Sunday, January 18, 2009

P.P's "No Freak Approach" to 'Crafting For Profit': Stage 2 - Getting Organized: PRICING YOUR WARES


Getting your Creative Business off the ground isn't all that intuitive. I am starting off this year by writing a series of posts with information that has helped me - and continues to help me - navigate through this adventure of selling my handmade wares. I, by no means, have all the answers, or consider myself an expert, but I do spend a great deal of time making sure that I run and cultivate my business in a well-thought out way. PLEASE feel free to comment with more information and links to resources.


Pricing your own works of art has to be one of the most difficult and agonizing processes when you begin your handmade business. When I first opened my shop on Etsy,
I priced my pieces and then repriced them, and repriced them again...until I decided that I needed a hard and fast system. The first thing I learned from all my pricing fiascoes is that it's better to price too high than too low. You can always lower your prices if you need to, but you look hugely unprofessional when you start jacking up your prices because you have decided you are not making enough of a profit. Start smart: Figure out your Product Prices before you even start to list, or sell your goods.

Let's first talk about:
Fixed and Variable Costs
Variable costs, sometimes called "out of pocket" expenses, are the costs associated with doing business: labor, materials, advertising, packaging, shipping, etc.

Fixed costs are those expenses that are paid regardless of whether you are creating/producing or selling a product: tools, equipment, utilities, taxes.


Both cost families need to be considered when deciding on the price of a single product.


What is Your Time Worth?
You love to be creative and feel that you could make a business out of your endeavors. You need to be paid, just as you would be with any other job. Would you be okay with getting paid $10/hour for what
you do? Maybe $20? The main goal is to not undersell yourself, but don't be too crazy, either. We all realize how valuable time is, but putting a figure on that time is the vital first step to pricing your works.

Materials
This part is a bit easier. You can easily add up how much it costs you just in materials to create one item, say, a bracelet. If you used beading wire, you need to calculate out how much of the wire you used for the bracelet so you are not charging yourself for the entire spool. Then all of the beads, findings, etc - everything needs to be calculated out per piece.

Labor Charge
You have now decided what to pay yourself an hour. Say, it's $10. How many of the same exact bracelet can you make in one hour? TIME YOURSELF - DO NOT GUESS. I have guesstimated creation times and I am ALWAYS wrong. So, do yourself a favor and don't mess around. Time yourself making a single item start to finish.

For exampl
e's sake, we'll say you can create two bracelets from start to finish in one hour. That means that your labor charge PER bracelet is $5 ($10 (the amount you want to get paid per hour) / 2 (the quantity of identical pieces that can be created in one hour).

Fixed and Variable Add-ins
When you're first starting out, it's difficult to decide what amount you should add-in t
o each piece to cover things like advertising. At this point, you may not have even started advertising or looking into how or where you would like to advertise. Eventually, you will need to set up a monthly budget for your marketing - whether it's Project Wonderful ads , mailing out postcards, taking out ads in the paper or magazines - whatever you decide, you will have a budget for it and then based on average sales per month, you can get a number that you can add on to each piece you sell.

I roll my packaging and actual postage I pay for shipping a package into the shipping charges I charge my customer. I know exactly how much each bubble mailer costs, tissue paper square, ribbon, box, etc - even the cost for the 1/4th of polishing cloth sample I put into each order - and come up with a total cost for packaging. Then my listing cost (for Etsy it is .20), and the actual amount it costs me to mail the package (based on the US, Canada, and International orders - so make sure you weigh the specific piece all packaged up so you can come up with an accurate postage amount). Everything is all added up and out pops my shipping charge. (I use and LOVE www.endicia.com - check it out for your shipment needs).

As far as fixed costs, I, personally, do not add them into the price of my pieces. I consider them business expenses and record them as such.


