Thursday, September 23, 2010

Your Market Counts in Pricing day 4

Your Market Counts in Pricing

By: Maria Nerius, Resident Craft Expert

Where you are selling your goods and who you're selling them to can play a role in pricing your handmade items or creative services. If you decide to sell to gift shops and boutiques, you will have to come up with a wholesale price (which may or may not be your regular retail price!), since these shops will want to mark up the price so they can earn money as well. When selling at a church bazaar, you may not be able to get the price you might get at a large annual upscale art show, since the customer base may be different. You need to know your market (your customers) and you need to research pricing of similar items sold at retail shops, in online galleries, and through mail-order catalogs.

I’ll use the example of a hand painted glass Christmas ornament. Using the traditional pricing formula of (Cost of Goods + Labor) x Overhead, you've decided to price your ornament at $5.00. However, while browsing the web and looking through some mail-order catalogs, you see similar Christmas ornaments are selling for $20.00. It happens! Crafters tend to under price their goods. With this research, you may decide to average the prices and sell your ornament for $12.50. Or you might decide to go for it and initially price your ornament for $20.00 and see if it sells at that price. You have some playing room in your pricing and you should adjust your selling price to earn more profit if you can.

But what if you were browsing that catalog and you found many similar ornaments selling at a lower price than yours, say $4.00? In this situation, you can give your $5.00 price a trial period to see if you can sell at the $5.00 price. Or, you may find that the lower ($4.00) price is the price that the majority of your customers are comfortable paying. In that case, you might begin to look for ways to reduce your COG, Labor, or Overhead to help you earn more profit from your Christmas Ornament while you reduce the price to what the market will bear.

Wednesday, September 22, 2010

Cashing In On Your Creativity: Turning a Hobby into Income Day 3

Cashing In On Your Creativity: Turning a Hobby into Income

By: Maria Nerius, Resident Craft Expert

In today’s economy every little bit helps and selling your crafts might be a way for you to earn some extra income from your creative passion. The first step is deciding just how much time you have available to craft and create an inventory to sell, then you’ll need to take a few steps into turning your hobby into a business. You have many options and can create your own schedule.

Some people earn what we call pocket money from their crafts. They make 3-5 items and can easily give these crafts to friends as gifts or sell these crafts for income. If you are going to devote a quarter or less of your free time to creating crafts to sell and you plan to just sell to friends or a few community craft shows, you don’t need to take many business steps as you are still considered a hobbyist by most local, state, and federal governments.

You do need to contact your local government for any rules that cover selling handmade crafts. Your city, township, or country may or may not have regulations you need to follow. For example my city asks that you not sell out of your home if it is going to create a traffic problem for your neighbors. You also need to contact your state government to see if you need to collect state sales tax on any craft items you sell. In the state of Florida for example you are expected to collect sales tax on any item you sell.

Don’t be intimidated! It’s just a quick phone call and each government agency will have the information you need. City and state regulations vary, there is no set standard so it’s important you do your regional homework.

If you’ve decided that you want to seriously earn some income from your crafts, you’ll need to understand that you’ll need some inventory (ready to sell items) and avenues to sell these crafts. To work part time or full time as a professional crafter you will have to take your business seriously. The biggest mistake most potential professional crafters have is not making a business plan and not keeping the records needed as a business. Your hobby has become a business and needs to be treated as a business.

You need to keep records of all your expenses, time, labor, and overhead. Again, don’t be intimated by the paperwork. Keep an accounting journal and your receipts. Keep a time card. Working part or full time also means you’ll be introduced to the Schedule C when you go to do your tax return for Uncle Sam. You can pick one up at your local IRS office or download the form. Look this form over carefully and note all the records you’ll be responsible for as a small business owner.

You’ll also need to contact your local and state government to notify each of your business. Some cities and states have few rules and regulations for home businesses, but others have rather complex ones that you need to be aware of. Most hobbyist who turn their hobbies into business work as home businesses, but you do have the option to rent space for your work. This is a personal decision, but I recommend that you start as a home based business and as you grow you may wish to move your business out of the home.

I’ve given you the basics. I’m going to be honest and tell you that some of the business aspects of earning an income from your creativity can seem boring and tedious, but you must be aware of your business responsibilities to be successful. Spend some time thinking about what you want out of your creative business including time spent creating, marketing, displaying, and selling your crafts.

Write down what you want to accomplish on a weekly, monthly and yearly basis, this is your business plan. You’ll be investing your time, energy, and in the beginning you are spending your own money to purchase supplies. As your business grows, you can pay yourself back and then reinvest in your business. Write these numbers down and review them often.

I’ve successfully made a great living from my creativity for 25 years now. I started as a professional crafter selling my handmade dolls at outdoor arts and crafts shows and expanded to become a craft professional who has published articles, books, and made hundreds of TV appearances. This leads me to the discussion of all the creative options accessible to you as a passionate crafter!

Tuesday, September 21, 2010

Cashing In On Your Creativity Day 2

Cashing In On Your Creativity: Get Your Designs Published

By: Maria Nerius, Resident Craft Expert

One of the ways to cash in on your creativity is to sell your finished craft items, but you can also earn income by selling the instructions to the crafts you make. The first rule of trying to sell a design for publication is that the design must be original to you. You had to create it on your own and with your own hands. You can’t sell a design that you created from another published designer or a design that you modified by changing the size, color, or adding a different embellishment. This means your design for sale to a publisher is original and never been published before.

