Question:

I am used to charging a 100% mark up on custom goods, i.e. window treatments, custom area rugs, and custom bed coverings.

I have always marked these items up 100% because that is the one of the few areas that the client can’t “shop” me. Also, it gives me plenty of cushion in case something goes wrong, for example the workroom refusing to correct an error.

Aren’t I just shooting myself in the foot if I switch over to a 25% purchasing fee?

Answer:

First of all I need to say that if a pricing tactic is working for you and your clients then don’t “fix” it… Keep doing what you are doing.

Beyond that, yes I agree that you do need that margin on custom pieces because your creative “genius” time to design them is much greater and the product liability is substantial.

I also want to point out that this is the area that we can be VERY well paid for our creativity and set the price of our custom designed product anywhere we want.

Here is how you can do it and keep the 25% purchasing fee intact…

You put the value of your creative time into the WHOLESALE price of the piece.

Then you charge 25% to manage the purchasing process.

This should net you at least a 100% mark up or more.