{Handmade Business in 31 Days: series recap}

For the entire month of October I published a post on Handmade Business. Some posts included tips to share, others addressed topics we personally have had to work through the challenging way, and other posts were a bit more simple yet thought-prov0king. Participating in this series was a brand new experience for me, however I know many of you have participated before in this annual series The Nester started {y’all are brave!}.

day 2: The importance of a blog.

I knew writing a business post for 31 days straight would challenge me in unique ways, and of course I had that moment of doubt — Did I really want to commit to this? — right before October started but, I kept at it. And I’m so glad I did. Writing this series ignited emotions I forgot I once inside me. When you own a business, and specifically a handmade one where everything we do, make and share feels so personal, you invest so much of your soul into it. And sometimes it’s easy to forget about those investments.

day 15: Developing your product/style.

Side note: yesterday I watched a biz video on amateur verses pro and the simple concept shared has me on my toes once again. I seriously LOVE when that happens!

Handmade Business in 31 Days was an amazingly successful series and I am very much appreciate of all the interaction + feedback you have provided. I wrote this series with all of you in mind, but I walked away from it with a few new ideas/realizations, which I very much appreciate. Your feedback throughout the entire month of October was amazing. Thank you :)

day 27: Holiday Tips.

SERIES RECAP — HANDMADE BUSINESS IN 31 DAYS:

Day 1// Knowing when to say ‘no’.

Day 2// The importance of a blog.

Day 3// Gaining support from your spouse/partner.

Day 4// Creating goals.

Day 5// How to handle copycats.

Day 6// Where to buy materials.

Day 7// Managing your email.

Day 8// Find quotes that inspire you.

Day 9// Addressing your biggest issue.

Day 10// Linky Parties: To participate or not.

Day 11// What to do during your slow seasons.

Day 12// Shipping madness.

Day 13// Do something: Having the courage to make mistakes.

Day 14// Taking time to rest.

Day 15// Developing your product/style.

Day 16// Work vs. Family Time

Day 17// How to network via email.

Day 18// Perfecting your elevator speech.

Day 19// My thoughts on moving a business across the country.

Day 20// Tackling writers block.

Day 21// Creating an editorial calendar.

Day 22// Having grace towards others.

Day 23// Is it still handmade if I don’t make it myself?

Day 24// How to move forward when you have a lot going on.

Day 25// Working from home.

Day 26// Trapped: On being courageous.

Day 27// Holiday tips.

Day 28// How to creatively package an order.

Day 29// Traveling to conferences.

Day 30// Hiring help.

Day 31// How to accurately price your handmade products.

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What post(s) spoke to you the most? Which post ignited a fire inside of you — one that is challenging you to follow your passions + purpose? I wrote this above, but just so you know — I’m really so appreciative + thankful of all the interaction, questions, feedback you left. xoxo

{Handmade Business in 31 Days — Day 31, How to accurately price your handmade items.}

Day 31// About this time one year ago we realized two huge somethings: if we didn’t change the way we made and priced our handmade items we wouldn’t remain profitable, and if we didn’t change these things we wouldn’t be in business for very long. Gussy Sews is my full-time job, the blog + shop take equal dedication and I absolutely love my job. There’s hardly enough time to describe all that it’s done for our family, others, and lastly, myself, so ensuring we make smart choices is super important. Lastly, Gussy Sews supports our family, not the reverse.

We took a few months {let’s be honest, it wasn’t a quick activity} to review our processes, pricing and overall goals. And what we realized is that we weren’t headed down the path we thought we were. We needed to act quickly and so once we had shipped all Christmas orders we took a short break from the biz to rest. In early January we re-grouped and worked incredibly hard to design, create + photograph a new line of Gussy products. We reworked our pricing guidelines and made sure our overhead costs were accurate. And then lastly we created some buzz to help with the upcoming launch.

Pricing your handmade items correctly is just one aspect of running a successful handmade business. You must perfect the art of saying “no”, you must know your goals + elevator speech, and you must take some time to rest, among other things.