Many crafters
learn a technique or craft by first using a published design in a kit, magazine, book, or on the web, but as skills increase the crafter goes on to create original pieces. You can sell the instructions to your original crafts to product manufacturers, magazine publishers, book publishers, online publications, and kit manufacturers.

Let’s start with magazines. Every magazine has a set of writer guidelines available upon request or to view on the web. These guidelines let you know what is expected of you as a designer submitting original work for publication. Usually a query is requested. You’ll send a photo plus brief description of the design to the magazine editor. In the old days this had to be done by U.S. Mail, but today magazines often take queries by e-mail. Make sure the image/photo is crisp and clear and your description should include your complete contact information, colors, materials, finished size and skill level needed.

One of the best ways to start is to pick a magazine you enjoy
reading. Most likely your design work will be complimentary to the magazine. You don’t want to send a quick and easy floral arrangement to a quilting magazine. It’s important that the design you want to sell will fit into the magazine’s format and style. Write the editor for Writer Guidelines or visit the magazine’s website.

Fees for designs vary. An average fee for general crafting would be in the $100-$450 fee range. If your design is accepted you’ll get a contract that should state the fee that will be paid for the design. Read the contract carefully and if you have any questions you should ask the editor. Some contracts state
first rights (publication has first rights to publish the design, then rights go back to the designer) while some contracts state all rights (design in any application belongs to the publisher). Understand that a contract is a legal obligation for you to submit a design with instructions to the publisher by a stated deadline.

You’ll be expected to write the instructions for your design which should include a material list. The material list needs to contain any supplies or materials that are needed to complete the project. Never assume the person who is going to read your instructions will know that scissors or an adhesive is needed. Make your materials list complete! Next you’ll write the step by step instructions to make the design. Take a good look at the magazine’s style. Write your instructions to match this style.

Some magazines request step by step photos for projects. Some magazines want you to provide either the finished sample for photography or to provide project photos. You can e-mail your instructions and photos. Finished samples are sent by mail and most magazines request that you include return postage if you want the finished design sent back to you.
Shipping can be expensive if you work right up to your deadline so think ahead and mail early to save on shipping.

Magazines have editorial calendars. These calendars map out what the magazine is looking for in future issues. Magazines work 6 to 18 months in advance. Request the editorial calendar if you want to create projects for future issues of the magazine. Winter holidays like Christmas are usually welcomed all year round, but other
holiday oriented themes need to be submitted as requested on the editorial calendar which means Mother’s Day submissions may only be taken during the month of October for the next year’s Mother’s Day.

My last word on submitting designs for publication is that you will be given a deadline for your submission. A deadline is a serious part of the publishing world. You can’t send in your work two days after your deadline. If you do you have just messed with the schedules of everyone else involved in that magazine’s publication from the editor to the photography to the art director. Get your work in before the deadline and you’ll earn a good reputation as a designer.

Monday, September 20, 2010

Crafting as a Business ... Day 1 Pricing Basics

Basics of Pricing Your Work

By: Maria Nerius, Resident Craft Expert

If you're making crafts to sell, you want to know how to price your work and what to consider when you price your work. Maria Nerius gives you some things to think about in this Craft Business article.

One of the most difficult tasks you have when you sell your work is putting a price tag on your work. There is no magic formula. Pricing considerations include the amount of labor (your time), cost of goods (supplies used), and your overhead (electricity, phone, rent). These are the basics! You may be thinking that since you work at home you don’t need to include a percentage of your price to cover electricity or rent, but you do. You are a business and need to price like the professionals.

At least once every time you create a design you need to write down every supply used (Cost of Goods/COG) and how much time you spent making it. It’s not the fun part of selling your work, but you need to document details so you can quantify the costs of material and labor. Time is m
oney and as creative people we don’t often realize just how much time an item takes to make. Making one of an item takes more time than if you can create several in an assembly-line method (paint all five at once, then attach the decorations to all once the paint dries, etc.). You’ll need to average your labor between custom orders and “mass” produced items.

The basic formula for pricing is (Cost of Goods + Labor) x Overhead= Price. There are numerous percentages used for Overhead. Overhead can range from 5% to 45%. Note that when companies are tightening their belts or trying to get expenses down they tend to cut Overhead. I advise to streamline your Overhead. Take a good look at your electric bill and rent/mortgage and think about what percentage you feel you are using or you want covered.

Saturday, September 11, 2010

Doily Decoration for the Holidays

Crochet Doily Bowls by handmadeintheusa

"Back in the day" I made these as home decor but I would use my hand crocheted doilies.
Now I have discovered that you can buy inexpensive ones at the Dollar stores or find very nice ones at yard sales or thrift stores. If you want Holiday decorations, choose color ones. These are beautiful for small custard cups, larger serving bowls or as candle holders using votives or candles in a glass container.

So lets begin...

Crochet doily (select size to fit custard cup, bowl or glass candle holder)
Glass custard cup, bowl or glass candle holder
Waxed paper
Plastic wrap
Plastic bag
Aleene’s Fabric Stiffener™ or Liquid StarchRubber band (to fit around custard cup or bowl)

Place waxed paper on work surface. Turn cup or bowl upside down and cover with plastic warp.

Pour stiffener or liquid starch into plastic bag. Place doily in bag and squeeze bag to saturate doily. Remove doily, squeezing out excess stiffener as you remove from bag.

Place doily over inverted cup and stretch to form and shape evenly. Place rubber band around top of cup to form crisp folded edge.
(This will create the rim of the bowl.) Allow to dry overnight. Remove from bowl and discard plastic wrap.