 16, 2008 at 3:02 p.m. quiltnut60

My question is regarding either consignment or just selling at a discount to boutiques and they can sell at their own price. What would be better? For instance, my lip balms are priced at $3 which is for a pretty nice sized pot. I could wholesale them for $2 each but then the store could sell them for $5 each. Should I just start my prices out higher? It's all so confusing!! I should probably charge more for my lip balms as it is. I dunno. HELP?!!

June 1, 2008 at 7:54 p.m. heartofnature

Thank you so much for this article! I am just getting into wholesaling, and after doing the math discovered that there's no way I can wholesale my greeting cards because of the time that goes into each one. I'm sticking to accepting bulk orders at cost for the cards, and wholesaling matted photographs :)

I would love to see what an official wholesale price list looks like, though. I've been asked by a few stores for one, but I'm not sure what it should look like (other than the obvious information such as cost and # of items).

Thanks again!

July 10, 2008 at 5:52 p.m. Alline

Thank you for this! I am a store owner wanting to support the etsy community (and provide my customers with fantastic products). However, many artists offer only a 10% discount. Perhaps they don't want to sell wholesale, or perhaps they are undervaluing/underpricing their items at regular retail? These articles are a great place for new craftspeople to start! www.milkweedmercantile.com

Aug. 1, 2008 at 7:22 a.m. tumpuscreations

Gives me something to think about...great article and great critiques by Etsians too. I was approached about doing wholesale work --trying to work numbers out, your article and comments provided some good insight. Thank you!

Aug. 6, 2008 at 9:21 a.m. BohemianChick

What if you wouldn't reduce your retail price by 50%? Products I am making (not yet selling, building a small inventory) couldn't really go for 50% less or I wouldn't be making more than a dollar or so. Would retailers go for a percentage like 40% below retail or is wholesale typically 50%? Just curious.

Sept. 17, 2008 at 6:15 p.m. cuddlycozy

This information is greatly appreciated. We have been considering a boutique's offer. I will look out for the rest of the information.

Thank you for all!

Oct. 25, 2008 at 3:02 p.m. banyantreeclothing

Wow, what a great thought. I have a problem with pricing. I have been selling my t-shirts at crafts fairs for the same price for 6 years. I guess I am afraid they won't sell if I raise my prices. If I do think about my wholesale price and what someone else could sell them for, I should be raising the price at least $3 per shirt.

Nov. 5, 2008 at 1:47 p.m. AftonRiver

I am still uneasy with selling wholesale, even a little more so after reading this article. The time it takes to make the items I sell in my shop will not change simply because I am making two dozen of the same thing. Lowering my net profit for each item really does not make sense when the materials cost the same, and I spend the same time making my items. Am I wrong to think that I have placed a fair price on my items? Would they still sell if I double my prices? Where does that leave the average consumer? I don't think everyone should charge boutique prices simply because boutique retailers want to profit as much as (or more) than the actual maker does.
More advice on pricing and wholesaling is very welcome and appreciated.

Feb. 8, 2009 at 2:51 p.m. freerangebaby

Thanks for a great article. I've recently started to sell wholesale after spending alot of time umming and arrring about it and getting worried, thinking... well I get more if I sell on etsy, am I wasting my time?

I have found that although I didn't think I could get faster, the nature of making in bulk means actually you can. You work more like a production line, your brain gets into a rhythm, and I do find that I'm faster. Not 50% faster...

BUT... I sometimes like to tell myself that wholesale - selling in other shops and in other location is a form of advertising, that comes at a cost.. but still its great advertising and that normally comes at a pretty large cost anyway.

Feb. 20, 2009 at 12:42 a.m. risabeads

Thanks for this article. I've been struggling with the to wholesale or not wholesale question for a while. I took a look at my prices and it became clear that I've been selling my work at wholesale prices for years now. I took the plunge and adjusted my prices. Now I'm practically holding my breath to see what happens......