LET’S TALK HOW TO ACCURATELY PRICE HANDMADE ITEMS. Here are some key factors you must know:

  • What is the cost per material item? {calculated down to the exact amount of material you use}
  • How much time does it take to make a finished item? {account for each step of the process}
  • What is the rate of pay to make a finished item? {include all positions/process steps; will you pay per hour worked or per finished task/piece}
  • What kind of profit* % must you make to remain a sustainable business?
  • What kind of overhead costs do you have? {your salary, accounting costs, newsletter subscriber fees, site hosting fees, basic office supplies, travel costs, site design fees, giveaways/donations, rent/utilities + more}

*The amount of profit you make could cover overhead costs {how you actually configure how to pay for overhead can vary {example: add it in to the product price like an expense/material; know how much product you have to sell each month in order to break even with your overhead costs}.

Oftentimes shop owners under-price their handmade items. This could be because they haven’t adjusted their prices as their experience/style develops, they don’t feel confident asking for what they deserve to be paid, or they don’t want to “compete” with neighboring shop prices. Here’s how I feel about that: you absolutely cannot compare yourself to other shops {for all you know THEY are underpricing your work, now you’re really losing money}; your story is uniquely yours therefore your prices are uniquely yours; if you don’t know what it costs to make an item how {seriously, how?} do you expect to stay in business?

Most handmade business aren’t properly priced, and actually — many lose money. The difference between a business and a hobby is a business makes money. One of the major problems facing our industry is handmade is expensive to create. A handmade shop owner has to set their prices higher than a big box store in order to reach profitability. However, the trade-off is a more unique shopping experience for the customer.

Knowing where to shop for materials was a huge reason we were able to go from a made-to-order to pre-made process in January of this year. Yes, we were suddenly buying larger quantities of materials but we could afford this simply because we knew we were getting the best price on the quantities we needed.

SO LET’S DRAW UP A SAMPLE PRODUCT PRICE FOR A ZIPPED POUCH:

Shop Owner A: your product retails for $9 and the total cost of all materials used is $2. Somewhere you heard you should triple the cost of materials to determine the retail price, so that’s what you’ve done. Your shop has been open for 6 months and while you’ve sold a fair amount of items since opening you have just enough money to cover your next batch of items but you’ve saved nothing and you have no capital set aside {for funding large projects, investing in new supplies + more}. Final grade: F

Shop Owner B: your product retails for $20 and the total cost of all materials used is $2. You also spent $2 making the item, bringing your total costs to $4. Now what about the time it costs to photograph, edit, list for sale + promote said item? Yup, you’ve got $16 left to cover all of those costs, not to mention have enough leftover to cover your monthly overhead expenses which remember, covers paying yourself! Your shop has also been open for 6 months and you’ve sold the same amount of items since opening as Shop Owner A, but you’ve been able to save a set amount each month as well as build a decent amount of capital. Final grade: A+

So… what’s the difference between Shop Owner A and Shop Owner B?

Having an accurate understanding of what it costs to run a business will immediately set you apart from others, but knowing + implementing what you know allows you to run your business much more easily.

Above is a list of some key factors to accurately pricing your items. Now, let’s talk in greater depth about this…

KEY FACTORS YOU MUST KNOW ABOUT PRICING HANDMADE ITEMS {for consistency purposes we’re basing the instructions on making a zipped pouch}:

