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Topic: Which is the more effective business model?  (Read 627 times)
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Wuggums47
« on: May 31, 2014 02:12:35 PM »

I'm getting to the age where I'm ready to get a part time job. I thought about becoming a cashier or something similar, but then it occurred to me that I've sold my creations in the past, and some of the things I make could have a big market. I thought I would either do chainmaille jewelry or sell my yarns. I decided that I couldn't do chainmaille for a very long amount of time without distressing my hands, so spinning it is. And I'm better at spinning anyways. But what I was wondering is what I should make. The way I see it, their are four options although I could mix the last two with the the first two a bit.
1. Use the cheapest materials possible to have a competitive price: I would make my yarns out of regular, kind of scratchy wool that I processed myself. I would try to spin fast rather than perfect, and then I would have a lot of product that I can sell for cheap.
2. Use the best materials possible to have a superior product: Rather than cheap wool, I could use things like alpaca, merino, or even super luxurious materials like camel down and Qiviut. Recently I found a cheaper source on some luxury fibers, so I would still have pretty good prices, but naturally these yarns will be more expensive, and less people could afford them. I could pride myself in taking my time and making a truly superior product.
3. Art yarns: Art yarns are a lot of fun, but they take a long time to come up with the ideas, and more effort to make. They might not even be completely functional. They would naturally have a smaller market, the most popular yarn artist I know of has things up on her site for a long time before they sell, and I am positive it's not her main form of income.
4. Sell completed Garments: While there is a pretty big market for yarn, a lot more people wear clothing than knit or crochet. I would have to sink more time in to each thing I made. There are two sub options here, I could make regular clothes, or I could make really wild ones like Ana Voog does with her freeform crochet. I'm not the best at crochet yet, but I think I could learn more without too much trouble.

So which of these things do you think I should do? It's worth noting that I like to make art yarns a lot, and I like to work with fine materials, but I figure I can afford more fine fibers and more supplies for myself if I do what's profitable for the yarn I sell. My main motivation for trying to start a business is actually because my arts and crafts are taking all my money.
« Last Edit: May 31, 2014 02:13:39 PM by Wuggums47 » THIS ROCKS   Logged
queenofcrows
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« Reply #1 on: June 01, 2014 08:24:25 AM »

I would personally go for a superior product over a cheap one. People who use and know yarn don't flinch at paying a high premium for the good stuff; there's a reason that LYS stay in business and it's not just because of people who want to support a local economy. They know that premium fiber is expensive to buy in the first place, but significantly more pleasurable to work with, too.

It would probably be worth selling some of the cheaper stuff, too, for people who want to felt decorative objects and what have you. But I feel like your main money-maker in selling your yarn would be to make a name for yourself as someone who sells a unique, quality product.

Steer clear of the garments. In my experience a lot of people just balk at the price you would need to charge on a completed garment (or blanket) to make selling it worth your while. Remember that your time as well as your supplies are worth money, and that you'd have to sink a lot more time into a single garment than you would into dyeing and spinning. It's simply not as profitable.

This goes double since you say you're not very practiced at crochet. If someone is going to sink big bucks into a garment, they are going to want expert workmanship, not novice/intermediate. They're also going to want premium fiber, not scratchy wool, which means even more investment for you out of the gate -- plus even more time, if you want to use your own product and need to spin the fiber.
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shadojake
« Reply #2 on: June 01, 2014 06:47:31 PM »

I would personally go for a superior product over a cheap one. People who use and know yarn don't flinch at paying a high premium for the good stuff; there's a reason that LYS stay in business and it's not just because of people who want to support a local economy. They know that premium fiber is expensive to buy in the first place, but significantly more pleasurable to work with, too.
...........
It would probably be worth selling some of the cheaper stuff, too, for people who want to felt decorative objects and what have you. But I feel like your main money-maker in selling your yarn would be to make a name for yourself as someone who sells a unique, quality product.

I do not crochet.  However, I would agree that you should use a higher quality fiber, the best you can afford to buy.  Who enjoys wearing scratchy clothing?  Even if you do not crochet the finished garment ... someone will use your spun goods and if you use the cheap scratchy stuff, the end product will be scratchy.

I also agree that it would be okay to have a few less expensive items but not cheap, as in Wal-Mart cheap.  But just have a range of prices from medium to high end.

I am doing this in my booth.  My most popular item so far has been coasters, $20 for a set of four.  I have added trivets ($25 each) and plaques at $10 each, 2 for $18 or 3 for $25.  My most recent thing to try is magnets.  I have nto yet had them at a show but will see how they go.  They will sell between $2 and $4 each, most likely.  I am not even sure I'll take them to craft shows.  I may just add them to my website.  But my point is that I am offering a variety of prices.  For all my products I am doing my best work and trying to offer quality products.

