|Posted on May 1, 2014 at 12:55 PM||comments (0)|
Women definitely help to make the world go round and we also carry the weight of it on our shoulders. We’ve all heard the saying, “behind every great man there’s a great woman.” While a lot of us have dabbled into many different business ventures over our lifetime, we’ve also held down the fort at home, at our 9 to 5 jobs, supported our kids, made sure that our significant other wasn’t feeling left out and connected the dots with the many other things in between . It’s understandable when the words, I’m tired are uttered because who wouldn’t be. No matter how bad that no chip manicure looks or how wild your new growth has become you will continue to sacrifice and wear as many hats for the benefit of your family.
Being a business owner also encompasses wearing many hats you’re already familiar with. Being new and starting out can be overwhelming but is also rewarding. Connecting with new clients, networking and sharing with others about the benefits of your product or services are important. You want others to not only like but love what you have to offer. In that process of getting the ball rolling you become the salesperson, marketing guru, financial analyst, HR rep and that tech geek minus the squad. Whether your goals are to sign up recruits or just simply increase sales, you will wear many hats.
Two key words that are important to remember are time management and prioritizing. Work your business; don’t let your business work you. Learn how to make time for people and things important in your life, trust that it’s okay to say no sometimes (we can’t be involved in everything…don’t over commit. It’s not the end of the world if you have to pass on something) and always take time for self. Women today are wearing many hats and we are able to handle the weight of the world while doing it.
|Posted on July 2, 2012 at 11:30 PM||comments (0)|
What Do I Charge?
This always seems to be major question among new business owners.
For many of us trying to determine a price for our product or service always seems to be a pickle. Most of us are guilty of not keeping good records of how much money and time we are spending on our business. We don’t know if we are charging too much or too little. Take a look at this video posted on Remake America, this is a common example of not finding a correct price point.
When I first started making my headbands and scarves I would search the internet high and low to find out how I should price my products. I gathered a lot of useful information and instruction, and learned that there are many ways to figure out your overhead, labor, wholesale price, sale price, etc. All of these categories tie into one another.
Below I put together a few formulas I use for figuring out the price of my own products, which are handmade. However, you can make adjustments as necessary to fit the product or service you are selling. Remember that there are many ways to come up with a price for your product; this is only a starting place to get you going. Not everyone’s business consists of actually manufacturing, packaging, and retailing a product. This information really pertains to every kind of business, except for the paragraph about finding your wholesale price (which would not be needed in a service based business).
Step 1: Accurately (and honestly) calculate your “break-even” cost.
Materials + labor + overhead = “break-even” cost
Materials: Think about the cost you are paying for the DIRECT goods that go into your product or service.
Labor: Your labor cost is made up of the amount you pay yourself by the hour and how much time it takes to make a product or complete a service. Keep a time sheet and accurately record how much time you’re spending to make a product or complete a service. Multiply the time spent working by what you have set as your hourly wage. If you’re not sure what your hourly wage should be, then do a little research. For instance you can look up the average pay for almost any job on www.glassdoor.com.
Overhead: Overhead would be considered the INDIRECT cost you pay to keep your business running. Some common overhead costs that many business owners incur are rent, utilities, marketing expenses, business related fees, office supplies, etc. Look carefully into this area because sometimes you can miss legitimate expenses that need to be added here. Overhead should be calculated and examined monthly, quarterly, and yearly. INC.com has a short and sweet article on calculating overhead cost. Click here to read.
Once you have these numbers together then add them all up.
Materials + labor + overhead = “break-even” cost
The result should be a “break-even” cost.
Step 2: Determine your Profit Margin.
Sale price - Break-even cost = Profit Margin.
Profit Margin / Sale Price= (Y)
(Y) * 100 = Gross Profit Margin Percentage
In order to find your selling price you need to know what your profit margin will be. Simply put, a company’s profit margin is the difference between the break-even cost and the selling price of that product.
EX: If my total break-even cost to make my product was $4.00 and I sold the product for $6.50, then my profit-margin was $2.50 (38.46%). So every item you sell should help to cover your expenses and return back to you $2.50. To find your profit margin percentage then divide the profit margin by your revenue. In this case $2.50 divided by $6.50 equals 0.3846. Multiply 0.3846 by 100 and you have 38.46% profit margin. I now know that 38 cents of every dollar I made will go towards covering my overhead expenses. There are a few websites that will calculate all of this for you, click here to try one out.
