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Topic: I have a costs-profit related business question  (Read 1110 times)
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« on: July 07, 2014 11:43:07 PM »

This is somewhat simple but I am new in business I cannot make sense of it.

If I spend 900 (stand rent, flyers, shipping and remaining of the worker pay) for a 2 weeks long gig and made 2000 (excluding the daily expenses such as food and some payment for the workers), would it mean it is worth it? my husband previously made almost same amount of money in 40 days and his expense was around 400  . Now he wants to pursue this fair business but I think the costs compared to what we earn is too steep and not worth it since our prices are somewhat low (and that's the reason we could sell that much actually) and if we raise it we lose customers... What do you think?

Chris in VT
« Reply #1 on: July 08, 2014 03:24:53 AM »

Let's break this down.

You earned 2000. Then you have to subtract all your expenses (stand rent, flyers, shipping and remaining of the worker pay) plus the daily expenses such as food and some payment for the workers.

So in two weeks, you made less than 900. Add in your cost of supplies, and just how much did you make? And how much work did you actually do in those 2 weeks?

Does your husband want to pursue this part time or full time?

There's NOTHING at a craft show, or on Etsy, anybody NEEDS. NOTHING.
« Reply #2 on: July 08, 2014 07:16:02 AM »


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« Reply #3 on: July 10, 2014 06:09:37 AM »

Without knowing the cost of expenses I wouldn't be able to come to a sound conclusion. Also, by raising everything by, say, 50 cents to a dollar, could you pay for the expenses from that? And, why a 2-week gig? This seems a bit harsh!

« Reply #4 on: December 29, 2014 05:12:50 PM »

There is a lot going on in this thread so I'm going to try and address each part.

First things first: Congratulations on your awesome weekend! Revel in the feeling that people like what you do and want to hand over money for it.

For two weeks work (assuming 10 days work) you've made $110/day, or $13.75 per hour (8 hour day). Not much above minimum wage in some parts but honestly more than most crafters start out paying themselves.

Unfortunately this does not include cost of materials, how long it took you to make the items, etc.

Here's how I approach it. Instead of looking at each show separately, I estimate all of my costs for the year (shows, food, banking fees, travel, gas, whatever) and divide by the number of hours I plan on working. You can use 20 hrs/week if you plan part time (48 weeks/yr). This will tell you how much you need to make each hour to stay in business.

My business costs me $20/hr to run. I value my time at $30/hr, so my rate is $50/hr. If I spend an hour working on a ring that uses $30 of materials, then I price it at $80.

The benefit of yearly planning means that if one show doesn't go well I don't need to change prices at the next show. Consistency can be important if people see you at different shows.

The second thing I need to point out is your finishing comment about raising prices will lose you customers. This is common logic, but unfortunately it's usually not correct. While there is a point when no one will pay an outrageous price, most crafters seriously undercharge for their work. This is something I talk a lot about with new crafters. The short answer is test your prices, you can probably charge more than you think without losing too many people.

A strange thing seems to happen when you raise prices that no one really talks about: people respect your work more. Price = quality for most people, even if it's only subconsciously. The show I started selling gold at I was pricing too low and people doubted its authenticity. I raised the prices the next day and no one questioned it, they just handed me their money.

« Last Edit: January 08, 2015 10:01:00 AM by jungrrl - Reason: edited to comply with Craftster guidelines » THIS ROCKS   Logged
Chris in VT
« Reply #5 on: December 30, 2014 04:34:16 AM »

In all my years of doing this I have never charged an hourly rate. The cost of my raw materials are low compared to the finished item, and I find ways to keep all my costs low too. So my profit margin on my work is quite good.

Charging an hourly rate can be fatal if you have a labor intensive product like crochet or 2D work. I do a lot of shows with 2D artists, and none of them charge by the hour to produce a painting. I know of no photographer who charges by the hour to capture a moose in the wild.

What I have constantly found with exhibitors who charge an hourly rate is they never are consistent. When you charge an hourly rate, you must charge that rate for every minute you're doing something connected with the business.

Some examples:
Ordering material. Purchasing agents get paid. Do you?
Receiving material. Warehouse people get paid. Do you?
Designing and making your product. Here's where everybody pays themselves.
Packing the van and traveling to and from the show. Truck drivers get paid. Do you?
Working a weekend show. The salesperson gets paid. Do you? You do a 2 day show and that's 16 hours you're working for the company. Do you charge $50 per hour?

If you're going to charge an hourly rate, then you are an employee of your company and you must pay your employees for every minute they are working for you.

What happens when you do a two day show and for whatever reason you don't make expenses? Maybe you're placed in a bad spot, or it's too hot/cold/rain/snow, etc. I don't know anybody who hasn't had a bad show. If you're charging by the hour with no return, you're losing your shirt.

My business plan has always been KISS. (Keep it simple, stupid) I find the lowest costs of raw material, produce my product in the most streamlined way possible, and sell it for what the traffic will bear. I then deduct my expenses, and what's left over is mine.


There's NOTHING at a craft show, or on Etsy, anybody NEEDS. NOTHING.
« Reply #6 on: December 30, 2014 05:54:04 AM »

Chris ... ^^^^ = like

God Bless,

Given enough coffee, I could rule the world!
« Reply #7 on: January 07, 2015 11:01:52 AM »

Something else to consider would be any residual income you would make of off customers who may not make a purchase immediately, but may make a purchase later on down the road from your website (if you don't have one, get one).  I would print up special business cards, coupons, etc. advertising that you can ship your products to customers if they see something they like but just aren't ready to make a purchase.  I would even offer a slight discount (5% or 10%) to help them offset the shipping costs, plus that gives you a way to monitor exactly how many customers you picked up from your two week engagement. 

So you may make $800 for the two weeks, but the opportunity for income on down the road can be great if you just work everything right.
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