Many handmade businesses sell their products wholesale, but should a quilt business consider selling wholesale?
This article will explain the difference between wholesale and retail pricing, why you need both if you’re selling your quilts through retailers, and why you may not want to sell handmade quilts wholesale.
WHAT IS WHOLESALE PRICING?
Wholesale pricing is basically discount pricing for retailers and is typically 50% off the retail price.
Retail price is what you sell your quilts directly to consumers for.
Retailers expect wholesale pricing because they’re often buying your products in bulk, or at least, purchasing more than one item per order. That saves your business marketing and sales costs.
When a retailer sells your quilt in their store, they’re taking care of the marketing to get customers into the store, the time it requires to sell your quilts to customers, and other costs such as transaction fees, shopping bags, etc.
Let’s say you sell your quilts for $500 to consumers. Retailers would typically expect to pay $250 to buy your quilt at wholesale price.
They would then mark your quilt back up and sell it at $500 in their store.
When they sell your quilt, $250 of it pays off the cost of the quilt (what they paid you for it) and the other $250 covers their costs to market, display, and sell the quilt, and (hopefully) leaves them with a profit.
WHY YOU MAY NEED WHOLESALE PRICING
If you plan to sell in any retail stores, you must have a set retail price and a wholesale price.
You can’t sell your quilts for less when you’re selling directly to customers, as that would be unfair to the retail store.
When a customer can find the same quilt in a store and on your website, and it’s listed for much less on your website, they’re going to buy from you. Giving you an unfair advantage over the retailer.
Not every product is suited to be sold wholesale, as it requires a considerable markup to do so.
You need to ensure your quilt’s prices cover all your business costs (production costs and overhead costs) and leave you with a profit when selling at wholesale prices.
My method of pricing adds those numbers up (production costs + overhead costs + profit margin) to get your wholesale price.
Then you would take your wholesale price and multiply it by two to get your retail price. That multiply by 2 allows you to offer a 50% discount to retail stores.
However, selling wholesale isn’t a fit for every business…
WHY YOU MAY NOT WANT TO SELL HANDMADE QUILTS WHOLESALE
If you make quilts, you know that they’re labor-intensive. The time it takes you to make one quilt is why quilts cost so much and what drives their prices up.
When costs are fairly low for a handmade product, multiplying the price by 2 to get a retail price doesn’t make the item overpriced.
For example, if it costs me $10 to make a pair of earrings and I have 20% profit margins, my wholesale price is $12. Multiply $12 x 2 to get my retail price makes that pair of earrings $24, which is a reasonable price.
But when you multiply a much bigger number by 2, such as $500 x 2, it increases the price by a lot and makes it a much more expensive quilt ($1000 retail).
If you have to sell your quilts for $1000 each so that you can offer a 50% discount when selling to stores, it’s likely you’re pricing your quilts out of the market and making it hard for both you and the retail store to sell to customers.
Unless you have a lot of retail stores wanting to sell your quilts, and perhaps you focus on only selling retail to save costs, it’s better to leave your prices closer to $500 and only sell directly to consumers.
For example, if I sell quilts both wholesale to retailers and directly to consumers by selling on Etsy and wholesale, my costs will be higher because I must not only spend time marketing and selling to retailers but also, I must spend time and money listing my quilts on Etsy and setting up at craft shows. I also need to buy shopping bags and shipping supplies, etc.
If I decide to focus only on selling my quilts wholesale to retailers, it will help me reduce some of my costs and make my business more efficient.
Plus, if you’re someone who doesn’t like marketing and selling, wholesale may be more suitable for you since you only have to market and sell to a store once to sell multiple items. And if your quilts do well in a store, it only requires a quick follow-up email to sell them more.
However, it’s okay to say no to a store owner that wants to carry your quilts. You can simply let them know you don’t have the margins to offer a 50% discount.
Or, they may be open to a lesser discount, which means they’ll profit less but you can keep your retail prices down (which is a benefit to the retailer as well because it makes it easier for them to sell one of your quilts).
WHAT IF YOU DON’T SELL QUILTS WHOLESALE?
Even if you don’t plan to sell your quilts wholesale, you should still have a markup, even after adding in profits.
A markup doesn’t have to be 200% so you can offer 50% discounts.
You can decide how big of a discount you’d like to be able to offer to customers and base your markup on that.
For example, if I wanted to be able to run sales once and a while, I might want to be able to discount my prices by 15% and would mark my prices up to allow me to do so (I explain how to do that in this article).
Or, if I wanted to be able to offer free shipping, I may mark my prices up to cover shipping costs.
A markup on top of profits ensures you’re not eating into your profits when you do offer discounts.
Having a markup also gives your business a little extra padding in case unexpected costs come up, such as a customer demanding a full refund and you’re left with a quilt you can’t sell. Or your sewing machine breaks down and you must pay for a new one or for expensive repairs. Or you need to take several weeks off from work.
Learn how to properly price your products and add markup based on your business plans here.
But in short, selling handmade quilts wholesale may not work for your business, and that’s okay.
Not selling wholesale will give you a lot more freedom with your pricing and allow you to keep your prices lower, which may help you sell more quilts.