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How to Make Money Selling on Consignment – Tips, Pros & Cons

By Jacqueline Curtis

consignment shopSure, the recession has brought back the era of bargain hunting and thrift store shopping, but it’s also welcomed back the return of consignment stores. Consignment shops work in several ways, and each allows you to earn money or store credit for your old, outdated gear. From maternity clothes, to shoes, to sports equipment, to purses, there are consignment stores for just about any of your stuff that is still in good condition.

While donating all of your old clothes, furniture, books, or other items to charity is definitely a noble route, if you’re strapped for cash, it simply might not be the best option. Learn how consignment stores work and whether they present a viable money making opportunity for you.

Using Consignment Shops

What do you think of when you hear the word “consignment?” I’ll admit, it’s kind of an outdated idea. But when funds are low, most people have to get creative about making money and shopping for new stuff, so the idea of buying and selling used goods doesn’t sound so bad.

Recently, I was cleaning out my closet and I realized that I had a pile of outdated clothes that had rarely been worn and that were mostly high-quality and name-brand. In any other case, I would have simply dropped a bag of old clothes to our nearest charity, but I started thinking about a new consignment shop that opened near me. I wanted to give it a shot to see if I could have any success selling on consignment, so I loaded up my bag of clothes and headed over.

Upfront Payments

Consignment stores typically work in two ways: upfront payments or profit sharing. There are pros and cons to each method, and not every consignment store offers both options.

When you’re offered an upfront payment for your gear, a store employee will go through your offerings to see what would be able to be resold in the shop. Generally, there is a set price for each item, such as $10 for a pair of shoes or $5 for a shirt. Once all the items have been selected for consignment, the remainder can be taken home or donated to charity. Then, the prices of all the clothes and goods are added up, and you’re offered an amount in cash or in store credit on the spot.

Often, the store credit amount is higher because it entices you to keep the money in-house. But if your bank account is hungry, it might be a good idea to accept the cash. Keep in mind that you don’t have to take the offer – if you feel that it’s too low, you can respectfully decline and head somewhere else.

consignment shops sell a variety of items

Profit Sharing

If your consignment store operates by profit sharing, you won’t see any money or credit upfront. Instead, you’re assigned an account number and all of the items that are salable are tagged with that number. The consignment store employee prices all your items according to what he or she feels is a fair price, and then agrees to put your items out on the shelves and racks.

As the items are sold in the shop, you and the store split the profits at a rate agreed upon beforehand. You then collect your earnings via cash or store credit.

Pros and Cons

There are definitely pros and cons to each method. When you receive an upfront payment, you get your money immediately; however, you might not receive the best price. The person buying your gear obviously offers a price significantly lower than what the items will sell for in the store – that’s how the shop makes a profit. Still, it’s instant, and probably best if you need money now.

Profit-sharing can help you get a better price, but the problem is that you can’t guarantee that all of your items will sell right away – or at all. Money filters in at a slow trickle, even if it’s a higher amount overall.

Tips and Tricks

Think consignment selling sounds perfect for your closets filled with old and outdated clothes and accessories? Here are some tips to get started:

  1. Find a Specialty Store. You’ll make more money if you zone in on a specialty store for your goods. For instance, a sports equipment store will pay more for your used football pads than a general consignment shop. When I wanted to sell my stuff, I focused on a store specifically for women’s clothing and accessories to help me score a better price on my leftovers. General shops are better for knick-knacks and stuff that can’t be categorized in specialty shops.
  2. Know What Sells. Consignment shops specifically look for stuff that sells quickly and easily. A nearly unworn pair of designer jeans or clean baby toys? Perfect. Your old Little League trophy? Not so much. Before you take your stuff over, consider whether you’d buy the same item used or not.
  3. Clean Your Items. You’ll get more money for each of your items if they’re in good shape and freshly washed and ironed. I just hung up the stuff I was going to sell and went over it with a steamer before folding it neatly into a paper bag. If you’re missing buttons, parts, laces and pieces, it’s best to just donate the gear instead. Check over your items for stains and other marks, since consignment shops will probably decline marked and worn-looking items.
  4. Read the Contract. If you decide to sell using the profit-sharing method, you’ll receive a contract. The contract gives you information about the percentage for sharing, how the items are priced, how long your items will sit on store shelves, and when you can arrive to collect your money. It’s important to know the details so you aren’t disappointed by the outcome.
  5. Don’t Always Go for the Instant Money. Sometimes a consignment store will split up the way that you sell your items. If you want instant money for an old shirt you don’t care about, take the cash. But if a store owner offers you a paltry amount for a baby crib you know is worth more, ask to go a profit-sharing route and you’ll probably score bigger bucks in the long run.

