Return Policies Feed

Payment Terms for artists and craft businesses.

Pain The recent post on late payments from galleries and stores seems to have touched on a very sensitive nerve, judging by the number of comments.   Apparently a lot of people have had some painful experience.   I will continue to collect your opinions, comments, tales, etc. and will follow up with more action items soon. 

Today, though, I'd like to focus on establishing the right payment incentives at the beginning of a galley, store, or customer relationship.  Specific payment terms and the consequences of late payment should be written into the consignment contract, purchase order, or invoice, whichever you use.  Interest should be charged on payments not received by the due date, no exceptions.  If the establishment is holding your cash, they should pay interest as mutually agreed in the contract. 

Like so many over situations, it is best to be prepared in advance with your Application for opening new accounts and your Ordering Policy.

-Bally Transi tSeries Chairs from 1994 Boris Bally has graciously agreed to show his Order Terms (download Order Terms) as an example.  An image of his Ordering Terms is shown below my signature, followed by a review of the terms (and some practical suggestions).  This is fairly specific to Boris' business.  You should adapt to your circumstances.

Harriete

Boris Bally purchase order policy (Download Order_Terms)

Order_Terms

Exclusive** representation of an artist's or crafts person's work should require a minimum purchase. In Boris Bally's example this only includes the area code.  Note that the Exclusive Representation is not extended to an entire city or state. Keep in mind that everything is negotiable, but why should artists offer Exclusivity for their line if the retail establishment is not adequately representing or selling your merchandise or art.

Everything is negotiable but establishing a  minimum amount for annual retail purchases is one guide for an Exclusive Representation. The big picture is that the retail establishment should clearly establish that they represent and sell within a specified geographic area to demand exclusivity to a state or several state boundary. 

Terms copy Consignment*** is for select exhibitions. Consignment is a very difficult way to make a living from your work. You don't have any control over inventory, display or promotion and have no guarantee that your work will sell. It can sit there for months, or even years.)

Payment is outlined clearly for first time orders, Proforma**** and accounts.  It is suggested that you try to get credit cards for orders (which means prepayment so you don't have to chase down checks)  Even though that entails a credit card fee (usually between 1-2%) it's worth not having to worry about getting paid in 30 days, or subsequent phone calls and emails when the payment doesn't arrive.  Stores are more used to this and they get 30 days from the credit card company so it doesn't make a difference to them.

Delivery should be clearly described. Sometimes this might be called Shipping.

Dimensionalweight Shipping indicates who is responsible for shipping to the gallery or store and whether it is a a fixed % of the total order for simplicity, or based on the weight of the box(es), or the dimensional weight of the box. (Shipping companies charge by dimensional weight of the box, if the box  is very large but light.) Keep in mind that Boris Bally's example is for purchase of retail goods (not on consignment.) 

It also might be good idea to clarify your preferred shipping method, for example, ground or air, USPS or Fed Ex, etc.

Purchase Orders usually expect the store/gallery to pay shipping. Consignment Contracts usually expect the artist to cover shipping to the Gallery or store. This increases the cost to the artist.

Order Policy  specifies that the order may not be canceled and they do not offer cash refunds.

ADDITIONAL CONSIDERATIONS:

Plan72 SPECIAL ORDERS:  If you will produce special orders or custom items establish your policy in advance including lead time needed to produce the item, pricing, and returns or exchange on special orders. 

REPAIRS AND ALTERATIONS: How do you want to handle repair and alterations to your work? Are you going to charge for repairs? Are you going to charge for shipping? Can your work be re-sized or changed to fit the person or installation? 

ProfessionalSize72 MINIMUM ORDERS: Do you have a minimum order? Do you have a miniumum for first time orders? A minimum for subsequent orders? Is this a dollar amount or a specific number of items?  