I also build in something into the price for my time.  Not all crafts people do this.  I believe they do the rest of the crafts people a disservice by not building their time into their prices.  It is best to do this from the beginning, then there is no sticker shock later when you increase prices to cover it.

Let us know how it all goes and what you decide.
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queenofcrows
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« Reply #3 on: June 01, 2014 10:30:25 PM »

The cheaper stuff would be good for more crafty things. Not for garments and the like, but I use coarser wool when I want to felt decorative rocks, or felt soap. (Felting softens it some and the texture is good for scrubbing yourself, kinda like a loofah.)

I'm not as good with pricing out smaller things in bulk, since most of my work is done on a commission basis and I've never done a booth anywhere. But, what shadojake said is correct, you'll want things over a range of prices so that people have options. I have products that start at around $20, and my big stuff starts at $125. That leaves a nice range to work in for alternatives for people who want to buy something but can't afford to sink a lot.

Do you dye your own fiber? If so, you can also consider selling hanks of roving for people who want to spin their own. It's a cheaper way for people to still be able to get your product, since you don't have to add the investment of spinning into the price.

Quote
I also build in something into the price for my time.  Not all crafts people do this.  I believe they do the rest of the crafts people a disservice by not building their time into their prices.  It is best to do this from the beginning, then there is no sticker shock later when you increase prices to cover it.

I agree 100% with this. Selling without paying yourself for your time, or trying to be "competitive" by charging next to nothing, screws over artisans and artists in general. It creates a low perception of value for handmade pieces, which is part of why I work on commission -- I'm selling only to people who understand why the price is what it is.

It's part of why garments would be a bad idea. Even if you're only paying yourself $5/hour (and I charge much more for my time), how many hours will a sweater take? There's a nasty belief that because it's art, we should be happy to accept very little for our work, as if our time is worth less because we're not playing with computers or whatever. Don't let people treat you like that, you deserve fair pay for what you do and your effort is not worth less because of what you put it into.
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Chris in VT
« Reply #4 on: June 03, 2014 04:05:57 AM »

Just a couple of observations.

Cindy, don't take the magnets to shows. Become known for one medium. Having the magnets, unless they're made with the tumbled work, will only cheapen your product. And you just become another crafter at the shows.

Time:
In this business, you first must determine the market value for your work. And that really depends on where the "market" is. At the level of shows I do, a spinner who is spinning at the show, gets a premium for the products sold. Why? because the customers want items that are actually handcrafted by the exhibitor. So a spinner who has made things like scarves, etc will do quite well. However, if there's no demonstrating, sales are terrible because the work "is overpriced". Perception is the key.

But when someone like a crocheter charges for his/her time, sales can be awful, because of the price. Someone charges $10 an hour, and it takes three hours, charging $30 for a $12 item makes no sense.

But there is more to charging just for the time actually making the item. If you don't charge for every minute you're "working" you're not arriving at the actual amount of time spent. Going to the craft supply store, ordering, receiving, packing, travel to the show, setting up, selling at the show, travelling home, etc is never counted. You charge for every minute, or don't charge at all.

I have never charged for my time because if I did, I would be undercharging.
I'll take say, 40 hours to make up for a show. In that 40 hours I'll make up about $3,500 worth of product. If I were to charge $10 an hour, I would only have $400 in product.

I just got back from a two day outdoor show in New Jersey. The space fee was $300, plus another $200 for the hotel. There were 125 exhibitors coming from as far away as Tennessee. I guarantee nobody charged an hourly rate for their work.
« Last Edit: June 03, 2014 04:14:19 AM by Chris in VT » THIS ROCKS   Logged

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queenofcrows
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« Reply #5 on: June 03, 2014 02:31:09 PM »

Obviously charging per hour doesn't work in every situation, like for small items. I certainly don't do it for things like badges and buttons, which I can produce in quantity and thus at much less per piece. And if you're multitasking (spinning and watching TV for instance), i.e. not focused entirely on your work, cut the rate.

However, I've actually had much less success when I don't consider and specifically mention my time. I've found more people are willing to accept "you are paying for both my time and my skill" as a reason when they ask why I charge what I do, rather than "because it's worth it." I wonder if it's because they think the latter sounds kind of arrogant, while they can connect more with the former.

The good news about perceived value is that in the market niche you're going for, Wuggums, people are willing to pay for good product. The perceived value is reasonably good for what you put into it. Chris, I think I first met you on the Regretsy forums? I know you sell in high-level events. Places like that, you can definitely make more if you don't charge per hour. People go with the expectation and willingness to pay a lot.

But for us at a less-than-professional level, a lot of times it's simply not worth it if we don't. I can't sell a blanket that I sunk six hours into for $20 or something and have it be at all profitable. Sad
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Chris in VT
« Reply #6 on: June 03, 2014 04:37:22 PM »

Sorry, I don't remember Regretsy.

