profit Archives - Page 2 of 2

How to make more money (with math)

One of the most-asked about topics in my inbox is money: what to charge, how to make more, how to thrive.

Last week in my free Q+A, Beth asked:

“How do I increase my rate of pay? How do I make more for every hour I work?”

The simple answer is: You change your numbers. Usually, you change your prices. Or it might be that you need to change your expenses. Or you change your efficiency.
You see, there's no easy answer I can give you…but it's very simple to find your own answer.

Do the Math

It's that simple: To make more money, do the pricing math.

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The math will show you how much your item costs, how much you can charge for it, and how many you need to sell in order to be profitable and in order to make what you want to make.

Instead, I talk to many makers who have set their prices randomly. They change their prices willy-nilly. They base it on other people, “the market,” or what a stranger said to them one time. They exclaim, “I couldn't charge a fair price for all this!” They feel frustrated and confused, because they're just guessing.

So stop guessing. Do the math.

The math is not that hard, and I've collected all of it for you in one place: Pricing 101. I've totally refreshed this popular class with 2 recorded audio lessons: the first with 3 equations for finding your right price and the second on how to actually get the price you deserve.

The class is only available in two places: As a bonus to Pay Yourself, and in the Starship Library.
Why? Because knowing the right price isn't enough. You absolutely need to set your price…but then you need to test it in the real world of your business. You need to know your Break-Even point, your production capacity, and your monetary goals. And that's what you'll do in Pay Yourself.

So grab Pricing 101 (2 hour-long audio lessons + transcripts + apply-it-yourself worksheets) with Pay Yourself right here.

Why selling more might be a bad thing

This is one of the trickiest things to grasp, but one of the easiest things to fix, in most of the crafty businesses I work with:

Selling more products doesn't necessarily equal making more money.

I think most of you know this, somewhere … but it's so counter-intuitive to how the rest of our monetary world works. At a job, if you work more hours, you make more money. At the store, if you buy more products, you spend more money. But in your small biz, it's possible that having more sales does not create an increase in profit.
And while you know that, have you done the math to really work it out? Have you figured out what your break-even point is – and if you're close to it? Not just for a usual month in your business, but for each craft show and wholesale order?

I'm guessing … not, because I know I didn't when I first started my business. Heck, I even quit my day job and did shows around the country before I really figured out all the ins and outs of my profit margin.

It's easy to skip this because it's easy to sucked into the simplicity of what a zillion articles tell us: more sales = better. When that (more sales) becomes your goal, it's easy to forget all about profit margins and expenses and do whatever it takes to sell more products. You make shipping free, you discount heavily, you throw in extras and specials and fanciness. And you sell a big pile of products – but you don't have any money.

This frustration, from successful sellers, is something I've been hearing for the last three years. But honestly, I resisted doing anything more than having deep (somewhat uncomfortable) conversations in the Starship. Because I'm not accountant. and I don't like math. And I still haven't figured out how to pay my estimated quarterly taxes in a way that doesn't leave me with a big tax bill at the end of the year (because I do make a profit, which means I do owe taxes!).

But the more I've talked about this over the last year, with online and traditional crafters, the more I've come to realize that this is exactly why I need to talk about it. Because if I – math-avoiding, mistake-making, bold explorer – figured it out but I don't talk about it, we might just keep going on thinking that more sales = better, and that only math-geniuses, accountants and non-creatives have to do the work of finding out what makes their business profitable.

And that's dis-empowering and discouraging. If I figured it out, then you can too.

We – artists, writers, makers, and designers – we deserve to live comfortably with our work. We are capable and smart and can figure this out, if only we know where to start.

So that's what we're going to do in Pay Yourself. We're going to find your numbers: the profit of each product and the profit/expense of your entire business. And then we'll use those numbers to make good decisions in the future.

In the last year of teaching this class online and in person, I've seen this material transform businesses. From a full-time artist who changed the galleries she works with to a yarn-maker who shifted her focus, to a maker who cut back on craft shows in order to do more wholesaling (and found more profit). I was convinced by their successes to offer this live online again and to make it even better – to reshoot all the videos, update the worksheets, and offer it in a self-paced e-course.