INTERNATIONAL Orders and shipping?  International shipping is incredibly expensive. I shipped  a pair of earrings to Australia and it cost the customer $28.00. Unless you have lots of experience with International Shipping, perhaps you will want to handle this on a case by case basis.  

If the readers of ASK Harriete have a TERM Sheet, Ordering TERMS or Purchase Order Terms that they would like to share, please consider leaving your ideas as comments below or write to me directly. It would be great to develop an example Purchase Order Terms in the Professional Guidelines, but I need your help.

Harriete

Definitions and image information below:

"Pain" image found at: http://research.unc.edu/endeavors/spr2005/pain.php

Plan Pin constructed by Harriete Estel Berman from recycled tin cans is available for purchase online..

Professional Size Pin constructed by Harriete Estel Berman from recycled tin cans is available for purchase online.

Exclusive** representation: The term “exclusive” implies that the gallery will be the only representative for the artist usually within a stated geographic boundary, for a specific body of work, or extent of sales. The geographic territory could be limited to a single city or town, a radius of a specified number of miles, the region, one state, several states, or nationwide. As for the scope of an artist’s work, an exclusive representation could be limited to a specific body of work, or a specific medium or type of work (e.g. jewelry vs. hollowware).

In contrast, the term “non-exclusive” means that the artist may sell the same work to a multiple number of businesses within the stated geographic territory.

This definition was taken directly from the Overview in the Consignment Contract as part of the Professional Guidelines.

Consignment***: Consignment is where the artist loans the work to the gallery or store and is only paid after the purchase of work. In effect, they borrow work from an artist for display in the gallery, and then pay the artist only when it sells.  This arrangement limits the gallery’s capital outlay, so they can devote more of their resources to paying for rent, staff, publicity, or other costs of doing business.

A consignment arrangement has advantages and disadvantages.  For example, one advantage is that consignment can allow a gallery to show risky or difficult work, since their money is not tied up in purchasing inventory.  However, a disadvantage is that even though the artist’s work is in the gallery’s possession, the artist isn’t paid until the work is sold.  This business arrangement is complicated enough that misunderstandings and difficulties can arise if the parties have not been clear about the terms of the arrangement from the beginning.   

This definition was taken directly from the Overview in the Consignment Contract as part of the Professional Guidelines.

Proforma****: Proforma is a business term for "Assumed, forecasted, or informal information presented in advance of the actual or formal information. The common objective of a pro forma document is to give a fair idea of the cash outlay for a shipment or an anticipated occurrence. Definition from businessdictionary.com



Example Return Policies for Retail Purchase

As mentioned in previous blogs, I offered to show you a variety of Return Policies from other artists or small businesses.  Next time you  go to a gallery, or any small business, look for their Return Policy as an example. The goal for small business owners (such as an artist or gallery) is to balance the importance of satisfying your client against the cost and inconvenience associated with merchandise returns.

(Before we go any further, I think it is import to establish that I am not including Return Policies from chains or major stores as an example. Their business structure and financial stability differs significantly from the small business owner.)

  (Read the previous blogs about Return Policies for more information on the topic.

Here are some examples of Return Policies for retail purchases that I found online from other artists and galleries.

Example #1.

RETURNS AND EXCHANGES:
I want you to love your jewelry item. If you are not completely satisfied with your purchase you may return the item within 14 days of receiving it for exchange or credit ONLY (excludes custom orders). Item must be in its' original packaging and in perfect, unused condition. Sorry, shipping costs will not be refunded.

Example #2.

RETURNS/EXCHANGES:
We want you to love the jewelry. You must email us within 5 days of receipt for return/exchange instructions. Sorry, we cannot refund shipping. Jewelry must be in original condition.

Example #3.

RETURNS/EXCHANGES:
Merchandise must be returned within 7 days for a full refund. Please include your receipt. Insure work for the full value with "tracking". Returns lost in return shipping will not be refunded.

Example #4.