My main point is, if you're going to charge per hour, make a timesheet and record every minute you're working for the company.

Pretend to be an actual hourly employee. How much would you let pass by without getting paid for doing something for that evil employer?

My philosophy has always been that if I can't deduct it from my taxes, I don't bother with it. And I cannot deduct my time. The profit from the business is my pay.

The secret is to lower your costs, not raise your prices.
You find ways to buy wholesale in bulk with a resale cert so you don't pay sales tax.
You find as many ways as possible to cut the time necessary to make the items.

And the best way to make money is to find good shows with plenty of paying customers. Shows where you can make more money in one weekend than in a year on Etsy or those other sites.
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shadojake
« Reply #7 on: June 03, 2014 08:04:24 PM »

Cindy, don't take the magnets to shows. Become known for one medium. Having the magnets, unless they're made with the tumbled work, will only cheapen your product. And you just become another crafter at the shows.

I have been thinking of selling them on my website and adding them to orders as a 'thank you' .... and not taking them to the website.  I believe I have enough going on in my booth without them, but they are still a fun thing to make.  I have been having some creative days and I am trying to encourage that in myself by doing some things are new and different to me.  Thanks for the input.

Time:
In this business, you first must determine the market value for your work. And that really depends on where the "market" is. At the level of shows I do, a spinner who is spinning at the show, gets a premium for the products sold. Why? because the customers want items that are actually handcrafted by the exhibitor. So a spinner who has made things like scarves, etc will do quite well. However, if there's no demonstrating, sales are terrible because the work "is overpriced". Perception is the key.

I do not demonstrate while at a craft show.  There are not many artists who do so at the craft shows I am at.  Usually I stay busy enough taking care of customers, plus there are just to many small things to carry.  I also need a special cleaner for cleaning up the ink (not just soap and water), etc., etc.  So demonstrating it will not happen at my booth.

But when someone like a crocheter charges for his/her time, sales can be awful, because of the price. Someone charges $10 an hour, and it takes three hours, charging $30 for a $12 item makes no sense.

But there is more to charging just for the time actually making the item. If you don't charge for every minute you're "working" you're not arriving at the actual amount of time spent. Going to the craft supply store, ordering, receiving, packing, travel to the show, setting up, selling at the show, travelling home, etc is never counted. You charge for every minute, or don't charge at all.

I have never charged for my time because if I did, I would be undercharging.
I'll take say, 40 hours to make up for a show. In that 40 hours I'll make up about $3,500 worth of product. If I were to charge $10 an hour, I would only have $400 in product.

I just got back from a two day outdoor show in New Jersey. The space fee was $300, plus another $200 for the hotel. There were 125 exhibitors coming from as far away as Tennessee. I guarantee nobody charged an hourly rate for their work.

I learned today about how the value of a particular product can vary greatly from one area of the country to another.  I am selling my tumbled travertine coaster sets (4 per set) for $20.  I live in Louisiana.  I had an order from a lady in California.  She said i could easily double my prices in California.  She told me that she thought it was $20 for 2 coasters.  I just cannot see customers paying that much were I live.  She even said .... start charging more in California!  I cannot make myself have a price differential based on where people live.  Sure, most everything costs more in California but to me it's not right to upcharge California residents!
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God Bless,
Cindy

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Chris in VT
« Reply #8 on: June 04, 2014 04:04:10 AM »

I agree. My prices are my prices no matter what show or what state I'm doing it in. You have arrived at what you consider to be a fair price.
I see some exhibitors who will adjust their prices depending where the show is. The show I did last weekend was in Morris County, NJ. It happens to be one of the wealthiest counties in the country. I got many people saying my product is so inexpensive. But that meant they bought more pieces!
One thing I learned about doing shows in wealthy areas. People do not become wealthy by spending their money foolishly.
I had a friend long ago who was a car salesman. He sold new Chevys, and new Cadillacs.
He always said the Caddy buyers would negotiate down to the last dollar, while the Chevy buyer was much easier to work with.
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shadojake
« Reply #9 on: June 04, 2014 05:36:26 AM »

One thing I learned about doing shows in wealthy areas. People do not become wealthy by spending their money foolishly.
I had a friend long ago who was a car salesman. He sold new Chevys, and new Cadillacs.
He always said the Caddy buyers would negotiate down to the last dollar, while the Chevy buyer was much easier to work with.

You are so right about how the wealthy don't get that way by spending $$ foolishly.  They are usually very frugal and when "prettys" are bought, it is well thought out.  The most wealthy don't live blatant over the top lavish lifestyles.  Many times you  could be living a modest neighborhood and have several millionaires living wi/in blocks of you.  Just read works by Stanley .... The Millionaire Mind, and others.  It is food for thought even in the craft business on how to meet the needs of that particular niche market.
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God Bless,
Cindy

Given enough coffee, I could rule the world!
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