what I need to know about dealers...

[Ryan Mazzocco]

As many of you know I've tired consignment. I'm sure it works for some people, but I just didn't have any good experiences with it in the two stores I tried. However, I am nearing completion of a commission build for a fantastic artist who happens to work days teaching lessons out of a family owned acoustic instrument shop. I have talked with them casually, and they have expressed interest in discussing becoming a dealer. I have done research but I think there may still be some things I need to be prepared for. I'm hoping you guys can fill in the gaps for me here.
It is my understanding that I need to be willing to sell to the dealer for at least 30-40% off my list price. This seems fair and I can manage with that discount, especially if they order several.
How does payment work? I'm assuming this won't work like a regular commission build where they would put any money down, but would probably pay in full on delivery or in the next few weeks, depending on their accounts payable schedule.
Is this all right so far? what else should I expect?

[Steve Sawyer]

I have no experience in the music business, but have spent a significant part of my professional life in wholesaling, warehousing and distribution.

A "dealer" is a retailer or wholesaler of product. Depending on the industry and the product, this may involve certain obligations on the part of the seller and dealer. Note things like Festool products or Yakima racks - they're priced the same no matter where you buy them as dealers are required to sell for the MSRP or at a manufacturer-specified "street" price, otherwise they risk losing their distributorship. In other cases, the only requirement is that the dealer pay for the merchandise. Once they own it, how they sell it is entirely up to them.

And yes, unless the music business is different (and I don't think it is) a dealer (wholesaler or retailer) purchases and takes title your product, and then sells it at a mark-up. You are due payment on delivery, unless you offer some kind of financing (like net 30 or something more complex). You are responsible for clearly stating your warranty terms as the dealer then becomes your agent in enforcing those terms; your obligation is to the dealer, not their customer. Part of the service the dealer offers in exchange for your discount is selling and servicing the customer, not you. If they offer something in the way of a warranty that exceeds your terms, they are on the hook for any discrepancy.

In all matters - pricing, payment terms, warranty - you have to decide what you are comfortable doing to establish and maintain the good working relationship with the dealer.

[Ryan Mazzocco]

Thank you Steve. That's quite helpful!