RETURN POLICY:

Special orders are final sales and cannot be returned or exchanged.
Purchases from our inventory may be exchanged within two (2) weeks of the date of purchase either for another piece of jewelry or for store credit. We do not give refunds.

Example #5


RETURNS AND EXCHANGE
Special orders are non-returnable.
Regular orders can be returned within 7 days of receipt in their original packaging and in the case of jewelry, in unworn condition. Please notify the gallery by phone or email before the return.The client is responsible for returning the item(s) pre-paid and insured to the Gallery. Credit issued will not include original shipping and insurance charges. We reserve the right to not accept a return and may require a re-stocking or repair fee if the item has been at all damaged or worn. While our policies are firm for obvious reasons, we will do everything we can to work with you and make sure your experience with is positive.

Do you have a RETURN POLICY that you would like to share with other artists? That would be great to see and share. Please send your  Return Policy to Ask Harriete either using the CONTACT EMAIL for my blog, or  include your Return Policy in a COMMENT. Thanks a lot for helping other artists.

Harriete


Return Policies at Open Studio Events.

If you are hosting an Open Studio event is it likely that you anticipate retail purchases. With this in mind it is essential that you prepare a Return Policy BEFORE the Open Studio.

Read the previous blog titled: Deciding your Return Policies for Retail Purchase to find a list of possible issues that you may want to consider when writing your Return Policy.

Post your Return Policy in a visible location in the Studio. (If you do not post your  Return Policy it will be assumed that you have no restrictions on returns which is probably not the case.)

This should be at the location where you are most likely to make a transaction such as your sales counter, cash register or packing area. It would be a good idea to post an additional sign in another visible location. Posting your Return Policy signs prevents returns not consistent with the established  return policy. In addition, informing the customers in advance might make them more comfortable knowing your Return Policy before they decide to purchase an item.

Take a photo of your Return Policy signs. Save the photos of your Return Policy in case you need to prove your Return Policy was posted.   You can also use these photos for handy reference next time you host an Open Studio. It will help you remember all the things you need to get ready.

Prepare your invoices in advance with your Return Policy on the invoice. This can either be on the invoice in your computer, (ready to fill out with the customers name and the items purchased) or have a pre-printed invoice book ready. Print, stamp or use a sticker label  of your Return Policy on the pre-printed Invoice book or sales receipt.

Do you have a way that you handle your Return Policy at Open Studio events that you would like to share with other artists and craftspeople? Please feel welcome to share your ideas in the comments.

Harriete



Deciding your Return Policies for Retail Purchase

As mentioned in the previous blog titled, "What is your Return Policy?' it is very important to establish your Return Policy and post this policy in a location where the sign is visible in advance of a purchase. If you are participating in online retail, then your Return Policy is often included in your "profile" information and/or on the shopping cart page.

If the purchase is made at your studio or store, post the information in a visible location where the item is purchased.

The following are some criteria that you may decide to include in your Return Policy.

  • Under what circumstances will you accept a return?
  • How many days does the customer have to return the items purchased?
  • Does the item need to be return unworn, unused or in salable condition?
  • What if the item is damaged? Will you accept a return?
  • Does the customer need to include their receipt or  Proof of Purchase?
  • Is the item returned for a credit with the artist to purchase other merchandise?
  • Is the item returned for full credit to their credit card or PayPal?
  • Is the item returned for a cash refund?
  • If the client given a full refund? Is there a restocking charge?
  • If the client is given a refund, is it  immediate; or within 2 weeks; 20 days; or a month?
  • Do you refund the clients shipping expenses?

This is not a comprehensive list, but if gives you a good idea about what to consider and there are variables under each question. Goodwill is very important to keep with your customer, so flexibility may be essential regardless of your Return Policy.

If the item is returned because it is described as defective, seriously flawed, or poorly crafted then more than likely you are both legally and ethically required to accept a return no matter what your Return Policy may state.

Look for future blog entries for example Return Policies AND:

 Harriete