Now your profit margin can be any number you want. However, price wisely because your customer will only pay what they feel your product is worth. If you’re not sure of what to make your profit margin price, just ask some friends and family what they feel your product is worth. Try researching the prices for comparable products. Your profit margin should create a fair price for your company and the customer.
Step 3: Get your Wholesale price
Finally, we are narrowing things down to a wholesale price. You have done all the hard work of calculating your expenses, keeping up with your time sheets, and in-depth research to reach a profit you are content with. You should now have a break-even cost and a profit margin price. Add these two numbers together and you now have a wholesale price.
Break-even" cost + profit margin = wholesale price
Pricing your product is sort of…“Save a little here, spend a little there”. Basically, it’s a process.
Sometimes people get disappointed at first to find that their wholesale price ended up being much higher than what they believe their customers will be willing to pay. Don’t get discouraged; within your break-even costs there is always room to work those numbers lower. Some cost will be fixed, in which you cannot change what you’re paying. However, any costs that are variable can be negotiated or sourced at a lower price. For instance, my product requires fabric. I get better deals on fabric when I buy in bulk or from wholesale suppliers. The lower price I pay for fabric creates a lower break-even cost, which lowers the price my customers pay. The key is to get the best price and quality for the goods that make up your product. This can be a long grueling research project, but it has to be done eventually if you want to stay ahead of the game and grow your business. If your overhead costs are too high try to print less, get lower rates on your phone service, work with free lancers, etc.. Maybe the wages you desire to pay yourself are not realistic. This can be a tough one to accept, believe me! But this is how you will know if your business is worth the time and energy required to keep it up over time.
Selling your product at a wholesale price to other companies or distributers is purely optional. In my opinion if you can figure out a wholesale price for your product, you can actually make nearly double or more in profits each time a customer buys at retail price directly from you. In addition your product can be sold globally from many locations versus from one.
Many experts suggest that you multiply the wholesale price by two to get a retail price.
Wholesale price x 2 = Retail Price (100% markup)
Remember, that when it comes to retail pricing everything is not simply multiply times two. Market research is important. In fact after doing some market research on your product, you might feel that your retail price is too high or too low. Let’s say you own a candy company. You make and sell chocolate truffles at a wholesale price of $2.00 each. The “standard” retail price of your truffles should be $4.00. However, you can set the retail price of your truffles to be $3.00 or even $3.50. You could even retail your truffles at $5.00 each. Now, you may be wondering, “why would I change my retail prices in these ways?” As I mentioned above, market research will show you the way. Everyone’s business is different and pricing depends on many things like brand power, quality of goods, competitors pricing, etc.
Does anyone else use a special formula to determine what their product or service price should be?
|Posted on May 28, 2012 at 12:30 AM||comments (0)|
1. Bigger vendor shows don't necessarily mean bigger profits and smaller shows don't equate to smaller profits. Each show is different, treat it as such.
2. Learn how to identify your target market, every event is not the best market for your product or service.
3. Don't try to bring everything that you have to the show, take certain pieces. You want to have options but you don't want to overwhelm your customer by having too much. Your table/booth should be neatly displayed and organized, not crowded or junky.
4. If you’re unsure about participating with a vendor show, attend the event as a consumer first to check it out. Most events are reoccurring but if not take the chance and participate as a vendor. You can also talk to people who have done the event before and get their feedback.
5. Always keep change. You can potentially lose a customer by not having change. Most people carry plastic, so considering accepting credit cards as a form of payment as well. Square, intuit, and paypal offer devices you can connect to your smart phone to accept payments anywhere.
6. During events always network with other vendors, don’t be afraid to mingle.
7. Don’t assume that because you did a show more than once that you’ll have the same type of success.
8. When there is more than one vendor selling a similar product, have a spirit of camaraderie not competitiveness. See them as being comparable.
9. When pairing up with another vendor to do an event, pair up with someone who has a product that compliments yours.
10. Best goal for profits is to double your vendor booth fee.
11. When working an event, you shouldn’t pack up and leave early when you don’t have any sells. Try to remain for the duration of the event.
12. When deciding on shows, make sure it’s worth your time. Consider the time involved to pack up your items, load your vehicle, unload, set-up, break-down and repack your items.
13. Be proactive in responding to your customers, always greet everyone, and make the experience memorable for the shopper.
14. Be open to deals (those that are reasonable), counter offer and offer an amount similar to what was suggested.
15. Remember your repeat customers; give them something extra or a little discount. Also don’t forget about those who continue to refer you customers. Make sure your customers know how much you appreciate their business.
Contributors: Shemika Swann-Thompson & Shara Jones