Trade/Retail Pricing
by Margeret Bunn - 01444 246446
Today’s help and advice will cover the topic of pricing for both trade and retail.
When exhibiting at BCTF, you will need to have your trade price and your recommended retail price
(known as RRP) for each of your products.
Calculating the correct trade price is essential. You will need to take into consideration your material
costs, labour costs and overhead costs (power, gas, rent, etc.).
To help you, we recommend a book called ‘Second Steps’ by Caroline Mournment. You can buy it
from Amazon and it explains in detail how to work out the costs for your trade and retail prices, plus
a lot more.
It’s essential that you research the prices your competitors are charging. Try to stay within the same
ball-park figure. Selling your work at a much higher price may hinder your sales, while selling for a lot
less is likely to give you very little, or no, profit. You have to make sure that there is a profit for you
in your trade price.
There is one important rule that mustn’t be overlooked and that is not to be in conflict with the
retailer selling your work. Your retail price, whether on your website, at retail craft fairs, or through
an open house or your workshop, should be the same as the retailer’s.
I’m going to give you an example of how to arrive at your RRP.
Once you have set your trade price you will then need to add the percentage mark-up, which will
give the retailer their profit. The average mark-up is 100% but if you can offer a greater percentage
then do so.
For example, if your product sells to the buyer for £40 and you are offering the 100% mark-up, you
double it, making it £80. It’s likely that the retailer will have to add a further 20% for the VAT, which
on £80 is £16, so the product will retail at £96. It’s important that you too sell this product at £96
when selling direct to the public.
One of the biggest problems retailers have is that a customer will go into their shop, see your work,
then Google you and find that they can buy it for less if they buy from you direct. Buyers tell me that
customers go onto their mobile phones to do this research whilst in their shops, much to the
frustration of the shop owner. Almost all retailers promote the makers they stock. Very few will keep
the identity of the maker secret, so it’s only fair that they get the sale.
Now, a buyer may not sell at your recommended retail price. They may decide to sell at a much
higher price than you’ve recommended, but you will find that if you allow them at least a 100%
mark-up plus the 20% for the VAT , most will go with your RRP.
That’s it. If you have any questions, give me a call.