Pricing Your Piece
Here's where we really get down to it. Now that you know what it costs in labor for each bracelet, you can begin to figure out pricing per bracelet. These figures do not have fixed or variable costs added in, but you can/should add those in as appropriate:

The price of your bracelet AT COST will be:
$5 (labor charge) + $8 (material cost) = $13

Your Wholesale price for this item will be:
$13 (cost) x 2 = $26

And your Retail price for this item will be:
$26 (wholesale) x 2 = $52


This is the technical way that pricing your goods should work. However, there are mixed schools of thought on whether or not this is even feasible in some selling venues. Some argue that online selling venues such as DaWanda, Etsy, ShopHandmade don't have markets that will tolerate this type of ma
rk-up. If you plan on ever selling wholesale, and offer keystone pricing to your wholesalers, then this formula is pretty much the only one that will allow you to make a profit. You cannot discount the idea of wholesaling even if right at this very moment in time you don't believe it's in the cards for you. A major department store, or high-traffic online store could approach you one day and then what? You tell them that you have to 'adjust' your prices? Hmmmm.... Well, I can't say too much because right at this very moment of my business, I don't take on very much wholesale due to the whole pricing issue.

Since my main selling venue is my shop on Etsy, I have seen what others charge for similar products - and those that sell them at ridiculously low prices, I know that the quality of their materials do not compare to mine. And those who charge higher, I can only understand it if the quality is as high as
mine and figure that they are (or want to) sell a lot wholesale.

However, my business plan has me on a track that will eventually lead me to having to raise my prices so that I can work with businesses that will promote me as an artist (so I don't have to sell my lovingly created works incognito) and still allow me to keep the integrity of my handmade, artisan works.

That's why all of the pieces used to begin and build your business are so important - starting with that business plan that I discussed in Stage 1. At the end of it all, it's YOUR business. Just stay smart.

Info About Pricing


Etsy: The Storque: Art of Pricing
Online Art Magazine - Archive - Pricing your work
Self Representing Artists
Don’t Sell Yourself Short: Price Your Art for What it’s Worth


Good Reads on Pricing


Pricing Guidelines for Arts & Crafts:
Successful, Professional Crafters Share Their Pricing Strategies to Help You Set Profitable Prices for Your Arts & Crafts

by Sylvia Landman

The Crafter's Guide to Pricing Your Work
by Dan Ramsey


The Basic Guide to Pricing Your Craftwork:
With Profitable Strategies for Recordkeeping, Cutting Material Costs, Time & Workplace Management, Plus Tax

by James Dillehay


Feed Shark

Tuesday, January 13, 2009

You are the Yin to my Yang...


I have a new design I wanted to share - just because I know that I will be tired of seeing hearts and the color red pretty soon here with Valentine's Day gearing up. I don't have anything against hearts...I mean, it would be a weird thing to have something against hearts, right? But it is a tad overdone and I fall victim to overdoing it, too, just because creating personalized jewelry and the shape of a heart sometimes go hand-in-hand.

This year, I am really focusing on my fine silver works for two main reasons: 1: It has been the medium that I find the most interesting and tolerant of my creative A.D.D. and 2: (and most importantly) it is one of the most environmentally friendly jewelry materials available. I have coined my collection of fine silver pieces the "Good Karma" Collection and I will be launching a website dedicated to these eco-friendly lovelies by the end of February.

My newest piece: You are the Yin to My Yang Pendant/Key Chain Set

Here's a little background on yin yang, just in case you are unfamiliar:
In Chinese philosophy, the concept of yin yang is used to describe how seemingly opposing forces are interconnected and interdependent in the natural world, giving rise to each other in turn. Many natural dualities - e.g. dark and light, female and male, low and high - are cast in Chinese thought as yin yang. As also know to many people as a little bit of the other balances the other. So no one can live without."
~ excerpt from Wikipedia ~
My biggest draw to fine silver is its ability to hold texture - I love texture. There is something so reassuring and real about running your fingers against the relief of patterns and detail on metal.

These little beauties can have embedded CZs in them to represent you and your dear one, or maybe an anniversary month, favorite color...that kind of thing. And then you can personalize a bit of wit or lovey dovey something-or-other on the back/smooth side of the 'slice'.

