What Determines A Fair Consignment Percentage?
A 'fair' commission (paid to the store) is subjective and may depend upon:
- How adept store management is in garnering the highest prices for merchandise
- The store's overhead plays a significant role in the percent the store must have to cover expenses and make a worthwhile profit.
- The relationship between consignor and consignee - Friends, relatives and neighbors might get a higher share others.
- The value of each item. High-end items like Baby Grand Pianos and Porsches might warrant larger splits to consignors than infant onesies.
- Locale and clientele - Wealthy people in high-rent districts may not be as concerned about their shares of sales proceeds as those at the other end of the spectrum hoping to turn unwanted merchandise into much-needed dollars.
The bottom line is how much consignors are receiving for their sold merchandise. If they aren't satisfied with the amounts, they'll stop participating, or worse, spread the word about their discontent.
Typical Consignment Rates
- Clothing: 40-60%
- Furniture: 50-70%
- High-end Items: 80-90%
- Mall Vendor Merchandise: 80-90%
- Sporting Goods: 50-70%
- Vehicles: 70-80%
Calculate A Fair Consignment Percentage
The 'percentage' is calculated by dividing the payout by the amount of the sale. On a $100 sale with a 40% consignor share, the payout should be $40, so 40/100 = .4 or 40%. When the share is less than expected, just inquire as to why. The division may be less because other fees may have been applicable. Fees cannot be assessed if they were not disclosed prior to placing items on consignment and should be spelled out in a consignment agreement with signatures of both parties. Continuing with the benefit of doubt, sometimes mistakes are made and simply addressing them may resolve them.
A software vendor in Miami, FL actually rigged his software to hide the actual sale price so consignment shops could literally lie about the sale price and pay consignors less. He publicly encourages users of his software to employ the tactic to 'increase store profits'. (The software name is similar to 'Consignpo'.) This can be detected by having someone purchase something that you have on consignment. See if the sales price matches the shop's representation of the selling price.
Consignment Percentage and Store Profit Margin
Store 'profit' is far from the share of sales proceeds that shops take in. Typically from the store's take expenses are deducted like rent, help, utilities, advertising, insurance, supplies and fees.
It is becoming increasingly more accepted if not expected to have credit-card charges either deducted from sales proceeds prior to splitting the remainder, or passing fees on to consignors (only for credit-card transactions).
Consignment Percentage For Retail
Consignment and 'retail' are generally mutually exclusive. 'Consignment' refers to adding others' items to inventory for resale with payment made when items sell. Retail refers to purchasing products from suppliers, wholesalers, designers and manufacturers for resale where payment is made when inventory is delivered, which is not to say that retailers won't also place inventory at outlets on consignment.
Average Consignment Percentage Rates For Clothing
The average rate based upon the 20 years of observation across thousands of consignment store selling all type of clothing ranges from 20% on high-end clothing to 80% for run-of-the-mill used children's clothing of which there is plenty. There isn't an 'average percentage' that can be applied across the board for any and all clothing consignment shops. Consignors with high-end designer bags, shoe and threads expect more and should get more because for the store, a lower percentage of a high-priced item begets more than 70% of a baby bib. To know an average for the type of inventory in your shop, send some emails to other similar shops. Make some phone calls. In your area, learn what the competition is offering and better by enough to attract business.
Consignment Pricing Formula
Consignment Rules Guidelines
Furniture Consignment Percentage
Retail Consignment Agreement
Selling Crafts On Consignment