Feb. 20, 2009 at 3:13 p.m. shadesofsplendor

I have also been approached about wholesaling. In my research I have found that if I produced many of the same item, I could then purchase my supplies in bulk at a wholesale rate, which would then allow me to still make a nice sum even at the wholesale price. I have yet to take the plunge though, because purchasing all those items in bulk, even at wholesale prices, will cost quite a bit of money for my shop.

Feb. 27, 2009 at 12:47 p.m. luckytroll

Thanks for the info. I now have an idea about the pricing discounts that happen behind the scenes. Good to know, makes you think twice about doing wholesale.

Feb. 27, 2009 at 6:31 p.m. vabeckner

I have owned a boutique which only sold Art to Wear. My overhead was about $10,000 per month. In order just to cover that, I would need to sell $20,000 per month if I doubled the cost of each item I offered for sale: that's covering costs, not making a profit. If I could only mark up a product by 10% then I would have to sell $100,000 per month to pay the overhead. (And we have not spoken about freight to get the goods to the store.)
If a retailer is charged the same price as someone who discovers you on Etsy, and the customer finds out that she, too, could have purchased at the Etsy price, the customer will never buy from that store again! So, you can price your goods to enable a retailer to make a profit selling the goods at retail OR you should turn down the wholesale order. Killing the retailer is not a solution. There are still many customers who want to see and touch the products before buying and the retailers are an integral part of that buying process.
The retailers are not the pricing problem. The artists need to understand the finances every store owner must juggle before passing judgment on the retail price in stores.

April 16, 2009 at 4:22 p.m. GracieDesigns

vabeckner, thank you for your post. I wholesale and I do the usual 50% with a minimum. I wouldn't be nearly as successful as I am without my retailers. I love them. They are return customers, they buy large quantities, and they are all very nice people. My goods do well at fairs, markets and festivals due to the 'touch and feel', and that is why my wholesale accounts just keep increasing their orders and frequency of ordering.

I would love to see more information on wholesaling internationally. As a future topic, or a bit for a future wholesaling article.

May 29, 2009 at 5:40 p.m. SusanKJewelry

vabeckner.... really great point. Retailers have an important position for sales. I always offer 1'2 of retail for wholesale accounts. The prices have to be in line with each other and both need to profit from it. $2.50 profit would never cover expenses and overhead.

May 29, 2009 at 5:42 p.m. SusanKJewelry

alline... really cool site.

May 29, 2009 at 8:03 p.m. HibouCards

Dreamwoven and JoyArte, I really appreciated your comments on this article and I agree with you that we already tend to underprice our items, I know I often do. This is really perfect timing for me too because I have just been approached by a boutique wanting to buy wholesale from me and I was trying to figure out if tit was worth it. I mainly sell handmade cards and at $5 a card I do not have a lot of margin for discount...
Also I cannot really "mass" produce what I do, since it is all handmade, unique and artistic it kind of defeats the purpose....
Anyway I'm still thinking about the issue and will decide according to what my heart and soul are telling me :)
Thanks for raising the issue though, these articles are always helpful and it makes it worth being a part of the Etsy community!

May 30, 2009 at 3:14 a.m. sycamoreboutique

I am both a seller, a wholesaler myself, and a wholesale buyer (for my brick and mortar store)so I can comment from all sides of this situation.

But mainly, as a wholesale buyer I am looking for something unique, something that can be delivered fairly quickly (assuming I am not requesting something custom) and a low minimum "buy in" to get started.

If I were a big store or a chain then minimums would not be an issue, but being a very small, specialty retailer trying to carry lots of different things - minimums are an issue. It is understood that the wholesale discount is tied to a larger order, but maybe consider a sliding scale - a low minimum with a lower discount with an increase for each level achieved. IE: 5-10 pc 30%, 20-50 40% and on.