I am going to have many, many more new fine silver designs this year...hopefully drawing more from nature...but always with the ability to make it personal. It's what I do. :)

Feed Shark

Sunday, January 11, 2009

P.P's "No Freak Approach" to 'Crafting For Profit': Stage 2 - GETTING ORGANIZED Step 1 : Your Money


Getting your Creative Business off the ground isn't all that intuitive. I am starting off this year by writing a series of posts with information that has helped me - and continues to help me - navigate through this adventure of selling my handmade wares. I, by no means, have all the answers, or consider myself an expert, but I do spend a great deal of time making sure that I run and cultivate my business in a well-thought out way. PLEASE feel free to comment with more information and links to resources. On to Stage 2: GETTING ORGANIZED!

Now that you have your Business Plan written and you have given yourself the opportunity to think carefully about your goals and how to achieve them, it's time to figure out the "what's next?"

First, GET ORGANIZED with your Money

~ BANK ACCOUNT ~ There is really no reason not to open up a separate business account at your local bank. Typically, there is a small monthly fee for having a business account and some banks require you to keep a minimum balance - though, if you have your personal checking account at the same bank, they sometimes waive those fees.

I do not write checks very often through my personal account since most of my bills are paid through online banking, but I have found that I write far more checks with my business account to pay for things like deposits on booths at fairs. Having a separate business account allows you to have your name on your account and a DBA ("Doing Business As") with your business's name. This also allows individuals who write you checks for your products at home shows, for instance, write the check in your name, or your business's name and when it's time to deposit, you get no hassles at the bank!

Most banks offer a business credit card with the account - an excellent way to track funds - but a quick way to get into a whole lot of financial trouble quickly. Be careful.

The business account should be viewable online and you can pay your bills online, just like with your personal account. I have my business account separate from my personal account, but since they are with the same bank, I can view everything at the same time. Makes paying recurring bills a lot easier!

~ EXPENSES ~ Get a simple shoebox, or file folder, or if you're really fancy, a receipt scanner and keep every single receipt and invoice of purchases you make for your business. Use Excel, or a spreadsheet program, and record each expense. I, personally, have a separate column for the date of purchase, the company I purchased from, a short description of what I purchased, and the amount. At the end of the year, I can break up the costs per company to see if I need to find a different supplier, or that I spent way more on shipping than I thought and need to adjust my prices. Spreadsheets are great because you can click one button and get a total sum, each entry is numbered and you can create multiple tabs of multiple worksheets in one spreadsheet workbook. It's easily backed up and easily emailed to your accountant come tax time (if you are lucky enough to have one), and easily searchable. Do not forget to include fees (such as Paypal fees) and shipping service fees (i.e. Endicia, Stamps.com), or forgettable items like your cell phone/business phone and mileage.

~ INCOME ~ In the same spreadsheet workbook, create another tab for your income. Make sure to make note of where the income is coming from, i.e. specific online venues, craft/art fairs, trunk shows, home shows, wholesale locales, etc. Be as detailed as possible because this is the information you are going to evaluate at year's end to see if spending time and energy in certain venues is even worth it. ETSY has a great downloadable CSV file that you can copy and paste into your own worksheet with handy info on each transaction (date, customer, transaction ID, cost of item, shipping of time). I keep a separate Income Workbook for each year with a worksheet for each month of the year. It allows me to click through each month and see how I compared to the month prior. I would love a program that did all of this for me in pretty graphs, but haven't found one that suits my needs as of yet - if you know of one SHARE!!!

Keeping track of your money seems like a no-brainer. However, when I started, I believed that since I had such a tiny, little business, tracking every little thing was a waste of time. But you cannot necessarily predict where you will be even a short month from now. A passing mention in a high traffic blog, or a celebrity purchasing one of your pieces, being in the right place at the right time, can lead to a lot of sales and a lot of changes in your business and mindset. Start now while you can manage it all. It will be one less thing to worry about when you travel down that road to greatness!

