Understanding Consignment Percentages
Most furniture consignment shops’ percentage is either a 50:50 or 60:40 split in favour of the consignor (the item’s owner). Retailers who insist on a higher than typical consignment percentage and / or monthly shop fees make it quite tough for the craft artist to make a reasonable profit. In my own opinion, a 60/40 split is a fair consignment percentage under most circumstances. If you want to sell your products on a consignment basis through a retailer, you need to be ready to negotiate a fair percentage of the consignment. Before selling any of your products at a retailer’s store, you need to know what percentage of the retail price and how much the retailer will cost. The common craft consignment split is 60/40.
Consignment shops typically take a 40% commission, which is considered a 60/40 split. 40/60 or 50/50 split is also appropriate, depending on the products you’re selling and the type of consignment shop you’re selling through.
Determining a Fair Consignment Rate
There are a few things you might want to consider to determine what you believe to be an appropriate consignment rate. The average percentage for consignment will vary based on what kind of item you’re selling. Typical rates can range anywhere from 25% to 60%, depending on the item. What you, as the original owner, consider reasonable and what the consignee considers adequate might be two vastly different numbers.
When it comes to consignment selling, there are several special considerations and factors to take into account. Consignment selling is one of a range of business models that include retail and wholesale. A typical consignment percentage split is 60:40 in favour of the seller, while a wholesale scenario usually involves a 50:50 split, and retail selling allows the seller to keep 100% of the profits. One of the challenges of consignment selling is managing inventory.
Consignment Selling Considerations
The rate is commonly agreed upon consignment of inventory and is often stated in written consignment agreements signed by consignors and consignees. The current owner in a consignment transaction doesn’t get their money until someone buys their item.
If you’re a shopper considering negotiating at a consignment store, it’s best not to. The maker may receive a higher percentage after having a proven track record of their products selling well in a consignment store. They may start with the lower consignment percentage and then negotiate a higher commission percentage based on performance.
For example, if I sell handbags at craft shows for $100, craft show shoppers pay $100 for a bag. Wholesale prices are typically 50 percent of retail price.
A ‘fair’ commission paid to the store depends upon the store’s overhead to cover expenses and make a profit, the relationship between consignor and consignee, and the value of each item.
Consignment stores usually sell items for about one-third of their new retail price. Typically, the consignment store owner keeps 60 percent of the profit on each item and gives 40 percent of the profit back to the item’s original owner.