Saturday, March 21, 2015

Start Selling at Craft Fairs #4: Money Talk

At long last, Part 4 of a series I'm calling (5 Steps to) Get Started Selling at Craft Fairs. Read Step #1: Find Your Shows , Step #2: Booth Display , and Step #3: Marketing Materials.

Money Talk

Okay, now we are getting down to business. I think most of us start out just making things because we love to, we are compelled to. Soon we have boxes of things, and then begin trying to sell them simply because we want to make more. At some point you can't help but consider making a living doing all the things you love most. And I fully believe in that dream. But now after so many years, I can tell you... while it is possible, it is not easy. Very few artists I know make a full time living, where they can buy houses and support families. For that you need some real business finesse, a way to sell consistently in multiple venues, and probably mixed with teaching classes or other service based offerings. I don't have any data behind it, but this is what I've gathered from many conversations with artists. 

Most of us are able to make half a living, enough to supplement a day job, or a partner's income. Personally, I am happy to just be able to keep doing my work the way I enjoy doing it. My goals are more based on lifestyle than income. I would rather lower my standard of living, than get another day job. But that's me, we all have different goals and life situations. I've said it before, you can make this thing do whatever you want it to do. It's all you. 

Huckleberry Festival in Whitefish, MT last year.

Getting back to the craft show itself, here are some money details to consider:

Pricing is Super Important. As I mentioned in my previous post, fair pricing is a huge issue for the new craft seller. I'm going to repeat myself, and say that when you sell your beautiful handmade items at low low bargain basement prices, you hurt the whole artist community and bring down the overall value of the show. Those with experience know you have to charge enough to pay yourself well and cover all your expenses. Your $15 hat makes my $50 hat seem outrageous by comparison. Soon people are complaining to me, and I'm not too happy with you. Because I know how long it takes to make the hat, and you should be earning more than someone working at McDonald's. Have respect for what we do, it's valuable. 

I do understand that at first you are just emptying your boxes of stuff. It's been sitting around and you really just want to get rid of it. That is a hobbyist perspective, not a professional artist trying to make a living. I sometimes have items like that as well, things that have been hanging too long, maybe have a repair. What I do is put them on clearance at a good discount. I know I am still coming out ahead (because I use a good pricing formula), but I can move some older things out and make room for the new. But your entire booth should not be on clearance, unless you are selling at a flea market. Mark them up so you can mark them down.

The best way to calculate your pricing is to use a pricing formula like this:
(Materials+Labor)+Profit=Wholesale Price
Wholesale Price x 2 = Retail Price

When you sell to a store, you charge the wholesale price (or a little above). This covers your expenses plus a little profit. The idea is that the store has all the overhead expenses and does all the work, and you get to sell a larger amount of items at one time. Selling at a craft show is retail (directly to the customer), so you need to double the wholesale price to cover your selling expenses. Show fees, booth display costs, packaging, food, gas, time selling, day off work, etc. That's exactly what a retail store does. 

And if you really want to continue making things and selling them, you must include both profit AND labor costs. Figure out how long it takes you to make a thing, then pay yourself an hourly wage (to start, $10-$20 per hour). I know many new sellers like to take the cost of materials alone and multiply it by a number. Yes maybe you have only spent $5 on the yarn for your hat, but the time it takes you to make it is the main thing you are selling. Your special skills and talents and creativity. You seriously have to pay yourself appropriately. And if you don't also include a little profit on top of all that, you are only breaking even and will never make money. That's just basic business.

Front yard sale at Mom's house in ND, 2014. Fun!!

Taking Payments. You will need to come up with your own system for processing sales. A place for your cash, credit card stuff, business cards, etc. I use a cross-body pouch that stays on me at all times. Some like a cash box, but I like to know my money is safe and at hand. Many artists just keep everything in their pants pockets. Simple. I also make a little sales stand with empty tubs covered with a cloth. 

There are 3 ways to take money for a sale: 

- Cash. Good old cash. I keep my prices rounded off so I don't need to handle coins. $100 in change works for me.

- Check. I don't take checks anymore, unless it is my home town and I am familiar with the person. It's just so much easier to take a debit card, and know if it's good right away. Checks are risky. If you do take a check, look at their ID and take a phone number. But even with those things I have been burned. Not a lot, but why bother.

- Credit Card. It is so SO easy and cheap to take cards now, there is no excuse not to. Join the modern day, my friend. Paypal, Square, even Etsy I think has a card reader you can plug into your smart phone or tablet. Yes it costs a small fee, but the sales you will gain will be completely worth it. Trust me. People bring only so much cash to a festival, and they'll use it for lunch and beers. When they run out of money and still want to buy something from you... let them!

Sales Tax. Dealing with sales tax at a festival can be weird. Some people seem surprised when you add tax, though I'm not sure why. We must pay it no matter what. I really don't want to deal with coins in the booth, so what I (and most others I know) do is factor the tax into my selling price on most things. When I run a credit card, I let CC reader add the tax to help cover my extra fees. But it comes off more as a cash discount, and encourages people to pay cash.
 Keep Track. You also need to find a way to keep track of your sales. The best way, and maybe legally we are all supposed to do this... is to give receipts. Then you have a copy of every sale. Some use a notebook to write down what has sold. I use my price tags, which I place in my money bag after every sale. After the show, I enter them into a spread sheet so I have a record of what sold for next year. Sales totals are entered into my Quickbooks program for taxes later.

My friend Andrea from Rhythmic Stitch - Urban Harvest market, Bismarck, ND.

How much will I make? I guess this is really the big question. For all of us. Because there is no good answer. We never truly know what will happen. Even a show that has been consistently good in the past can bomb. So many factors involved... weather, date or venue changes, other events happening, booth location, buying audience, and on and on. 

One formula some of us use is the 10 times rule. This is the idea that a good show will yield 10x the booth fee. Many artists say this is outdated and the sales have gone down over the years, so it doesn't' really work. In my experience 10x is my top end usually, and I can expect at the very least 5x. It is very rare for me to only break even, and more likely at a dinky fair than a large one. This is just my experience and a way to roughly estimate what to expect. 

But again, this whole festival life is a crap shoot. You really do not know what will happen until you do it. This is the nature of the life we have chosen. And it can make you nuts. 

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