Understanding How a Consignment Percentage Split Works
Selling goods on consignment gives craft artists, fabricators, and private citizens looking to dispose of lightly used or estate items a chance to make money without the hassle and expense of storing and advertising the articles themselves. This can be lucrative, too, if the consignment percentage split for these goods is fair.
We will be looking at some of the ins and outs of consignment selling and what constitutes a typical consignment percentage for various classes of goods.
What is a Fair Consignment Percentage?
The consignment percentage split determines the proportion of payment for a particular consignment item that goes to the owner or producer of the goods (the "consignor") and the establishment that's selling it on their behalf (the consignment shop or "consignee").
So what is a fair consignment percentage split in today's market? Most trade analysts agree that a 60:40 split in favour of the consignor is fair. This means that the owner or maker receives 60% of each item's selling price, while the consignment shop gets 40%. So, for example, if an artisan lends out a hand-crafted purse to a sales outlet and it sells for $100, she receives $60, and the store gets to keep $40.
While a 60:40 split is generally acknowledged as an acceptable standard, other percentage splits may apply to consignment sales transactions. Depending on the type of items being sold and the consignment outlet selling, a 40:60 split in favour of the consignment shop or an even 50:50 split are also typical consignment percentage figures.
Note that in all cases, the real consignment percentage represents the net figure that both the goods owner and the consignment shop take in after all necessary deductions for HST, transaction fees, and so on.
Factors Determining the Fair Consignment Percentage
Several factors contribute to determining the real consignment percentage
for a transaction and to what constitutes a fair consignment percentage split. They include:
- How skilled the consignment shop is in marketing the consignor's goods.
- The amount of overhead that the consignment shop has to pay to cover its expenses and remain profitable.
- The closeness of the relationship between the consignor and the consignment shop.
- The value of individual items, as higher quality merchandise may attract a larger split for the owner.
- The location of the consignment shop may favour a wealthier client base, willing to pay higher prices.
- The location and income bracket of the consignor may predispose them to accept a certain price level for their goods.
Consignment Rates for Different Items
Over the years, there has come to be a standard consignment percentage split associated with various popular consignment goods. Some typical consignment percentage figures are:
- Clothes: 40 - 60%
- Furnishing: 50 - 70%
- High-end luxury items: 80 - 90%
- Sporting goods: 50 - 70%
- Motor vehicles: 70 - 80%
Commission Percentage for Consignment Shops
A consignment percentage split between the seller and consignment shop owner is necessary to ensure that both the sales outlet and the artisan/fabricator can profit from selling the consigned items.
So what percentage do consignment shops take? This depends on the circumstances of both the consignor (the maker) and the consignee (the consignment shop selling the goods). If, for example, the owner of the merchandise is simply selling used goods, the level of their input and the value of the items themselves may tend to be less than for an artisan who puts time and money into creating craft goods. On the other hand, the consignor might be looking to sell valuable heirlooms or estate goods that might attract a higher profit for the seller. In this case, the owner might be in a stronger position to negotiate a higher than typical consignment percentage.
On the consignee side of the equation, the consignment shop has to consider its staffing, marketing, space management, and other overhead costs associated with selling the maker's or owner's goods. Therefore, all of their expenses and overheads will need to be factored into the real consignment percentage figure that they present in negotiating with the consignor.
As we have observed, consignees will typically take a 40% commission on sales - that is, a 60:40 split favouring the maker. However, there may be circumstances when the consignment shop's percentage might be higher.
For example, this may occur in cases where the consignment shop is a high-profile establishment such as a well-known retail brand or niche seller. The seller may be looking to expose their articles to a wide consumer base or to a wealthy clientele. The price they pay for this exposure may be to accept a smaller percentage of the proceeds from the sale of their goods.
A "flip side" situation occurs when the seller is looking to sell boutique or niche items, but the consignment shop generally deals with a lower-priced inventory. Here, the consignor may take a hit in the percentage they receive, as the consignment shop must spend more time and money in promoting these higher-end items.