The class is now available as a self-paced e-course – every lesson will be delivered to you, when you're ready for it. You can read more about the class and register for it here: https://taraswiger.com/product/pay/.

How to have a profitable business, Step 1

When I quit my dayjob to make yarn full-time, I had worked for months towards an income goal. But then, life fell apart. In one month, my car caught fire, my husband lost his (only-part-time-anyhow) job, and my house was broken into (yep, everything electronic was stolen. Thank goodness they didn't know how valuable my little wooden spinning wheel is!)

Since that inauspicious start, my creativity has been my ticket to paying bills, traveling the country, going to movies and generally living life. In the beginning, I didn't know what to do except: SCRAMBLE. And, to be honest, sometimes it's still a scramble.

But I make it work.
I take my family to a hotel + fancy dinner + the Chocolate Lounge for Mom's birthday. I take a week off to be in San Diego after teaching at TNNA. I get stuck overnight in an airport and can afford to get a hotel room at the last minute. I drive 3 hours and get a hotel to visit my husband's grandpa before he dies, then the next week for the funeral…then the next week for Thanksgiving.

These aren't glamorous rolling-in-the-dough stories. But this is real life.
I'm a 31-year-old married French major who likes to watch movies in a sofa cinema and can't bear “office casual”.
I bring home the puppy chow from my ideas and my words and my hands.

And in the nearly 5 years of doing this full-time, I've learned how do it, and do it with some ease.

And so, I think long and hard before I answer a question like the one Laura asked: “How do you create the income of your dreams when creating the products by hand?”

The answer is GINORMOUS.

But it's also kinda small: Profit.

Everything you sell, every project you work on, and every opportunity you jump on must be profitable for your overall business to be profitable.

But doing that! It involves…math, my dear friends.
And it involves bold honesty. We tend to avoid the things we're not-so-comfortable with, so I created a class that walks you through all of it. From individual product profit-testing, to the things that keep your whole business paying you. It's the systems I use (and that I've helped other crafters in the Starship use) to launch new products, find new income streams, and pay the bills.

In the meantime, I can begin to answer Laura's question, with the very first step of profitability: Knowing your numbers.

Watch the below video to learn about your numbers and what they teach you:

(I made this video last year. Pay Yourself has newer, better quality videos – watch a sample here.)

Once you know your numbers, it's time to learn from them + to Pay Yourself.

Let’s explore profit

Money. Profit. Pricing.

These are some of the hardest things to talk about in our businesses (and lives!), for a many reasons: because of our culture and its messages, because we might use it as a measure of our self-worth (and thus, it becomes a tool of self-doubt), and because it is so easy to get lost in the Comparison Game.

This is exactly why we should explore it. Not just explore the ideas of profitability or making money – but explore your actual, real-life numbers, no matter what they are.

You see, in my work with creatives I find two things that routinely get in the way of their doing what they want to do:

They don't have a plan, they don't know exactly where they want to go. (Which is why I created this.)
They don't know where they are, they don't know their actual numbers. (Which is why I created this.)

If you want to go somewhere else, you have to know where you are right now.
If you want to make more money, you need to know what your money is doing right now. You need to know your expenses, your profit margin, your minimum break-even point and your most profitable products.
With this knowledge, you can grow, build, and expand. You can spend your time on what works and stop doing what doesn't.

But this doesn't have to be hard or stressful or self-flagellating. We can pull out these numbers, run a little math, and then learn the lessons. We can explore instead of hoping, comparing, or grasping.

If you'd like to join me in this exploration, it's time to learn how to Pay Yourself.

Image by Lacey Atkinson

Get comfortable, be an explorer

beanexplorer

We've been talking about money lately. And money-talk can be…uncomfortable. Talking about hard times, slow learning and real numbers opens yourself up to judgement…even if it's just from yourself.
And that's why it's so important to be an explorer.

Before we get into your numbers and profit, let's talk more about exploring and how it can help us get in the right space to do this work:

This exploring is what we'll be doing in PayYourself. If you're ready to explore your profit margins and build on what's working, join us here. (Class starts on Monday, and that's the last day you can join. No, I won't be holding it again.)

