Is selling on consignment actually worth it?
Whether a consignment shop earns you anything, worked out from sell-through, the cost of the counting trip, and the stock sitting on their shelf.
Consignment gets defended on the higher price and attacked on the risk, and both arguments are usually made without numbers. Here is how to actually work it out for a specific shop, which is the only level at which the question has an answer.
The break-even, in one division
Ask the shop what it would pay to buy outright. You now have two numbers: the wholesale price and your consignment price.
Divide the wholesale price by the consignment price. That is the sell-through you need for consignment to be worth the same.
At MX$70 wholesale against MX$100 consignment, that is 70%. Sell seven jars in ten and the two arrangements pay identically. Sell eight and consignment is ahead. Sell five and you would have been better off taking the outright money and going home.
wholesale ÷ consignment
Your break-even sell-through
One division, per shop, done once. Everything else in this guide is about the costs that division leaves out.
That number is the floor, not the answer, because two real costs sit underneath it.
Cost one: the trip that sells nothing
Consignment needs a second visit — the one where you count. It moves no stock and generates no invoice. Its entire output is finding out what you are owed.
On a shop you drive past anyway, that costs you ten minutes. On a shop that is a dedicated round trip across town, it can cost more than the margin the shop earns, and no sell-through rate rescues it.
So the honest version of the question is not “does this shop sell my product”. It is “does this shop sell enough of my product to pay for the journey I make to count it”.
Cost two: your stock, on their shelf
Twelve jars sitting in a shop are not a loss. They are also not an asset doing anything.
Six weeks in a slow shop
- On the shelf last visit
- 30
- Still there today
- 12
- Sold
- 18
- Price per jar
- MX$100
- Owed
- MX$1,800
MX$1,800 earned, and MX$1,200 of stock still sitting there — stock you made, paid for the ingredients of, and could have put in a shop that would have sold it. A shop that sells 60% is not a shop that pays you 60% as much. It is a shop that pays you 60% as much and holds the other 40% out of circulation for as long as you let it.
That is the cost people miss, and it is the one that compounds: the slow shop quietly ties up more of your production every time you top it back up to a full shelf.
The six-visit test
Give a new shop six visits. On a weekly round that is six weeks; on a fortnightly one, three months. Then answer four questions.
- What did it earn? Total owed across the six visits.
- What did it cost to serve? Number of journeys made specially for it, times what an hour of your time is worth.
- What is still sitting there? Value of stock on the shelf right now, at your cost, not your price.
- Did it pay without chasing? A shop that owes you for three visits is not a slow seller — it is a different problem, and a worse one.
A shop that earns well, sits on a route, holds little, and pays on the day is a shop to give more shelf space to. A shop that fails two of the four is a conversation. A shop that fails three is a shop to take your stock back from, politely, and put somewhere else.
When the answer is clearly yes
- A new shop that would otherwise say no. Consignment is what gets you onto the shelf at all. A shop earning you less than wholesale is still earning you more than the shop that never stocked you.
- A product where being seen matters. Ceramics, leather, anything bought after being picked up. Shelf presence has value beyond the units that move.
- Anywhere already on your route. The counting visit is nearly free, so the break-even drops back to the plain division and the higher price does its work.
When it is clearly no
- A shop that has sold through six weeks of stock happily. Stop. Ask for wholesale. You are now the one carrying risk for a shop that has proof it does not need you to.
- A special journey for a small shelf. The trip is the cost, and it does not shrink.
- Anywhere that cannot tell you what sold. If you cannot get a count, you cannot bill, and the arrangement has stopped being consignment and become a loan.
The whole test rests on having the six visits written down somewhere you can compare them. If yours are spread across a notebook and three spreadsheet tabs, that problem has its own guide — and if you would rather just check the arithmetic on one shop right now, the calculator does the sum.
Common questions
- Is consignment worth it for a small producer?
- It is worth it in a shop that sells through most of what you leave, sits on a route you already drive, and pays without chasing. It is not worth it in a shop that sells a little, is a special journey, or holds stock you could have sold elsewhere.
- How do I know if a consignment shop is making me money?
- Work out what it earned you over six visits, then subtract the trips it cost you and count how much of your stock is sitting there unsold. A shop can look profitable per jar and still be losing you money once both are counted.
- What sell-through rate do I need for consignment to pay?
- Compare your consignment price against the wholesale price the same shop would pay. Divide the wholesale price by the consignment price — that is the sell-through you need to break even. At MX$70 against MX$100 it is 70%.
- How long should I give a new consignment shop?
- Six weeks, or about six visits on a weekly round. That is long enough to see a pattern and short enough that you have not left a season's stock somewhere that was never going to sell it.