About Item Fees

An Item Fee is an amount added to the price of a consigned item that appears only on the price tag and not on consignor's item lists.

Example: With an Item Fee of $1.00, an item originally priced at $20.00 will show $20.00 as the original asking price when a consignor's Item List is printed and throughout the system. The actual selling amount of $21.00 will only appear on the price tag and at the Point of Sale.

Item Fees are not affected by the consignment split: thus the store keeps 100% of the Item Fee and the consignor receives 0%. Item Fees are set in Price Codes, and every Price Code can have its own Item Fee.

Example: Price Code A could have no Item Fee, and Price Code B could have an Item Fee of $1.00 for items priced from $10 - $25, and $2 for items priced over $25.  

Another thing to note is rather than using a flat rate dollar amount, you can use a percentage of your asking price to calculate the item fee.

When items are posted in Point of Sale, the Item Fee is included in the sale amounts displayed on screen. Since the user is referring to the information displayed on screen to know how much the customer owes, the information must match that found on the price tags. More information on this option can be found in the section entitled Setting Up Item Fees.

Some stores consider the idea of assessing an extra fee to be an excellent idea. Other stores find nothing beneficial in using an Item Fee and would not wish to implement it under any circumstances. Since a significant percentage of stores find the Item Fee to be an attractive feature, it has been included in this program. There are pros and cons to using an Item Fee, as well as some recommended Do's and Don'ts.

The benefit to using an Item Fee is the added revenue the fee will generate. For instance, a store which sells 10,000 items per year stands to increase revenues $5,000 by imposing a 50 cent Item Fee. Figure the amount of increase in your store's revenues based upon a realistic Item Fee amount, and you will no doubt discover there is potentially a large amount of money to be made by implementing a fee. In addition, since there is no cost to this increased revenue, it represents the same amount of increase on the bottom line.

Detractors to the use of an Item Fee point out that it is important not to alienate consignors since they are the life-blood of the consignment business. This is an important point, however, different stores are able to work with their consignors in different ways. Only the store owner can judge his or her own situation by evaluating the type of relationship maintained with the consignors.

Tips for using Item Fees

1.Be honest about the existence of the Item Fee. You need not advertise that an Item Fee is part of the price, however, don't try to evade the truth.

2.Include the fact that an Item Fee is assessed in the consignment contract.

3.Don't make the amount of the fee so high as to be excessive.

4.Don't expect the Item Fee to solve all your financial problems.

5.Be sure to have several reasons to justify the Item Fee when queried.

Some of the other justifications heard (some would call them rationalizations...) are:

a. To help cover overhead (or rent, or supplies, etc.).

b. Other stores charge a higher consignment fee (percentage split), and We don't make any money on items that don't sell and end up being returned to the consignor after having taken up floor space for (3 months).

c.Children's stores might consider: The average price per item is so low that an Item Fee is necessary to insure the store earns a certain, base amount per item in order to stay in business.

d.Overall: It is a way to recoup these funds without having to take them from the consignor's payout.

There are any number of valid reasons which may be formulated in favor of using an Item Fee. The examples given above are to help you consider and choose some responses in advance of being asked the question. This is important, because there is nothing worse than having no answer for a potential or current client.

Related Topics

Set Up Item Fees

Price Codes Overview

Options for Handling Item Fees at the Point of Sale