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The cost of doing business

I found the link to a fascinating post on Joanie San Chirico’s blog, which sent me to Edward Winkleman’s blog. Who you might ask? Honestly, I’m not sure, but it is a fascinating breakdown on the expenses faced by an art gallery. As he and Joanie rightly noted, many people (emerging artists included) are surprised that a gallery’s cut is 50 percent of the sales price, and only 50 percent (60 if you’re lucky, like me! living in not-really-rural Camden) to the artist. Why? well, Winkelman’s explanation is worth reading: click here to open it up in a new window.

When I worked for an interior designer on San Juan Island, Wash. (that was a whole ‘nother set of nightmares, but I learned a TON about high-end home dec sewing, interior design, and business), the designer used to quote the adage that “the cost of doing business is one-third.” That apparently applies across a lot of industries. As well, wholesale in many industries, including quilting, is fifty percent of suggested retail.

So, despite our math-phobias, let’s do the math. If you take a yard of fabric at $10 per yard, you can guesstimate that the wholesale cost was $5 per yard plus shipping/freight/delivery charges. The cost of doing business is 1/3, or $3.33 (one third of $10), which covers rent, utilities, insurance, wages, cash register receipt paper, fees charged by credit card companies, and so on. Then, if like Maine-ly Sewing, the shop is nice and gives you a ten percent discount because you are a member of a guild, that is another dollar.

If you’ve been doing the arithmetic, that is 5 + 3.33 + 1 = 9.33. That leaves all of 67 cents of “profit” for the shopowner. No wonder quilt shop owners and other shop owners work so hard and have such a long road to staying in business.

For me, I’m thrilled to have my sales at Ducktrap Bay Trading Co., a gallery here in Camden, Maine. I may not make a lot (close to minimum wage) when a journal quilt sells, but it SELLS. Which it would not do otherwise (like sitting in storage on my spare bed). The owner and staff work hard (without being pushy or intrusive) to sell all the works (last time I was in a new staff member wanted to ask me about my work and inspiration so he would have more to tell customers!), and pay their bills, so they deserve their cut, too.

And I won’t grump about the price of things in stores as much……especially not quilt stores!

2 Responses to “The cost of doing business”

  1. Dianna in Maui Says:

    Sarah, thanks for the post. I can agree with the 50/50 split…what’s been bothering me is that a gallery I work with now wants 55%. Now, my work is selling there and probably wouldn’t be otherwise without a LOT of extra hard work from me, they pay on time, they are friendly and supportive and have great sales staff. It’s also a prestigious gallery. Am I crazy to feel like I’m being pinched a little? Or should I just get over it?

  2. Melody Madden Says:

    Gorgeous work Sarah……….thanks for sharing it with us