  • What is the cost per material item? {calculated down to the exact amount of material you use}
    • Take that zipped pouch you are working on. Here’s a breakdown in materials you use: outside fabric, inside fabric, interfacing, thread, zipper, embellishments, name tag {for example}.
      • You buy the outside and inside fabrics for $5/yard and the interfacing for $4/yard. To determine how much material in the outside and inside fabrics you use, figure out how many finished pouches you can make from 1 yard of fabric. Let’s assume you can get 12 pouches from a yard of fabric, making each outside/inside fabric cost you $0.42.
      • Apply this same formula to determine the cost of interfacing used, noting that the outside/inside fabrics are doubled over and the interfacing is not, meaning you use twice as much interfacing per yard than you do of outside/inside fabric.
      • Thread probably costs you pennies {if that} per finished piece, and while this dollar amount seems insignificant it is important to include it in your costs.
      • Use the same formula to figure out the cost of the zipper, any embellishments you use and name tag added to every zipped pouch. For example, if you buy a lot of 12 zippers for $4 then each zipper costs you $0.33
        • You now know the cost of all materials needed to make your handmade item — yeow!
      • Repeat this for EVERY ITEM you sell in your shop. Each of your items has unique measurements, material uses + costs, so taking the time to determine a unique price for each is an absolute must! Hint: use a spreadsheet to create a formula that’ll allow you to simply plug in your item measurements, material prices + production times to determine a suggested retail price
  • How much time does it take to make a finished item? {account for each step of the process}
    • Prep work: 2 minutes {includes cutting and ironing fabric}
    • Sewing: 7 minutes {start to finish, the amount of time to sew 1 zipped pouch}
  • What is the rate of pay to make a finished item? {include all positions/process steps; will you pay per hour worked or per finished task/piece}
    • Prep work: $10/hour {may also be paid per finished task}
    • Sewing: $12/hour {may also be paid per finished piece}
  • What kind of profit % must you make to remain a sustainable business?
    • You’ll have to work a few scenarios to know which % is the right amount. Start with 50% — are you able to pay yourself, cover overhead costs, and save/pay for anything additional with this number? What if you bumped your profit to 60%? How about 70%? Running a handmade business, like any business, is extremely expensive. It’s important to keep this percentage in perspective, realizing there are many expenses we don’t account for {due to infrequency or inexperience}.
  • What kind of overhead costs do you have? {your salary, accounting costs, newsletter subscriber fees, site hosting fees, basic office supplies, travel costs, site design fees, giveaways/donations, rent/utilities + more}
    • Breakdown quarterly AND yearly costs so they become a monthly expense {site hosting fees, accounting fees, etc.}
    • Will you include a fraction of your overhead costs with each product you list, or will you focus on reaching a specific sales goal in order to cover your overhead costs? Or, consider covering your overhead in a way that works best for you!

The bottom line is accurately pricing your handmade items will push you towards success whereas using a set formula, like “3x the cost of materials” will quickly pull you towards failure. It may sound harsh, but the reality of not accurately pricing your items is harsh. It’s exactly what challenged us to change the way we made and priced our handmade items. And, it’s what’s allowed me to take some time off over the summer as well as in September when we moved from Minneapolis to Los Angeles.

 NOTE: This post explains how to accurately set retail prices, not wholesale prices. Wholesale is another language entirely ;)

Homework// If you haven’t already done some, revisit your pricing formula and make appropriate adjustments. If you’re concerned about the difference of what you currently sell an item for to what you should being too dramatic, increase your prices in small increments. Remember, your end goal is profitability + sustainability :)

Any questions? Let’s chat in the comments!

Read, study + excel at being a Handmade Business owner! Click to see all posts.

{Handmade Business in 31 Days — Day 30, Hiring help.}

Day 30// We made the choice to hire shop help pretty early on. I was still working my full-time day job when we made this decision, and while it was a little scary with a big dash of new-ness, we fully believed in what hiring help could do for Gussy Sews.

One afternoon, while sitting in our downtown Minneapolis apartment, I found myself on the phone with Lisa Leonard. I was in desperate need of some advice — hiring an assistant seemed so difficult, and it is, but it’s not as unreachable as it once felt. Lisa shared her insight with me: if I never hire help I’ll only be able to do so much with Gussy Sews. We reached a fork in the road — if I was content with only selling as much as we were, working as many hours as I was, and not experiencing any growth, I shouldn’t hire help. OR, I could hire an assistant and Gussy Sews would continue to grow.

Obviously I chose the path of hiring help, which not only benefits Gussy Sews but allows me to work with amazing women who live incredibly passionate + talented lives.

Adding to our team ebbs + flows as the seasons change. Usually over the holidays we bring on more talent, and sometimes we hire out just for a project, but for the most time we have a pretty consistent team. I am so thankful + appreciative of the women we work with.

