Thursday, May 28, 2009

How Do They Get Away With This??

I was talking with another artist the other day about a shop that had approached both of us within the last few years. What stunned me as we spoke was the fact that this place was still in business, getting artists to sign up to their "great" plan.

The deal is that you pay a fee of about $170 for six months, and then you "only" have to pay a consignment fee of 15%. Apparently this last thing is what gets so many artists caught up in the web. They hear the 15% and think,

"What a great deal. Only 15% fee."

What is wrong with this picture?

First of all, why are you paying someone to carry your work? It is not necessary, and it is a needless cost. Let's assume that a mark-up of 2X your wholesale price is reasonable for both you and the seller to cover your costs, in which case the standard consignment of 50% is not entirely out of line. So, you would need to sell $400 through this shop to reach break even. It is only if they are selling more than $400 over a six month period that you will begin to see any advantage to the better consignment rate.

But, when you sign up, how do you know if this will be the case? This artist that I talked to managed to negotiate a six month period with a standard 50% consignment rate. During that time, she found out that they did not do a good job selling her work. She would have been in the hole by several hundred dollars. And when they presented her with a contract, and an offer to continue to have her work with them, she saw that they had kept the consignment rate at 50%, AND wanted her to pay that membership fee.

What else is wrong with this picture beyond the basic math? First of all, why are we so willing to carry the inventory costs of the shop by offering our work on consignment, and, to pay a fee for the privilege on top of that? The sales pitch tells you that they will spend your fee to help market your work. Isn't that what the the normal consignment fee goes towards? Why would anyone want to assume all the risks of their business by paying this fee up front, and giving them the inventory they need to run their shop?

When we sell our work on consignment, we are carrying the inventory costs of a business. This is part of the normal operating costs of a retail business. And when the work is on consignment, their is a risk that the merchandise will be neglected, damaged, or not tracked well. We are assuming more risk that with wholesale.

There are good reasons to have your work on consignment. There are a few local shops where my work is sold through consignment, and I find they do a good job representing my work. And, I can give them a wider range of work than some wholesale accounts might carry. It gives me the opportunity to see how newer work will do. A few local wholesale accounts will have one or two larger pieces on cosignment to give the display of my work more "Wow!"

But, I only will do consignment with local businesses. Even then, it is a challenge to keep them stocked, to rotate inventory, and make sure that my work is being well represented.

There are some galleries that only work on a consignment basis. Sometimes you need to do some research, talk with other artists who have their work there, and find out if it is a good place to have your work. Do they pay promptly? How do they handle rotating stock? Have they ever had any concerns?

I am not ruling out consignment, under the right conditions. Ideally you will be paid 60%, or in a few rare instances even more, of the selling price. But 50% is pretty standard these days. Know how often the checks will be cut, and sent out, so that you know when to expect payment. And, be willing to risk losing something. Theft happens in even the best of circumstances, and you will be more at risk to absorb this loss under consignment, than under a wholesale arrangement.

But please. Do not pay to play. If someone is asking you to pay a fee to sell your work in their shop, and keeping a portion of the sales price as well, ask them,

"Why am I assuming your business risk?"

I did not get a straight answer from this shop when I asked that question. So I declined the opportunity. They placed a wholesale order for some cranes. Go figure. Sometimes saying no is the absolute best thing you can do for yourself, and your business. There is enough risk in the business of being an artrepreneur without taking on the risk of another business too.

Remember, sustainability is our goal. We want to be in this for the long haul.


I am leaving for Las Vegas and the ACRE wholesale show this afternoon. The last word I heard was that more buyers were registering in the last few weeks. Let's hope that turn out is better than expected, and people come ready to place orders.

I'll keep you posted!


Tasha said...

Thank you so much for this information. I've never sold art to a local store before, so I need to know the tricks of the trade so that I don't get taken.

Emme Toaye said...

Thanks for the info, I need all the help I can get and you seem to have "been there, done that". Enjoy Vegas, and if you get a chance the "Rio" has a fabulous "free" show and a lot of very interesting shops.

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