Free/Open Source Software for your Small Business
There can be so many start-up costs associated with your handmade business. Here's some free software to help you manage it all.
Open Office
OpenOffice.org: The Free, Open Source Office Suite
Free Personal Finance Software, Online Money Management, Budget Planner and Financial Planning - Mint.com
Free Personal Finance Software, Online Money Management, Budget Planner and Financial Planning - Mint.com - Free personal finance software to assist you to manage your money, financial planning, and budget planning tools. Achieve your financial goals with Mint. (P.P. Note: I LOOOOVVVEEE Mint.com!! I cannot say enough good things about this softwares!!!)
QuickBooks Simple Start 2008
Easy-to-use free small business accounting software to manage your business better.
Free Accounting Software | GnuCash
GnuCash is personal and small-business financial-accounting software, freely licensed under the GNU GPL and available for GNU/Linux, BSD, Solaris, Mac OS X and Microsoft Windows. Designed to be easy to use, yet powerful and flexible, GnuCash allows you to track bank accounts, stocks, income and expenses. As quick and intuitive to use as a checkbook register, it is based on professional accounting principles to ensure balanced books and accurate reports.


~~ Stay tuned for P.P's "No Freak Approach" to 'Crafting for Profit' : Stage 2: GETTING ORGANIZED: Step 2 Where to Sell and Pricing your Wares? Coming soon!!! ~~

Tuesday, January 6, 2009

Gadget Girl Strikes Again! A product review...










I admit, I love gadgets. I don't know where this adoration of things that buzz, beep, light up, etc, came from, but I'm not fighting it.

My new little love: The Pulse SmartPen from Livescribe. You may have seen these commercials on tv or little set ups at Target - I actually did not see either. I came across it because I was trying to make my handmade business more efficient. This was my first holiday season selling online and it was insanity (the good kind). Since most of my work is personalized and/or customized there is a lot of sketching and scanning to provide customers an image of what is in my mind's eye.

I scanned in so many sketches of layouts/designs and what not and then had to write up a detailed explanation of my sketch and ideas, hoping that the customer would be able to follow. It was time consuming and sometimes fruitless, because the customer and I were not understanding one another.

So, I started to search for a way for me to streamline this process. I was really only looking for an electronic pen that would keep me from having to scan images, but then I ran across a bunch of stellar reviews of the Pulse. I really wish I had one of these baby's in college, but I think I'm going to get a lot of happy use out of it for my Crafty Business.

I am not going to explain every little thing about this pen, you can check out the website for tech specs, weight, cost, etc - even watch a little video. What I am going to tell you is that although you have to buy the special paper for the little camera that it uses to capture your writing, it isn't all that expensive (about $5/notebook - which is about what Mead charges these days) and the pen - even for someone like me who loves writing with ink (think: Montblanc) - is pretty darn decent. AND this pen RECORDS. So, as you are writing, you can record your own voice with extra bits of info, or whatever, and later, when you go back to your notes, you can just touch the paper (on the word where you started recording) and hear the playback. It is sooooo awesome!

It also has a little screen that can scroll through a main menu, battery power, tells you the time and, if you are recording, how many seconds/mins you have recorded.

The system I am using to keep myself and my business organized is having one notebook be my "desk" notebook - because I am always jotting things down when I'm in front of the computer such as: supplies I need to order, people I need to contact, marketing opportunities. When the pen is docked in its cradle (it has some really nifty magnetic thing going on that sucks the pen into the exact right spot) it uploads my notes and then I can do a search for words like: Order or Contact and the Livescribe Desktop software highlights those words so I can find all the Orders I need to place, even if my notes have them scattered across several pages. When I'm done with a page from the notebook, I can just delete it from the archives. All in one-click. Niiiicce. I also record myself as I'm writing things down at times to eliminate having to write every little thing out - like when I have to contact someone, I'll write the contact info down, but then have a recording of the "why am I calling them?".

