Posted on | April 2, 2009
So you have cleaned out your closet and now you want to turn your clothes into CASH? Get your items ready before May 2nd and participate in The Ultimate Exchange; a sale where you can get up to 70% of your sales total and you get to set the prices. Before you start pricing though, it is important to first understand is how much your items are really worth.
One of the most important things to discuss when it comes to consignment is pricing. Most people do not understand how much their clothing is currently worth, how to properly prepare for the resale process and the different types of market prices for used and new clothing. If your item isn’t priced accurately, the chance of it selling decreases significantly. A key to understanding pricing is, understanding both the different price structures and the difference between price and value. If you saw the recent Confessions of a Shopaholic movie you might remember when Luke Brandon tells Rebecca Bloomwood, “cost and worth” are very different things. He has just given her $20 to get out of the way so he can buy his $3 hotdog. This statement sums up the largest problem with resale. It is often hard for a client to understand why they received payment of $24 for a jacket they originally paid $700 for.
This can be explained. Though the retail price of the jacket was originally $700, the current Fair Market Value (FMV) is only $60. Then, once the consignor takes a split on the jacket the consignee receives a check for about $24. The FMV amount is the amount an item is worth at the time of resale or what someone is willing to pay. Below you will find an overview of the details of what each type of pricing is from the time of creation until resale.
When you start pricing you must make a decision, do you want to make money or do you want to keep your clothes? Your “get rid of” pile may include both. I typically have a large pile of items I want to get rid of and would love any amount I get in exchange for them. Then I have a smaller pile (typically higher priced items) that I would rather keep than sell for less than $X. Remember the less you price your item for, the more likely it is to sell so be sure to set your price at a place where you are comfortable. For those of you who just want to jump into pricing we will give you a few general rules to guide you.
Guide to Pricing for Resale
1) Pricing should be less than 75% of the retail price (the price charged by the original store)
2) In the case where you are reselling a new item with the tags on it you can charge slightly more than 75% of retail if the item is still in style and in season, with no damage.
3) There are some instances where an item you purchased now has an inflated value, use the “eBay Test” to find out.
4) “eBay Test” Go to ebay.com and click on the Sell page. They have made it very easy by including a “What is it worth?” box. Enter the name of your item, and it will give you the average price “sold” in the last 30 days. It is important to search for “sold” prices, as the prices on the unsold items aren’t relevant because the seller didn’t sell the item. For example “Marc Jacobs Blake” had 23 handbags sold and an average price of $360. The FMV would be $360 unless your bag was a limited run or in mint condition with tags.
5) There will always be exceptions: Items that are in too poor of shape to be resold, items that are so out of date that 1% of retail would be FMV and on the other hand items like Hermes Birkin bags that may be worth more than their original retail price due to their rarity.
Note: Remember that 1994 formal you paid $700 is not worth more to the new buyer because you wore it to your senior prom with McDreamy. That emotional value is not typically passed on in pricing. Unless of course you really went to prom with Patrick Dempsey and have pictures to include with the dress.
Guide to Pricing Structures
Wholesale- A wholesale price is the price offered to purchasers of manufactured goods or to commercial sellers in many cases. These prices are usually about half the price of something that could be purchased at retail value. Sellers or producers of other goods (like restaurants) confer a higher price to the retail customer, often at a mark-up of 100% or more.
MSRP- Manufacturer Suggested Retail Price, and means just that; a suggested selling price for the retailer. (Also referred to as List Price)
Retail Price- The price charged to store customers at store offering retail merchandise (merchandise sold for the first time) This might be the MSRP or it might be more or less than the MSRP.
FMV- A fair market value is often an estimate of what a willing buyer would pay to a willing seller, both in a free market, for an asset or any piece of property. If such a transaction actually occurs, then the actual transaction price is usually the fair market value. Note that the opinion of people that are not interested in buying or selling an asset has little meaning, because they are not active in the market. Thus, “market value” (which is the same for everyone in the market) is not identical to the “intrinsic value” that different individuals may place on the same asset based on their own preferences and circumstances. This is the most important concept in resale! Fair Market Value is determined by the current selling price, based on things like the eBay of a like item.
Blog contributed by: Valerie Elizabeth and Kate Trevorrow