What are you exploring now? What could use some gentle curiosity?

A messy path to profitability

Last week I shared a bit of my story, of what it was like to have to figure out how to pay myself once I quit my dayjob. But I left out the messy middle. The part where I had to take apart my whole system of profit and look at it piece by piece.

When I first started selling yarn, I did what most of us do, I looked around and priced my work according to what else was out there. But it soon became clear that I could barely afford the skein of yarn I was dyeing at that price. I had to buy in bulk, at wholesale prices in order to have ANY kind of margin.

But then, I had to look beyond the expense of that particular skein (also called Cost of Goods Sold) into my overhead: paper, ink, dyes, time, and figure out how that was going to get covered.

And when I get to this part of a conversation with a maker, I usually get two reactions:

But I can only raise my price so much!

True.

But I can only reduce my expenses so much!

Also true.

And this is where the exploring breaks down, because you just know there's nothing else you can do so you better stop looking at it before you discover something really awful (maybe you shouldn't have a business, maybe you'll never be a success, maybe this is crazy).

Honey, I know. I know that looking at these numbers brings up all kinds of panic. And I know that you're afraid that there's nothing you can do to make it work. I know because when I got to this point of my numbers-crunching I freaked out. I wanted to stop looking and just hope that the math would magically resolve itself if I just worked harder.

But it didn't. (And I gave that magic solution a good long time to show up.) What did resolve it was looking at other options. Revisiting the numbers and figuring out what else it told me. Just like with your marketing: explore what has worked and build from there.

So now I also know that there are lots of things you can do to make it work. You can introduce a new product, you can try a new income stream, you can shift your focus a bit.

There are a zillion things you can do to make it work, and none of them involve giving up.

These zillion things are what we're going to explore in Pay Yourself. We'll find out what's not working, sure, but then we'll focus on what is working and build more profit from there.

What has your path to profitability been like? What have you learned? What are you afraid to look at?

The first step towards a profitable business

First Steps toward a profitable business

When I quit my dayjob to make yarn full-time, I had worked for months towards an income goal. But then, life fell apart. In one month, my car caught fire, my husband lost his (only-part-time-anyhow) job, and my house was broken into (yep, everything electronic was stolen. Thank goodness they didn't how valuable my little wooden spinning wheel is!)

Since that inauspicious start, my creativity has been my ticket to paying bills, traveling the country, going to movies and generally living life. In the beginning, I didn't know what to do except: SCRAMBLE. And, to be honest, sometimes it's still a scramble.

But I make it work.
I take my family to a hotel + fancy dinner + the Chocolate Lounge for Mom's birthday. I take a week off to be in San Diego for my Dad's birthday party. {This was the year both parents turned 50. It was a big deal. But don't mention it to them!} I get stuck overnight in an airport and can afford to get a hotel room at the last minute. I drive 3 hours and get a hotel to visit my husband's grandpa before he dies, then the next week for the funeral…then the next week for Thanksgiving.

These aren't glamorous rolling-in-the-dough stories. But this is real life.
I'm a 30-year-old married French major who likes to eat at Plant at least once a month, and can't bear “office casual”.
I bring home the puppy chow from my ideas and my words and my hands.

And in the nearly 4 years of doing this full-time, I've learned how do it, and do it with some ease.

And so, I think long and hard before I answer a question like the one Laura asked: “How do you create the income of your dreams when creating the products by hand?”

The answer is GINORMOUS.

But it's also kinda small: Profit.

Everything you sell, every project you work on, and every new “opportunity” you jump on must be profitable for your overall business to be profitable.

But doing that! It involves…math, my dear friends.
And it involves bold honesty. And we tend to avoid the things we're not-so-comfortable with. So I created a class that walks you through all of it. From individual product profit-testing, to the things that keep your whole business paying you. It's the systems I use (and that I've helped other crafters in the Starship use) to launch new products, find new income streams, and pay the bills.

The class is Pay Yourself, and you can register for it here.

But in the meantime, I can begin to answer Laura's question in today's video, with the very first step of profitability: Knowing your numbers.

Once you know your numbers, it's time to Pay Yourself.

Got a question? Ask me!
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