I also have a designated Design notebook. This works out so well because I usually organize my designs by materials or even when I would like to release the new piece (like Valentine's Day) and then when I'm ready to actually sit down and work on a batch of fine silver, I can search "fine silver" and find the designs. The recordable feature helps me out here because there have been so many times that I draw a design out thinking it was my next 'big thing' only to go back to it a week later and not have any idea why I thought it was so great. Now, I just record as I draw.

I think I digressed from what my original point was...which was to streamline the scanning process. Livescribe gives you online storage space to upload your notes (you get to choose what you want uploaded) and you can share the file publicly or privately. So, picture this:

You create a sketch of a design layout for a customer and while you are sketching the layout you are recording and explaining as you draw. I then upload the sketch and I provide them with a link to the uploaded file on the website and when they click on it, they can see the sketch and hear my explanation. Here's a quick example CLICK HERE (there is a triangle 'play' button on the bottom left and you can make the screen larger by clicking on the arrow on the upper right hand part of the sketch)

Because you can set a file to public or private, you can decide whether everyone gets to see the upload or just a specific person or set of people.

The Pulse connects to your computer with USB, and upgrades, applications, software updates automatically take place when you place the pen its cradle.



There are a lot of gadgets out there that don't really do much for you, or work as advertised. Sure, the Pulse Smartpen has hokey crap on it like the ability to draw out a piano keyboard and actually play it (it was cool for about 10 minutes) and you can also draw a calculator and have it work (now, that one I like), but I really do think that the Pulse delivers on its word and I can see us having a very happy - and productive - relationship!

Oh - and check here to see if there are any coupons for a new pen - I got $10 off mine and free shipping!

Happy Writing!


~~~ Be looking for my next installment of P.P.'s 'No Freak Approach' to "Crafting for Profit" coming soon!! ~~~





Turbo Tagger

Sunday, January 4, 2009

P.P's "No Freak Approach" to 'Crafting For Profit': Stage 1 - The BUSINESS PLAN


Getting your Creative Business off the ground isn't all that intuitive. I am starting off this year by writing a series of posts with information that has helped me - and continues to help me - navigate through this adventure of selling my handmade wares. I, by no means, have all the answers, or consider myself an expert, but I do spend a great deal of time making sure that I run and cultivate my business in a well-thought out way. PLEASE feel free to comment with more information and links to resources.
There is such an apparent divide between artists/craftsters who sell their goods and treat it as a true business versus those who consider themselves as 'dabblers' who sell for a little "mad money" or a way to pay for supplies.
I don't think that you know from the moment you make your first (or even twentieth) handmade creation, that you may be onto something that could be bigger than what it is right at this very moment. But, creating a business plan will help you decide if you want to walk down that road.

The process of creating a business plan forces you to think through all of the vital aspects of running a business - no matter how big or small - and helps you decide how you are going to approach them. It lays out your vision for the business and helps you set goals and how to achieve them. One of the greatest perks of creating a business plan is that you can use it to help evaluate your progress.

I created a business plan for my handmade business over a year ago. So much has changed as far as what my goals are now, where I sell and why, where I market - my very thought process, but my business plan is still somewhat relevant - AND, because the thing is not set and stone and should be used as a guide, it must be reviewed and updated periodically. Without it, I know I would have floundered, or gone off track as far as what my goals are long ago.

So, what all goes into a business plan? Basically, it's:
  • Description of the business
  • Marketing
  • Finances
  • Management
The Small Business Association has a great tool for guiding you through writing a plan. Microsoft Word also has a business plan template that you can download right here or go into your Word program, create a new document and choose "Plans" for a list of templates. You don't have to answer every question or fill in every blank - there are a lot of parts that won't be relevant to your business.

It may seem a bit daunting to begin with - but take it easy. Set aside designated quiet time to work on it so that you can really think about what you're writing. This is the first step to really driving into your brain that you are no longer a glorified hobbyist, you're a full-on, small business owner!

Next post: The No Freak Approach to 'Crafting for Profit': Stage 2: Getting off the Ground