A consignment agreement is what a maker and a shop agree before the shop puts the maker's goods on its shelf without buying them: the shop sells them, keeps a share, and pays the rest after they sell. Until then the goods are still the maker's, which is why the agreement has to say who sets the prices, when the money comes, and who pays when something is stolen or damaged. Below is what goes in one, a filled-in example for a sewing studio placing pouches and totes in a boutique, how consignment compares with wholesale, and a free template with a consignment sheet and a monthly settlement. It's a starting point, not legal advice.
The short version
- Who and what: the maker, the shop, the items and their retail prices.
- The split: the share of the retail price each side keeps, often around 60/40 to the maker.
- Payment: when the shop pays, and with what sales report.
- Prices: the maker sets them; no discounts without agreement.
- Loss and damage: who pays for items stolen or damaged in the shop.
- How long, and how to end it: notice, and what happens to unsold goods.
- TaroStack keeps the stock at each shop as yours, counts the shelf on a visit, and settles the month. More below.
What goes in a consignment agreement
| Term | What it says | Example |
|---|---|---|
| The parties | The maker and the shop, with addresses | Kanawha Stitch Co. and Elk River Mercantile |
| The term | Start date, length, renewal | Six months, then month to month |
| The split | Each side's share of the retail price | 60% to the maker, 40% to the shop |
| Retail prices | Who sets them, and discounts | Set by the maker; no discounts without agreement |
| Payment | When, and with what report | By the 10th, for last month's sales, with a sales report by item |
| Loss and damage | Who pays for missing or damaged items | The shop pays the maker's share |
| Display | Where the goods sit | A shelf near the counter, with the maker's card |
| Counts | The maker's right to count the stock | On any visit, settled at the next payment |
| Ending it | Notice, and the unsold goods | 30 days' notice; goods back within 14 days |
| Insurance | Whose policy covers the goods | The shop's, while they're on its premises |
The split is the term every maker asks about, but loss and damage is the one that matters most when it goes wrong: a shop that isn't responsible for theft can sell your goods out the back door and report them missing. Write it down.
A filled-in example: pouches and totes in a boutique
Kanawha Stitch Co., a made-up sewing studio in Charleston, West Virginia, I use in these examples, places pouches, totes, aprons and pillow covers in a boutique on a 60/40 split. After September:
| Item | Retail | Delivered | Sold | Returned | On the shelf | Your share of each sale |
|---|---|---|---|---|---|---|
| Zipper pouch | $23.00 | 20 | 9 | 0 | 11 | $13.80 |
| Lined canvas tote | $67.00 | 6 | 2 | 0 | 4 | $40.20 |
| Apron | $55.00 | 8 | 3 | 1 | 4 | $33.00 |
| Pillow cover | $37.00 | 6 | 1 | 0 | 5 | $22.20 |
September's sales were $543 at retail, so the shop owes the studio $325.80 by October 10 and keeps $217.20. The shelf should hold $926 of goods at retail; when the studio visits, it counts them, and any difference is settled at the next payment. How to keep stock that's in someone else's shop is in consignment inventory example.
Consignment or wholesale?
| Consignment | Wholesale | |
|---|---|---|
| Who owns the goods on the shelf | You, until they sell | The shop, once it pays |
| Your share | About 60% of retail, when it sells | About 50% of retail, up front |
| Risk of not selling | Yours | The shop's |
| Risk of loss | As the agreement says | The shop's |
| Paperwork | A monthly report and settlement | One invoice |
Consignment pays more a piece and later, and leaves the unsold goods yours. It suits a new shop that won't buy yet, or goods it's never carried. For a pouch that costs $11.27 to make, 60% of $23 leaves $2.53, so consignment only works on pieces with room in the price; how to set a price that does is in how to price handmade items for wholesale, and payment terms for shops that buy are in net 30 terms.
Get the template
Download the consignment agreement template. Three sheets: the agreement's terms, filled in for the example, to change to yours; a consignment sheet, where what's on the shelf, its retail value and your share of each sale fill in from what was delivered, sold and returned; and a monthly settlement, where each line's sales and both shares fill in from the split, with the total owed to you. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Three shops, each with its own shelf, deliveries every few weeks, monthly reports that arrive late or by text, and counts on each visit that don't quite match. A spreadsheet adds up what each shop should have; it doesn't know which batch is on which shelf, or put a missing pouch anywhere but a note.
How TaroStack does it
TaroStack keeps the stock at each shop as yours, counts the shelf on a visit, and settles the month.
Each shop is a site. Stock at a consignment shop sits at its own site, still yours and in your stock value, and a delivery is a transfer, with stock in transit until it lands and a transfer note to print.
Counts settle the month. On a visit, count the shelf on your phone, and TaroStack shows what each difference is worth before you post it. The month's sales from the shop's report are recorded against the shop as a customer, and anything missing is billed to the shop if the agreement says so, or written off with a reason.
Lots reach the shelf. Transfers carry their lots, so you know which batch is on which shop's shelf, and a recall is one report by lot and site.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| What's on each shop's shelf | Delivered minus reported | Stock at each shop's site |
| A delivery to a shop | A list on paper | A transfer, with its note |
| A missing pouch | A note in a cell | Billed or written off with a reason |
| Which batch is in which shop | Not written down | Lots on every transfer |
Counting and lots are on every plan, from $49 a month; more than one site, with transfers between them, is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.