put your old, outdated clothing on consigment to make extra cash

Final Word

Of course, no one is going to get rich by selling old stuff to consignment stores. As of now, I’ve earned about $75 for a couple hundred dollars worth of clothing and accessories – and I’m taking store credit. But if you’re strapped for cash or you want to do some shopping yourself, consignment stores can help feed your habit on the cheap.

Have you used consignment stores for selling or buying? What tips can you offer for others to have a successful experience?

(photo credit: Shutterstock)

Jacqueline Curtis
Jacqueline Curtis is an experienced style expert, and she focuses on getting high fashion on a tight budget. She writes for several online publications, including her own fashion blog, How Not to Dress Like a Mom, and specializes in fashion, finance, health and fitness, and parenting. Jae grew up in Toronto, Canada, but now resides in Utah with her husband, two kids, and prized shoe collection.

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Comments

  • Kkibby8

    I recently took some items to a consignment shop. I was disappointed when I came back to pick up my cash and the clothing. I could have let them donate the left over clothes but I had further use for them. The store had the ability to mark down the price and by the time I received my money, it was very little. I had one pair of jeans with the tag still on that the store told me had a stain so they marked it down. In retrospect I should have taken the jeans back to the store for a refund. I didn’t see any stains. The store took a percentage of the price – around 60%. I think I could have done better with an online garage sale ad or craigslist. I probably won’t use that consignment shop again.

  • Zack Jones

    I don’t think I have anything that a consignment shop would want but I looked into a local one after reading your article. They want 65% of the selling price. I realize that 45% of $10.00 is better than 45% of nothing but I think I’d rather try selling the items at a garage sale or flea market first.

    • Interesting Math

      But is 35% of nothing even less than 45% of nothing?

  • Jacqueline C.

    You definitely want to do your homework. If you find that the percentage is too low for traditional consignment, using an upfront payment would be the better way to go. Of course, eBay and garage sales are totally legit options too!

  • guest

    I recently took some clothing to a local consignment store and asked if they gave cash or store credit. The woman told me “No, this is a consignment shop. We only accept donations of clothing.” So apparently some people have different ideas of what “consignment” means.

  • http://twitter.com/SmallBudgetBigD Kari

    Before e-bay existed (back in the stone ages ;-) I use to sell clothing on consignment. I haven’t been in a consignment shop for a while, but might try to find a few local ones to price out if it’s worth taking over a couple bags of stuff.

  • Cl84

    Thanks for the info :)

  • Anne

    As the owner of an upscale ladies consignment clothing store I deal with questions about how the consignment process works all the time. I pay the consignor 40% of the selling price and almost everyone wants cash instead of a store credit. I cut checks twice a month and unsold items get donated to a local church or women’s shelter after about 90 days. Some sites recommend negotiating the consignment % or other aspect of the relationship, but my suggestion is…forget it!

    I turn down 70-80% of the items people bring in and my store gets at least one new consignor per day on average so I have no incentive to cut special deals with anyone. Not trying to be mean – just realistic.

    • justsayin

      Wow…if your turning down “70-80% of the items people bring in” and still your getting “least one new consignor per day”….I find that hard to believe but good luck…

  • Monica

    You can’t win, when you take your Items to this consignments places. They Rob you blind. YOU NEVER REALLY KNOW HOW MUCH THEY SOLD YOU ITEMS FOR. You end up with almost nothing.

    • Kelly

      I disagree, it depends where you go. I take my items to a place where they have an online system. I can check to make sure they have all my items as well as the price, if the items sell and my earnings.

  • K Kinsey

    Hello – You didn’t mention the now, hugely popular across the nation, Children’s Consignment Events! At the consignment events (usually 2-7 days), you earn 70-80% on the sale of you items and you typically get your money a few days after the event. you do have to do more of the work, ie. hanging, tagging and pricing your items, but I usually make $300 twice a year selling my old children’s sizes, then use that money to purchase the next season’s clothes at the sale!

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