On the other hand, being a wholesaler myself I know that the sale needs to be worth your time. I have found however, if I am not to strict with the minimums that once the buyer gets going they will return with ever increasing orders over time.

PS - I usually look for the "wholesale" tag when searching sellers.

Angela

May 30, 2009 at 3:43 a.m. sycamoreboutique

>>>Would retailers go for a percentage like 40% below retail or is wholesale typically 50%? Just curious.<<<

Yes, definitely. As a seller and a buyer I recognize the difficulty of discounting the standard 50% on many handcrafted items. A sliding scale dependent on materials and craftmanship is completely acceptable for wholesale. Some might only be able to offer 20% off - but that is ok if the perceived value is high enough to carry it at retail.

Like Vabeckner pointed out, retailer overhead is HIGH and expecting to double your prices on merchandise is not greed, it is a necessity just to stay in business. Unfortunately many of us have to resort to selling some imported goods that we can get 3-4x profit on to make up for things that we cannot mark up enough, or that just sell too slowly (consider that fact that we completely lose our profit on items that have to be clearanced out).

If you can't pay the rent, electric, wages and taxes you are not going to be there very long. I love being a retailer, but it is stressful all the same.

May 30, 2009 at 10:48 a.m. lzubal01

Hi! Thanks, this was helpful. I recently had a booth at a "green" fair and was approached a few times about wholesale. I hestitated to follow up with these people because I wasn't sure how to go about it and was unsure about legal requirements. None were mentioned in the article so am I to assume that is a nonissue? Lisa

May 30, 2009 at 3:46 p.m. sycamoreboutique

The only legality you would run into would be the sales tax issue and that only applies to within state sales (unless they start enforcing a nationwide sales tax).

If the buyer is a qualified retailer they will have a Resale Tax Id issued by their state. This exempts them from paying sales tax on the purchase because it is collected on the end sale (final user), otherwise it would be double taxation.

You need to keep a record of these resale tax Ids (for instate sales) for tax purposes.

May 30, 2009 at 8 p.m. barkingdogblankets

Regarding wholesale costing I was at a loss, I wish I could have read this before I started with wholesale BUT after reading this it seems that I did the right things afterall.
Thank you!!

June 1, 2009 at 4:14 a.m. ilovehearts

Great advice. Thank you x

June 1, 2009 at 8:15 a.m. TurnitoverTreasures

Love the article! I have just made my Etsy shop available for Wholesale orders of 10 items or more in a mix and match scenario. Shops and individuals alike looking for great prices will hopefully check it out! Thanks for the nudge to go Wholesale!

June 1, 2009 at 11:37 a.m. Dreamcatcherdesigns

Thanks for bringing this topic into a discussion arena. I've been wholesaling for five years and truly enjoy the relationship that I've established with boutique owners. It may be important to note the difference between wholesaling products that can sell in volume as opposed to those "one of a kind" pieces that cannot. Perhaps the comparison should be between the artist who goes directly to the store to sell single items as opposed to a rep who sells to a chain of stores purchasing multiples of the same item. Most boutiques with which I work do not want several of the same piece until they learn if it will sell. I believe the pricing shown in the article is mainly for the chain of stores. My greatest financial asset in wholesaling is finding that unique boutique owner who exactly doubles my price and if she finds she can sell a piece for more, she shares that profit with me. She knows that if I don't make some money, she will not get my work. Thanksfully, she wants it! I can also recommend establishing a relationship with a store by offering to make pieces specifically for the garments being sold. This can be a win-win for both parties.

June 1, 2009 at 12:14 p.m. SZBEADS

Nowhere in these articles do you mention the fact, if buying wholesale that a business license is required! I really get peeve with shows I do mostly when seller wholesale to the general public. A business License lets you know your selling to someone who is reselling an item. Plus, I as the seller don't need to worry about the state taxes, if business lisc. # is given at time of sale. I think we need to inform people any sales we make we need to pay appropriate taxes on and if whole selling any items business license is required in order for item not to be tax. That was one of main concerns when I started selling with etsy that noneof the buyers seems to be paying tax for items purchased. I decided I just pay the taxes myself cause I got alot comments about people not wanting to pay them. As a business practice seller must be aware taxes are required to be pay even if selling as crafts to the public.

