- Consignment Store Percentage
- Consignor Share
- Inventory Item Assigned %
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Consignor percentage is the share of sales proceeds paid to the owners of consignments. The amount is agreed upon on consignment and is commonly stated in a written consignment agreement.
A 'fair' commission (paid to the store) is subjective and depends upon many factors:
Most commonly the rate paid on clothing is between 40 and 60%. The split on furniture might be 50-70%.
As a provider of software for consignment shops, we've seen a long list of 'ideas' for paying consignees (shop owners) more than the agreed-upon amount stated in the consignment agreement.
The 'consignment %' often is not the same as the percentage of sales proceeds that is paid to consignors when additional fees apply. Straight up the consignor percentage is the amount stated in the consignment agreement and is applied to the sales proceeds of each sale.
The 'percentage' is calculated by dividing the payout by the amount of the sale. On a $100 sale with a 40% slice, the payout should be $40, so $40/$100 = 40%. When the share is less than expected, just inquire as to why. The most common reason is that shops mark down inventory as it remains unsold - to encourage purchase which in turn increases inventory turnover, keeping new items flowing through the store. It's this 'freshness' that fosters repeat visitors.
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 furniture software competitor in Miami, FL actually rigged his software to hide the actual sale price and he publicly encouraged users of his software to employ the tactic to 'increase store profits'. (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.
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 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, 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.
Call 888-427-5779 for a free live demo prior to purchase to assure that all needed features are available and that the software works properly. The demo can be performed remotely and please note that this is not a 'sales call' but a software demonstration. Here's a video overview.
If you are a consignor placing items on consignment at a secondhand store, avoid issues by understanding the terms of the agreement. It is the obligation of the shop owner to take that opportunity to disclose practices and conditions.
If you are a shop owner it isn't necessary to learn the lesson that has been learned by so many before you: piling on fees and attempting to 'hide' fees is a good way to drive clients away, so here's a heads up: Wilson at 'consignpro' has a feature in his software program that allows shops to deduct a fee prior to dividing sales proceeds and not disclose it to consignors.