Episode 5 - Pros and Cons of selling through a Distributor

Jun 17, 2015

In this episode I discuss the pros and cons of selling your work through a distributor. 

I personally sell my work through 2-distributors and several retailers directly. The benefits of both allow for a consistent income without putting all your eggs in one basket. On one hand you have a catalog that has a broader reach of distribution allowing more exposure for your line of work. Selling to a select few retailers gives you an outlet for one-offs and a higher profit margin. I cherish the relationships built over the years with my retail accounts and consider many of them family. 

Most distributors take a 25% fee off the top of the wholesale. If you sell an item for $10.00 wholesale the distributor will then pay you $7.75 per item. If you calculate your time and gas that it takes to drive around and hope to sell orders it is way more beneficial to work with a distributor. On the otherhand dealing with a few select retail stores you may make more of a profit but limit yourself to a broader distribution nationally.  When you first start out I recommend starting off sellling to a select few shops and have then help you find the right pricing based on their customers feedback. In the long run you can then fine tune your line and become more consistent which you can then approach the catalog companies. 

When building relationships it is important to know that you will need to mail off FREE samples giving the distributors an physical sample of your work. This allows them to settle on pricing and then if they accept the item they have it for photographing it for their catalog.  

 

 

below is a basic calculation you can use when figuring out cost of manufacturing your items. 

 

How to calculate cost of production 

 

This is a generic example 

 

In this example I'm using reference from internet which has material price based on length .....

 

3"-wrap and rake hand pipe 

 

Material breakdown : 

-2"point of simax 25.4 hvy wall ($8.00/60") 

-$0.26

 

-1/2" section of color -cobalt firsts ($5.25/18") 

$0.15

 

-9" section 4mm clear for raking ($0.52/60")

$0.09

 

Guestimated total for cost of

Goods

3"wrap and take spoon $0.26+$0.15+$0.09=$0.50

 

Propane/oxygen/power is pennies on the dollar if you're able to get liquid oxygen. If you are renting space you still need to calculate your estimated per hour rate. If you pay 500.00/mo break it down to per day then estimate how many hours you work in a day and use that number as a base calculation.

500.00/month (30-day month) in approx $17.00/day (per hour in a 10-hr day) 

$1.70/hr (gases and power)

If you can make 10-$5.00 wrap spoons per hour your estimated cost per hour is 

Rent(power/gas) $1.70+(material x's 10-hr) $5.00= $6.70/hr to manufacture 10-$5.00 spoons 

 

Net-$50.00 -$6.70(cost to manufacture)=gross approx $43.00/hr.  

 

In a 8 hr day do the math.  You can see just by getting a good base line down for estimating your cost to manufacture you have the ability to make anywhere from 30-60.00/hr net. 

 

Gross= income 

Net =income-cost to manufacture =profit

 

Now take 15% of your net and put that aside for taxes !!!!

 

hope this helps. If anyone has questions feel free to contact me at [e-mail] 

 

 

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