July 3, 2009 at 10:08 p.m. TheFourStore

I've been approached about wholesaling and just didn't know what to say. I realize if I want to make any kind of profit, I need to rework my prices. I like the idea about offering free shipping on Etsy. Thanks for the advice!

July 12, 2009 at 11:43 p.m. restintheword

Hi Beth, I've just received an email from a customer that would like to purchase some of my items on etsy for wholesale. Not sure what to do. She ask if I would consider consignment or wholesale. Which way is best? Also, how do I adjust my prices on these items? I really don't want to lose sales, but I do want to make some profit. Thanks, God Bless

Aug. 6, 2009 at 1:14 a.m. aliengrace

Well, SZBEADS, you, like so many from the US, are assuming we are all from the same. I would like to know more about the issue of wholesaleing internationally, personally. I can figure out wholesaleing to someone from my own country - I know I need to charge them GST but I also need a business number (no biggie).

Aug. 14, 2009 at 1:32 p.m. Handamade

I have one issue, actually two different issue. One customer ask me for the wholesale and I told her that an order of 12 I gave 10% discount. I can't gave her half of my price or else I don't make my profit like everybody else says. The other one person ask me about consignment or wholesale, and I say wholesale and same thing I told her 10% discount for the minimum order or 12. Like Beth said, we have to considered our time to make, time for taking photo and etc., etc. but all my handmade items I did not even adding my time to make all I know is I can make I item in an hour and a half. But I add my packaging, PayPal fees, Etsy fees and material used. Sometimes I was thinking I will change my price to a higher price then I'm worry about not having a sales. I can make a little profits but not the same as my regular hour job. By the way, about that person who ask me about the wholesales I did not get her for a wholesale buyer. She said for resale she doesn't, get her in the right price points for my items. I've done a consignment but that did not take long. The company I have my items call me that they going out of business, but she sold one of my item and actually, my price for my apple jacket is $12 and she sell it for $24. Anyway, may I will try to raise my price.:D

Sept. 15, 2009 at 1:02 p.m. LovMely

I have found that using the sliding scale works for my Etsy shop. I start with 35% off each piece with a minimum of 10 pieces. If they want to buy more the discount can drop up to 45%, i usally don't go much lower than that as my retail prices are pretty low. I now have over 15 sops that carry my pieces and that's with out me having to reach out to them for there business. Most of these have come to me because of my price points.

One thing that i would be interested in learning about is how to make a line sheet for wholesale orders. Most companies want a line sheet and i want to make the most professional one i can, but i'm just not sure how to or where to get the best information. Maybe someone in here can help? Anyway, it's great to see everyone's opinions on wholesale terms. Good luck to all ;)

~Mel

Oct. 6, 2009 at 6 p.m. victoriaelizabethqoc

I loved reading the comments here. When I started my shop most of my sales were wholesale. I was very naive. One thing I learned is to not expect repeat customers and base your pricing on that. I did do that and could not keep up with the volume and time frame a particular customer would like. Also, another thing I did wrong was give/wholesale some unique items. The problem with that is that a pattern can be made from the garment and then it can be made by a dressmaker, possibly for less than I would sell it for. I'm not saying that happens on a regular basis, but I think it's something to take into consideration. Oh and one last thing I wish I would've found out initially is whether or not your tag is on the item when they resell it. A lot of boutiques put their own tag on items, which negates any exposure for your shop. Thanks for the article and also for everyone contributing to the discussion.

Oct. 28, 2009 at 1:41 p.m. steampunkjewelry

This is great information and the comments and experience from etsy users add so much more, thanks!

Previous Page | Next Page