There are also situations when the seller's percentage might be higher. Suppose an artisan or owner has established a reputation for providing consignment shops with popular products in high demand. In that case, they are in a stronger position to negotiate a higher percentage split.
At another level, if the consignment shop is a start-up, small or not very well known, sellers may be able to negotiate better terms from the outset. And established sellers may have a stronger hand in negotiating a higher consignment percentage split if these lesser-known outlets approach them directly for business.
Consignment Percentage vs Wholesale vs Retail Percentages
Consignment selling is one of a range of business models that include retail and wholesale -- and a consignment percentage split is different from a wholesale percentage and a retail percentage.
In consignment selling, the owner or maker of the items essentially lends them out to a consignment shop, which contracts to sell them at an agreed price, then splits the proceeds in accordance with an agreed formula. As we have seen, a typical consignment percentage is split 60:40 in favour of the seller.
In a wholesale scenario, the maker or owner sells items to a shop in bulk for an agreed upfront price. The general agreement is that this will be 50% of the price that the shop sells the items to direct consumers. So the percentage split for wholesale is typically 50:50.
When a maker or owner sells their items on a retail basis, they assume full responsibility for providing, storing, and marketing them directly to buyers. They can therefore set their prices and keep 100% of any profits.
How do you Price Consignment Items?
As a general rule, price items at about 20% to 70% of their original price. Here are some prices for the consignment split that may determine the real consignment percentage you can expect from selling common items in a consignment shop:
- Standard Purses - $3 - $4
- Table & Chairs - $25 - $40
- Dresser - $80 - $150
- Car Seat Cover - $20 - $50
Why Consigning your Goods is a Good Idea?
Whatever you're trying to sell, you deserve the best possible price for your items. You also deserve to be free from the hassle and expense of storing and marketing your merchandise beforehand. If you've done your homework and know the real consignment percentage agreed upon and associated with selling your goods, this makes consigning the items with a reputable consignee a good idea.
At Around the Block, we approach all consignments with professionalism and compassion. Whether you are downsizing, renovating, redecorating, or have an entire estate to manage, we have the expertise to help! We stand by everything we do and ensure that all consignments in our store are cared for as if they were still in your home.
Consigning with Around the Block, you can expect the highest level of customer service in the industry -- as well as a consignment percentage split that's 60% of the sale price!
- Furniture from various styles and periods
- Lighting (chandeliers, table lamps, wall sconces)
- China, porcelain, and crystal tableware, figurines, silver plate and sterling silver
- Original artwork
- Hand-knotted rugs
- Decorative mirrors
- Home décor
- Ladies designer accessories (handbags, wallets, etc.)
- Marked costume jewellery (i.e. Sherman)
We require all items to be in as close to perfect condition as possible within reason -- a threshold we refer to as "house ready".The better the condition of the items, the faster they will sell, and the higher the price they will command. All items are subject to final approval pending their condition upon arrival at our premises.
Though it's your responsibility to deliver your items to the store if you need help with furniture and large items, we have excellent, reliable, and affordable movers we are happy to recommend. Our CPPAG accredited appraisers have the knowledge and experience to accurately price your items so that they sell as quickly as possible while getting you the best return on your consignment.
When we receive your item, the initial price is set for the first 60 days. If your items have not sold after 60 days, the selling price will be reduced by 10%. Following that initial reduction, the items will continue to be reduced by 10% every 30 days until the items have sold. Checks are mailed out automatically to consignors at the beginning of every month!
Note that we are happy to keep your items until they sell! There is no expiration date! And you can take consigned items back at any time without penalty.
Based in Toronto, Around the Block has a knowledgeable and friendly staff and offers the real consignment percentage you expect- and the best consignment terms in the city!
If you're ready to get started or would like to know more, get in touch with us.