Saturday, January 11, 2014

new skirts, new photography, and a little insight into my new prices.

happy saturday everyone! i am super, super happy that this week ive managed to get back on our normal non-holiday schedule and that ive been able to get back to putting  more work into the shop side of things.

ive got two new pocket skirts up in the shop, one striped (which might look familiar, i made one for myself and wore it in my most popular post ever):

and floral:

and in addition to these two, ive also been spending a lot of time prepping and cutting fabric for a whole new round of skirts (and i think this may be my best crop yet). so im really excited about the work im doing right now. 

but thats not what im here to talk about. 

so, remember januarys theme and how i said that ive been working on bringing some fresh new content to the blog? well one thing youre going to be seeing a lot more of is the etsy shop. not just superficial glances like my weekend update series, but a real, honest look into my process, my business decisions, and the lessons im learning as i try to make this my full-time gig. 

i want to be more open and transparent about my business so that maybe i can inspire and encourage other new or struggling etsy sellers by letting them see what running a handmade business actually looks like, and that im right there with you. i promise youll here more about this later but for today i want to talk about the latest changes ive made to the poverty luxe etsy shop:

1. the photography. ive really been struggling with product photography since re-opening the shop. because i know exactly what i like (simple, well-lit, straightforward photos on a clean, white background), and i have not been able to replicate it at home. taking product photos in front of my ugly apartment screen door was not doing it for me. i hated it, but i thought it was the best i could do. until about last week when i realized that early in the morning my bedroom is basically a light box and as long as james gets up with me at 7 i can get the exact pictures i had in my mind. so im really happy about this change. 

2. the prices. i mentioned earlier that i was going to raise my prices with the new year (dont worry, everything that was already in the shop will stay at the same price, its just the new listings that will be at the new prices), but at the time i announced it i hadnt quite figured out what that price was. 

well, obviously since i have new skirts in the shop i must have figured something out, right? right. the new skirts are $45. which i realize is a huge jump from the previous price of $35, BUT it was very much necessary, and i think this is the perfect opportunity to share what ive been learning about business lately:

in a nutshell, the retail price of a handmade item needs to 1. cover the costs associated with making the item (in business speak, COGS, or cost of goods), 2. pay the person making it (for obvious reasons), and 3. provide a profit with which to grow the business (note: wages and profit are not the same thing). 

when i first priced the skirts at $35, i sort of followed this method. i determined my cost of goods (per skirt) to be between $2-3 depending on the fabric, that it takes me approximately two hours to make each skirt (from cutting, sewing, and finishing to photographing, listing, and mailing), and that id like to earn $10 an hour (depending on where you live this may or may not sound like a lot of money but we live in los angeles and that is just pennies more than i make cutting fabric at joanns). 

that meant that my total overhead costs per skirt was about $22.50 (give or take), so i rounded up to $35 because that sounded like a nice number. i could pay myself back for making the skirt, and have $12.50 left over to invest in growing my business. it felt like a good price. 

but upon closer inspection, it wasnt quite right. the $22.50 in overhead only pays for that skirt that i already made. it doesnt account for things like making more skirts, purchasing (and replacing) the non-consumable supplies that i use, advertising, research and development of new products, craft fair fees (and the supplies needed to do craft fairs) etc. etc. etc. each skirt only provides $12.50 towards these things. and well, thats not really enough to facilitate any kind of long-term growth. 

so i did lots and lots of research and came to the conclusion that a 50% profit margin was more appropriate for my needs. so that meant doubling my overhead costs ($22.50), resulting in the retail price of $45. 

what this all boils down to, is that by raising the retail price of each skirt 28%, i can DOUBLE my profits on the business end (NOT my hourly wages), to better facilitate sustainable long-term growth for poverty luxe. meaning, that i wont have to work myself to the bone and burn myself out just trying to stay afloat. 

now the reason im sharing all this is twofold, one, im a huge nerd and im really excited to share what ive been learning about running a business, and two, i just wanted to fill you in so that youd understand that these new prices are NOT me trying to be greedy, im just trying to grow a healthy business. 

the end. 

thanks for sticking around, and have a great weekend!

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