How Can I Increase My Profit Margin?

I hate to see professional crafters and artisans turn away from selling wholesale because they do not have enough of a profit margin to make it worthwhile to sell to retailers.?How Can I Increase My Profit Margin?

Of course, this is a valid concern, but there are a few ways to lower expenses, thus increase margins enough to sell wholesale:

Tips for Lowering Expenses

  1. Producing in larger lots.  You can save money — sometimes cutting the price significantly — when ordering materials in larger quantities.  We found this to be true when we purchased bottles for our gourmet sauces.  The pricing per jar went down over 50% when purchasing a pallet of bottles rather than a dozen cases at a time.  Of course, this only works when you have a proven seller that will resell many times over.
  2. Buying wholesale.  If you have a reseller number (sales tax exempt number), you can order larger quantities of raw materials at wholesaling pricing.  At the very least you can save sales tax, depending on the stores where you buy your materials.
  3. Use recycled packing materials.  Packing material can be rather expensive to purchase.  For years, a couple of local retail outlets saved their packing peanuts, bubble wrap and other materials for us at no charge!  We come pick them up periodically, cleaning out their backroom in the process.  Win – win for both of us!
  4. Decrease overhead.  Is a commercial office a necessary expense?  If you have an extra room in your house, you can turn it into your production room or office.  Using this option factors into your tax deductions as well as lower your costs.  We have done both, and even though our house is overflowing from our businesses, we saved the monthly rent spent on our downtown office.  Also, we no longer need to drive to work anymore!
  5. Doubling up on trips.  We deliver and pick up a large number of the products we sell.  Whenever we plan a trip to the southern part of the state, we order products from our supplies along the way to pick up rather than ship.  On the other side, we also call our customers along the route to see if they would like products delivered during our trip.  Saves us the extra time and expense of shipping and our customers love having us deliver  (even though, we charge a small delivery fee).

These are just a few ways that we have used over the years to increase our profit margins.  For more tips, check out this article from Artsy Shark.











Wholesale Pricing 101

Taking the step from retailing to wholesaling your products can be a big step — but not if you have your Wholesale Pricing researched and in place FIRST!

Personally, I hBusinessman Thinking about Wholesale Pricingave written numerous posts (see links below) and have published a FREE email course (How to Price Your Products) on the subject.  My experience and expertise comes mostly working with gift type shops.

One of my favorite authors and business associates is Carolyn Edlund of the Arts Business Institute.  Her take on Wholesale Pricing 101 comes from selling to galleries!  Here are some excerpts from her article:


The Truth About Wholesale Pricing

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.” ….

… 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.

…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.

… 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.

If you are interested in more information and articles on Wholesale Pricing, check out the links below:

Developing a Wholesale/Retail Price Structure

Are Your Prices Unrealistic (another post by Carolyn Edlund from the Arts Business Institute)

Wholesaling Your Handmade Items

Appropriate Pricing for the Gift Industry

Are Wholesale Margins Changing, Part One

Are Wholesale Margins Changing, Part Two

“HOW TO PRICE YOUR PRODUCTS” Free email course