How Much Money are You REALLY Making?
I have a confession to make. I’m not proud of it, I’ll admit. The fact that it was a surprise to me makes it even worse.
My business did not make any money in 2011.
I made the mistake of waiting until January (tax time) to sum up all of my totals. After ringing up all of my supply receipts, totaling my Etsy and PayPal fees, alongside with my booth fees for craft fairs, etc. the conclusion became clear: my business expenses were near DOUBLE what I grossed in sales. I shouldn’t have been shocked, but I was.
Sometimes it’s all to easy for us crafters to skip calculating all of our little expenses. For example, I might spend a $50 booth fee to attend a craft fair. If I sell $150 worth of jewelry, I’ll proclaim, “I made $100! So I did good!” Wrong. What about the cost of all of my beading supplies? What about the cost of my display materials (table cloths, folding tables, mannequins, etc.) What about the cost of gas to drive to and from the show? What about the cost of lunch? When none of these things are taken into account, it may seem like a profit has been made, but such can be a false calculation.
Because I waited until the year’s end to configure exactly how much my fees and supplies were taking out of my “profits” I made some serious errors. I was not charging enough for most of my items, and spending too much buying new supplies before using up the supplies I already had on hand.
Lesson learned. I hope you will also learn from my mistake.
In 2012 I am keeping a running total of my gross sales, fees, and supply costs. In the same manner I balance my personal checkbook, I am running weekly cost totals to ensure I am in the black from January through December. Plus, if I keep up on my records, it won’t be such a chore come next tax time.
Here’s to a (hopefully) profitable 2012!
Hey Timothy here!
I remember when I listed my very first item on Etsy…I was clueless about pricing. There are many factors that come into play when pricing your items, so knowing your product is crucial. You need to know how much it costs to make your item, how much time you spend making it, and how much it costs to ship. These are just a few things to keep in mind when filling out the price section of your listing.
In pricing articles below, you will find in-depth tips that will help you get the most for your handmade items.