On Etsy, business planning, and pricing your crafts.

Etsy Peddles false Feminist Fantasy via Slate
Somehow I missed this article when it came out. I have to say, however, that as much as I appreciate the areas in which Etsy is great, these guys have a pretty sharp point.

On that note, one of the factors involved in the sustainability of our household is my business. I hate to admit this, but I’ve usually been running from one festival season to the next with so much going on in-between that I’ve never sat down and taken a good look at where all this running is taking me. I recently ran across this article on Crafting an MBA and boy did parts of it hit home. Now that I’m thinking about broadening my work with these potential Home-Ec type classes, it’s even more important for me to really get myself centered into a proper long-term business model with a real plan, a budget and goals. This is not something I can continue to put off.

So here goes! First up is a business plan. The SBA has an online, self-paced course here:
http://app1.sba.gov/training/sbabp/index.htm
The course itself is really basic, but there are good links and templates along the way, making the framework of your plan really easy to set up.

One of the trickiest sections for me is the financial planning; this is where you have to really sit down and take a look at your budget, your profit margins (if you even have any!) and how to price your work. I’m historically not very good at this, despite knowing what I should be doing, and since I have heard this from other people who craft, I figured documenting my struggle might help someone else as well.

The general consensus about finding a fair price for your work goes something like this:
materials cost + labor cost + overhead= minimum you need to make to break even.
Sadly, that’s usually where most people stop (including me).
See, there’s this thing called PROFIT. I know I, and many other crafters consider our wage profit, but the hard truth is that that’s just not the case. You need that wage to buy groceries and pay your mortgage and the vet bills. Profit is the money you put back into your business, and if you’re not putting money back into your business, it won’t grow. It may not even survive the first rough patch. So, you absolutely have to include profit margins in your pricing. However, figuring out what that number should be isn’t always easy. One company I used to work for doubled their minimum break-even point, then doubled that number again to arrive at their wholesale price. I have to admit this sort of sickened me, when I knew something that I got paid 5$ to make, that had maybe 20$ of materials in it was going to ultimately sell for around 200$. However, even if I think their formula was outrageous, the hard fact is that they are still in business, and that’s a lesson in itself.

Only you can decide what a comfortable number is, but I’d advise you to not skimp too much. While I can’t bring myself to use the above formula, I know that doubling my break-even price once is not outrageous at all. I’ve been needing some new equipment, and wanting to try some new techniques, and both of those things cost money that I won’t have if I don’t plan for growth.

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