Cost vs. Profit –
With all factors included like basic supplies, services (in my case printing), tools, service fees, packaging, shipping, how much are you really making on products that you sell? We’ve all heard the saying “you have to spend money to make money “- and that’s definitely a true statement whether your business is 1 person or 5,000. So you budget it out, item by item, cost by cost, determine your expenses and then your profit. Your face kind of goes flat here, right? All that work and you are only making (insert amount), really??? I know I justify this by thinking that the money adds up.. eventually. A $16 profit here, a $50 profit there, yea its okay (I guess), but it’s not great.
I was contemplating this earlier and the immediate question of “How can I charge more for the same product?” came to mind. I know this is terrible and that in order to keep my competitive edge and have better prices than the big retailers, the answer is “I can’t.” And quite frankly, I don’t want to charge more. I like offering affordable products, not to mention I like selling these products. So that got me thinking about how I can make more profit from the same item with the same price. I obviously don’t want to skimp on quality. I take too much pride and love what I do too much to deliver an average product. I don’t want someone to look at something I created for them (that they paid me for) to think “Ehh, its alright”. No, I want their reactions to be “This is amazing! I love it!” Right?!?! Don’t we all want that? I’d like to think so.
Anyways, after I ruled out charging more, my next thought was “Well, if I can’t charge more, then how can I spend less to achieve the same results?” Bingo! This was the right question.
Some costs you can’t change. For example, an Etsy listing is .20 cents per item and when you make a sale they charge you 3.5% of the sale’s total. There is nothing I can do about that besides not sell on Etsy, but this would defeat my purpose. What you can control is what you spend on other things like your basic supplies and the services you need to do what you do.
I asked myself this very question and realized that the paper I thought I was getting a great deal on, was not that great after all. So I did my research and made a little trip over to a new supplier. I priced out my most purchased items and then compared them to my old retailer’s prices. We’re looking at price differences of $9.99 to $2.99 for the exact same envelopes, and $11.99 to $2.65 for the same paper! And since they are local, I don’t have to pay shipping or wait 4-10 days to receive my order. That’s a huge difference, especially when your listed item is selling for $35. This also lets me offer faster turnaround time for my customers. Its a win-win for everybody (well except my old paper retailer, I suppose).
I know that this is not a new concept by any stretch of the imagination. I am not some amazing business genius, I know this. But I wanted to encourage anyone out there that sells their products to question your costs and do your research, even when you think you are getting a good deal. Chances are there is something better out there for you. You could really profit greatly from it.