5 consignment fees to boost your bottom line

March 5, 2019

This article has been updated from the original article published in February of 2017

Adding consignment fees will make a difference

A wise consignment shop owner sees the value in covering their costs with added consignment fees. Many times, adding various fees is the difference between being in the black or in the dreaded red. Never be uncomfortable with the idea of added fees. As long as you openly and honestly state how you use them in your consignment agreement, everyone will accept them. Your business belongs to you, not your consignors or customers. After all, adding consignment fees is merely part of smart business ownership.

The following are fees SimpleConsign provides. Check with your software provider to see what they offer.

1.) Buyer’s Fee

Let’s face it, overhead is costly. You need to recoup some of those expenses. This fee is added on and paid by the customer at the time of sale. A Buyer’s Fee is set either by a fixed dollar amount or a fixed percentage. You determine how much you want to add. Let’s say you decide all merchandise priced between $20 and $50 will receive a $1 Buyer’s Fee. A new item is entered in the system for $20. This is the price the consignor sees and the price your reports show. However, when the item is tagged and placed on the sales floor, it shows a price of $21. If your consignor split is 50%, the consignor receives $10 and you receive $10, plus the $1 Buyer’s Fee.

2.) Item Fee

Consignors have the privilege of selling their items in your shop vs. having strangers trudge through their homes. When floor space is at a premium, you need to add a fee for taking up that space. Unlike the Buyer’s Fee however, an Item Fee is taken off the consignor split. Once again, you set the Item Fee range. Let’s say you want to add a $0.50 fee to every item sold in your shop. A new item is entered into the system and tagged for $20. If your shop has a 50-50 split, the consignor would receive $9.50 and the shop would receive $9.50, plus the additional $0.50 fee at the time of sale.

3.) Credit Card Processing Fee (%)

Shops no longer need to “eat” credit card processing fees simply because it’s the “price of doing business.” SimpleConsign especially wants to help our customers recover some of these costs. A percentage is set by the shop owner and taken from every credit card transaction. Let’s say you have set a 3% fee. A customer makes a purchase of $100 and uses their credit card to pay. The 3% fee of $3 is automatically removed off the top of the purchase leaving $97 as the amount to be split. If your shop has a 50-50 split, the consignor would receive $48.50 and the shop would receive $48.50. Essentially, both the consignor and the shop are sharing in the “price of doing business.” It then becomes a true 50-50 split.

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4.) Check Fee

It’s the little things that add up. When you are printing and mailing individual checks to consignors, you can easily spend $0.50 to $1.55 depending on the number of consignors you pay out. This isn’t an area where you want to make money. Recoup at least some of that cost with a nominal check fee. The fee will be deducted from a consignor’s account when it’s time to send the payout check.

5.) Consignor Access Fee

Many consignment shops offer their consignors online access to view their accounts. Consignor access saves time for the busy shop owner who can’t constantly answer calls or emails from consignors wanting to know if their items sold. When offering this special feature, why not also charge for the privilege? A Consignor Access Fee is charged the last day of the month to all consignors that have had at least one item on consignment for that month. You determine the fee and with SimpleConsign, you also determine how much information you want the consignor to see in their account. If you set the fee for $1 and have 200 active consignors for that month, you will automatically add $200 to your bottom line.

consignment fees that will boost your bottom lineBeing honest

As you can see, consignment fees can make an incredible difference. If you aren’t using them but want to add them, start by drafting a new consignment agreement. Add a line to your contract stating how the consignment fees will be added or subtracted from a consignor’s account. Make sure they understand clearly who is responsible for paying the fees. Auntie Kate, in her book Too Good To Be Threw writes, “Do not delineate exactly what amount this fee is, so you have the flexibility of raising or lowering it in the future. But if a consignor asks, tell. It’s easiest to say something general like ‘It ranges from fifty cents to five dollars depending on the price, but mostly it’s fifty cents or a dollar.'”

Deb McGonagle

I have been a writer for various forms of marketing for over 40 years. I've written my share of radio and TV scripts, magazine and newspaper ads as well as direct mail brochures and newsletters. Currently, as the Marketing Coordinator for Traxia, home of SimpleConsign software, I've moved into blog posts, eBooks and website text. It's been an ever changing and ever challenging journey but I've loved it all along the way.