Local/online job boards have been very good to us, specifically Craigslist. We write an anonymous but super descriptive job listing and then review all applications as they come in. As soon as we reply to the listing we share who we are, complete with URLs, but for that first listing I’ve never listed our businesses name. I typically interview first at a public venue, then a second interview is held in my studio. If you already have an assistant(s), consider a group interview if you’ll be working closely together and invite all team members to be present. One thing I’ve learned — adding to our team is just as much about growing the business as it is about the personal needs of the applicant. It’s very much a two-way street :)

BEFORE YOU HIRE YOU’LL WANT TO KNOW A FEW THINGS:

  • What is our goal in hiring an assistant?
  • What tasks will the assistant complete?
  • How often will they work?
  • What kind of rates can we afford?
  • How will hiring an assistant benefit me/the business {long-term}?

Before you can hire an assistant you need to make sure you can afford to hire one. There’s potential for this to be the most tedious tasks but bear with me, it is so worth it!

Imagine if you can adjust the tasks you work on daily to be the tasks that only YOU can do. Tasks that no one else can do, such as designing product or creating visions for your business? It took me a while to be able to let go of certain tasks but the benefits of doing so far outweigh the stress/frustrations that doing everything myself brought.

Wondering if it’s still considered “handmade” if you don’t make it yourself?

Here’s where I advise you to seek professional advice on the topic, as we have done many times. You could hire an employee, a contract employee or an intern. Then there’s the option of full-time or part-time help {or seasonal}. You’ll need an accountant to guide you through payroll, help you determine if you need to become an LLC or working with a DBA is OK. I’m sweating a little just writing this out, but trust me, it’s wise to seek the advice from professionals.

My main purpose is to encourage you to consider hiring help for your handmade business :) And then of course cheer you on as you work hard at making it happen.

WHY SHOULD YOU HIRE HELP?

  • You constantly feel overwhelmed and/or don’t getting everything done {and procrastination is NOT something you struggle with}
  • Because — let’s be honest, we can’t do it all {on our own}
  • To give yourself more time to focus on your strengths {ask for help doing the things you are mediocre at/don’t enjoy}

If you sell a tangible product, the pricing of each item needs to reflect the incurred costs of all that work on it. So that means any prep work, the actual making of the product, photographing, editing, listing and writing blog posts/email newsletters/Facebook updates, plus more. If your blog is your “product”, think of all the tasks required to make your blog a success and the costs to help you make it happen. Consider the time it takes to seek out + write giveaway posts, seek + maintain sidebar sponsors, create/write DIY posts, general blog post prep/writing, email writing/answering. Then there’s the cost of business overhead: blog or shop fees, blog or shop design/maintenance costs, email newsletter subscription costs, general office supplies {NOT shipping supplies, that is factored into determining the shipping price}, business travel, business coffee/lunch events, and more. Whew! But you can do it :)

When writing your job listing be sure to include the compensation, job description, hours, availability + any other details about your business and/or the position you’re looking to fill. I’ve created a sample job listing for you to reference, click here download the sample job listing PDF. When writing the ad, be sure to list the personal qualities you’re looking for. For example, including “self-starter and self-manager” in our listings has helped us tremendously. Also list the qualities of the business — what makes your business an attractive place to work? And lastly, use bullet points, complete/descriptive sentences + check your spelling/grammar when writing the ad.

sewing machines in England

When you are honest about the time + costs your business accrues you’re able to grow your business at a much easier rate. And be sure to read this 31 Days post on where to purchase materials. What handmade business owners pay for materials is probably the #1 reason they struggle with not only being able to afford hired help, but achieve profitability status {speaking from experience}.

“The price of success is much lower than the price of failure,” — Zig Ziglar

Want EVEN MORE guidance with hiring help for your blog or business?

 

Homework// Write out a few sample job listings, then share them with a trusted family member or friend. What kind of feedback can they give? When you see a job ad, what encourages you to apply? When your job listing is complete, post it! You’re now on your way to hiring help for your handmade business — yeow! :)

Share with us below: What’s holding you back from hiring an assistant? What have you learned from hiring?

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