Tuesday , 23 September 2014
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.

How Much Money are You REALLY Making?

wood business card holder. slim.

wood business card holder. slim. by: yournestinspired

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!

 

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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.

How Much Time Are You Really Spending on Your Product?

For Time Intensive Handmade Items

Much Are Those Earrings? Pricing Tips For Etsy Sellers

The Price is Right? Tips for Pricing Your Handmade Goods

How much is your experience worth?

Pricing Your Handmade Jewelry

Not Just Another Pricing Lecture – Mellisa Borrell

Pricing Your Products: The 411

Holiday Price Point Strategies

Does Your Shop Compare to Successful Etsy Shops? – Price Points (Pro)blog ad1

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20 comments

  1. Understandably you are also in competition with other sellers on Etsy? What then? Do you keep your price lower to stay in the mix of choices? Right now there are a lot of origami, kusudama, paper flower makers.

    • Instead of focusing on being competitive on price points, focus on what makes your craft unique. The great thing about handmade products is that they are all different in relation to their creator. If you sell something that no one else has, then your price points can be relative to that uniqueness. :-)

  2. Hi Megan, this is a good seed to plant in sellers minds. It is disappointing to say the least when you don’t find you have made a profit. Many costs that are not considered quickly rob you of $. My rule was for me to make 3X my table fee is where I went to be to be profitable without doing my numbers. Depending on your items and cost of course this may or may not be a good rule for you. Good luck in 2012 :)

  3. Pricing has been a battle since I set up my first workshop in 1974. There is a limit to what the market will bare no matter how good you are. For most crafts, especially weavers, woodworkers, art glass, the 411 just does not work. The product is unsellable. Then what to cut? Of course with experience we work faster thus reducing cost of labor or increasing our hourly wage. Often buying supplies in larger quantities saves money but you risk having left over stock when your work changes. Many craftspeople move to the country and work in an old barn to cut overhead. (I refuse this option.) I have cut margins, usually on the retail mark up. This has never been a problem because galleries have seldom been interested in my work. Still after eight years here I must teach to support my art/passion.

  4. Oh man, I’ve been there and done that. Its so hard to see the cash flow when you are caught up in all of the day-to-day drama of making and selling.

    :-)

  5. Besides an Etsy seller, I’m also an Accountant by day. Megan makes one of the best points here that anyone can take with them and should implement immediately:

    Total up your income and expenses at least on a monthly basis. This way you know where you stand when moving forward, and you won’t have to rush at the end of the year to get it all together.

    Plus, the new year doesn’t stop when the old year ends…there’ll be more transactions to keep recording!

  6. Wonderful tips that I have to put into practice. I am totally guilty of buying more supplies before I use up what I had. I will start balancing monthly too. I need a better way to organize my receipts too.

  7. After struggling with this problem for a few years, I finally signed up with outright.com. This decision has saved me time and money by giving me a minute by minute (yes!) look at where I stand with sales and expenses. The $9.95/mo is well worth it.

  8. Thanks for sharing,always great advice! Hope you have a very prosperous 2012!

  9. This was my first year and I did the exact same thing. Live and learn.

  10. Great post. I shared it with my Twitter follows-many who are new Etsy sellers. Thanks! Dee

  11. I use QuickBooks to track all of my expenses and my inventory. I still struggle to keep it up to date but it definitely helps me to price my products and keep an eye on expenses. I have also heard some people recommending stitchlabs lately.Either way – some system is certainly necessary.

    Thanks for the post/confession!

  12. Great article. I think many artists make this mistake of not calculating their expenses currectly. I have created an excell spread sheet with all my direct and indirect expenses. This helps me price my jewelry items and make sure that my business is making a profit and not only selling.

  13. I totally need to keep a record of the $ ins & outs on the computer, right now I am writing in a ledger by hand & I wonder how much more time it takes me. someone recommended quickbooks or excel, I will try these thanks! I would like for something that does the total for me, so I don’t have to plug #s in the calculator too :)
    I know that I don’t charge enough for my items after I spend the time to write in-depth listings, but that is something I am not willing to sacrafice, but where else to cut corners? I spend a lot of time packaging nicely w/ handwritten thank yous & most often I gift wrap for free using all repurposed materials. so I def don’t pay myself an hourly wage & if I did it would be less than $2! after expenses. but I do enjoy it & so far I am not losing any $ :)

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