Sunday, September 20, 2009

Do the Math

As you attempt to get your home-based art or craft business off the ground, you may be approached by folks who have shows they would like you to participate in, or shops they want you to sell your products in. Here’s my special tip to help you make these important decisions- do the math! It’s very important to figure out how much something is really going to cost you before you sign on the dotted line and turn over your hard-earned money. What do I mean, how much it’s really going to cost you? Well, first and most important is the booth fee, or percentage the shop will take off the top. Booth fees are pretty straightforward.
Here’s an example. Let’s say I have heard about a show with a $100 booth fee. A fee of $100 is just that, no hidden costs, no percentages. But what, exactly, would I need to sell to make that kind of fee a sensible investment? I have often heard that a booth fee should be no more than 20% of your gross. So if I pay a booth fee of $100, I would want to bring in at least $500.
I would think about the number of hours the show lasts, the amount of inventory I predict I can have in my booth, etc. Does it seem feasible? I have found, in the larger shows I have done, that I can generally sell maybe 20-25% of the stock I have on hand. So for a show like this I would want to have at least $2000 worth of product on hand. I know that can be easily done. Now how about the hours of the show? Well, let’s say the show is just one day- a Saturday from 10am to 8pm. That’s 10 hours. Ok, so if I sold an average of $50 worth of items an hour, I could make that booth fee. Do-able? Well, probably.
There are plenty of other considerations, though. Is it in town? That means no hotel and minimal gas costs. Is it a juried craft show? I find that that is what draws the type of customers I am looking for. Is it indoors or outdoors? Bad weather can ruin your chances of having a good day at an outdoor show. Do I know anyone who has done the show? What do they think? This is a starting point, though folks have different ideas of what a ‘good show’ is.
All of these things and many more should be taken into consideration, but doing the math on that show fee is the first, very important step.
Here’s an example a friend presented me with recently- a craft mall situation where he would pay $100 a month, plus 15% of his sales. Hmmm… That sounded a little iffy to me, so I did the math for him. Here’s what I told him. Well, if you sold $1000 worth of your product a month, you would pay that $100 rent, plus another $150 a month in fees. That’s 25% of your sales. Is that sensible for you? Well, he knew from previous shop experiences that it was pretty unlikely that he would sell $1000 worth of product in one shop in a month. And if he sold less, the percentage he would be paying the shop would just go up. For me, the answer was a definite no. I don’t think he’s going to do it either.
Yes, there may be times when you just want to take the plunge, roll the dice, and see what happens. But I’d strongly suggest that you first do the math, and not delude yourself about how things will turn out financially in the end.
Hope this helps with some of those difficult show decisions!


GetGlassy said...

Great article! It is so important to do the math. One other math equation that should go into it is traffic to the show/gallery/shop you are thinking of. In the example of your friend and the craft mall, my first question would be what's the average daily sales. Same with any craft show should be what is the average traffic from past shows.

Mountaindreamers said...

good article , our local shops want 40 % to sell our goods, which is why I do online.

nomadcraftsetc said...

We have been fortunate enough to have done the math and make it work to our advantage. My hubby and I do shows every weekend in the summer and we also have 7 wholesale accounts year round every month! We are VERY busy. We have had to tweak some of our pricing, the items we sell and packaging to get the profits we desire. In general we make about $1000 per weekend off of a $40.00 booth rental at our local flea market. That is great, considering we sit there for about 6 hours. Much less painful than promoting online and elswhere. We work on our glass about 30 hours a week and spend about 10 hours per week on other things like accounting and such. This is definitely a full time job, but it is well worth it. Thanks for the article, it was a great reminder!

CreekHiker said...

I could only wish for such reasonable fees at shows! Here in LA, a booth fee of 500 - 800 is expected. I know many vendors that don't even make that much! It's like the show organizers are using the artisans to get rich. And that's not just art shows... rubber stamp conventions do the same! With rates like that, I can't afford to do shows at all!

gabi said...

Great article!