Crafting a Successful Small Business. Joanne Dewberry
circle template and cut out your sentiment tag.
Step 5. Adhere the spotty paper to the card blank and using your ink pad ink the edges of the front of the card and around your polka dot strip and circular character to give them a rough coloured edge.
Step 6. Colour your digi stamp character using coloured pencils.
Step 7. Adhere your polka dot strip across the centre of your card. Cut two lengths of ribbon slightly larger than the length of the card, adhere them to the centre of the card along the length of the polka dot strip. Punch a hole in the sentiment tag and thread ribbon through. Add 3d foam squares to the back of the character digi circle and sentiment tag.
Step 8. Adhere onto the card as shown and add three sticky pink gemstones to the left of the tag.
© Erica Martyn, www.oddsandsoxlets.co.uk
You are welcome to use the above for personal use & non-commercial use only, you do not have the rights to reproduce them in any way. This includes copying, sharing, or using the image in any other way other than to produce handcrafted paper items. You may only offer for sale any handcrafted paper items, including cards, invitations, envelopes, gift boxes etc that you personally create using Erica Martyn’s Digi Stamps and Free Designs. All ‘Odds & Soxlets’ images remain the copyright and intellectual property of Erica Martyn.
Chapter Two: Is the price right?
Pricing your products right is vital. You don’t want to pitch too low and risk not making a profit, but at the same time you don’t want to go too high and price yourself out of the market. You will find that some crafters sell their creations extremely cheap in comparison to your well thought out prices, either because they are not registered as a business and do this for pocket money, or they have not got a clue about pricing. This can make it harder for those who play by the rules and, more importantly, know their product’s value. Do not be lured into lowering your prices – remember you are crafting a successful small business.
You need to know these three key prices for each of your products. This is where your business success will lie.
1 Cost price – this is the actual cost for you to make each piece, including time, overheads, raw materials, etc.
2 Trade price – this is the price you’re willing to sell to stockists and enable you to still make a profit.
3 Retail price – as a general rule the retail price should be twice the trade price. If you do sell to stockists – whether that be via wholesale or ‘sale or return’ (we will come back to these terms later in Chapter Four) – stick to this retail price as you do not want to undercut your stockists.
Make sure you know these three prices off by heart, or if not then always have them to hand. It will make you look far more professional if you are asked unexpectedly. Also make sure you review them on a regular basis, and think about the elements which may change, such as the minimum wage or the price of raw materials. You do not want to suddenly find you are only breaking even, or worse still making a loss.
Working out your cost price
My advice is to devise a simple formula. The figures you need to include and consider are: your time, the cost of raw materials, and what others are charging for similar products. I think this is the fairest way to develop a pricing scheme.
Example
This is a very basic example to give you the general idea.
Cost of supplies per unit
If a metre of material is £2.50 and that is enough to make eight bags then the unit price is 31p (£2.50 ÷ 8 = £0.31).
I buy all my cotton, labels, swing tags and string in bulk, which per item costs less than 1p, so I add 5p to each bag, which brings the total to 36p.
£0.31 + £0.05 = £0.36
Your time
You want to earn £6.08 per hour (the minimum wage in 2012) and can make five bags per hour, so each one costs you £1.22 in labour (£6.08 ÷ 5 = £1.22).
The competition
I would take the average price from three similar businesses. For example, A = £1.99, B = £1.49, C = £2.00, so the average is £1.83 ([£1.99 + £1.49 + £2.00] ÷ 3 = £1.83).
The break-even point is £1.58 (36p + £1.22), meaning any money made above that is profit, and your competitors’ average selling price is £1.83. Taking all this into consideration I would look at your recommended retail price (RRP) being between £1.85 and £2.
If you make more substantial items such as jewellery, paintings or clay hand casts, then Viv Smith’s (www.poppysparkles.co.uk) formula would work better for you:
“I have a formula – although I do occasionally tweak it if I feel something is coming out too pricey and just won’t sell: materials + time + overheads. I then add 20% and then double it. This means that I have priced in a way that enables me to do trade and retail without making a loss. I see so many handmade items priced in such a way that it’s not even a self-funding hobby! I won’t compete on price – I’m working on building a strong brand and offering a great shopping experience.”
Things to take into consideration:
You ideally want to pay yourself NO LESS than minimum wage.
Rates from 1 October 2011
The national minimum wage rates are reviewed each year by the Low Pay Commission. As of 1 October 2011:
the main rate for workers aged 21 is £6.08 (rising to £6.19 in October 2012)
the 18–20 rate is £4.98
the 16–17 rate for workers above school leaving age but under 18 is £3.68
the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship is £2.60 (rising to £2.65 in October 2012).
(This information is taken from www.direct.gov.uk. Check the new rates every October and increase your prices accordingly.)
When calculating your cost price, do factor in waste, shipping, equipment and advertising, as well as utilities such as broadband, electricity and calls. You will probably need to make an educated guess for this.
Weigh up your target market. High-end clients will expect to pay a premium for handmade products.
Do not pitch yourself too low. When the orders start flying in and you are up at all hours making products and the cash tin is empty, you will struggle to raise your prices and keep the orders coming.
Be reasonably competitive but DO NOT compete on price. Your products will inevitably vary from those of your competitors as they have been