Where is the Profit?
Does anyone else think of Jerry Maguire when we talk about money?
The thing is we start these businesses to make money, otherwise you would call them a hobby and I love hobbies, but I started my business because I wanted to contribute to my household and alleviate some of the burden of being the sole provider on my husband. Plus, I like to buy books, art supplies and sweater vests without reason… so I wanted to start by covering my own obsessions, lol.
Let's get to it. Profit. After you factor in the cost of manufacturing, shipping, packaging and the product itself, you are left with profit. For some products there are great margins, others not so much. Here are 10 points to consider when you are trying to add more profit to your biz. (At the bottom I have highlighted a few profitable products to ponder.)
Audience: I know, this part is really hard starting out, but a great way to fake an audience is to talk to the person you want to sell your products to online. Let's take the example of a custom watercolor house print. This would appeal to new home owners, realtors, and even couples celebrating an anniversary. If you want to sell your prints, think about what other things those people would want to look at online. Make your feed/newsletter stand out with relevant hashtags and information that appeal to your specific audience and soon you will start to cultivate a unique audience to sell to online.
Pricing: The most used profit formula looks like this-
cost of product x 2 = wholesale price
wholesale x 2 = retail price
There are exceptions to this formula. If you look around and you see that people are charging $4 for a sticker- and that seems to be the going price, feel free to offer the same pricing- even if that means you are charging more than 50% increase. This is a great way to find a little bit of extra profit. Keep in mind the cost of paper goods and shipping has increased in the past few years, you don't need to take on that burden.
Limited editions: If you are an artist who can offer limited editions, this could be a fantastic way to find additional profit. By sharing that they are limited editions, you will be creating scarcity and that is a trigger for many buyers.
Upsells and Cross selling: If a customer buys a print, can you upsell a frame? If it is a gift, can you upsell having it wrapped? These are all easy ways to find more profit in something you are already selling. Cross selling is when you create a bundle with additional items you already sell and create a discount. This can be great on the buyers end because they get a discount and in the end you are still making profit.
Customization: Can you make it a custom offer? If so, these are great ways to increase your margins as you are creating something specifically for one person. Customers go crazy for custom pet portraits, monograms and even family portraits. If this is your wheelhouse- go crazy!
Optimize your production costs: The best way to get your cost down is to buy in bulk or wait for a sale on packaging or supplies you use. Every penny adds up, so watch for the sales from companies you purchase from.
Online & Offline presence: People only buy the products they see, so, how can you optimize that? Can you have an Etsy shop and a website? Do you do pop up shops or holiday markets? The more you get in front of different people, the easier it will be to curate an audience that is looking for your product. Selling in person can also be a great way to make more profit as there can be less packaging for shipping and fees overall.
Collaboration: Artists love to collaborate. It is a great way to share audiences and build your following. If you are licensing your artwork that you also use on your own product this can be a great way to tremendously increase your profit margin on one piece of art.
Quality: When you sell a high quality product, you can justify charging more for it. This will also help to create repeat customers, win win!
Subscriptions: Want to find a more consistent revenue stream? Subscriptions could be the answer. Offering a subscription for your products give you a set number of sales each week, month, quarter or year (depending on how often you offer it). Being able to depend on a subscription can take some of the guesswork out how to sell on a daily basis.
After you consider all of the points above, what are the most profitable products?
1. Art prints- amazing margins, pretty low cost to produce, plus you can offer a limited run.
2. Stickers- low cost up front and a great way to test out your artwork
3. Digital products- create it once and offer it for sale. (this is great for art prints or planners)
4. Stationery items- there can be a ton of profit depending on the volume sold
There is always so much to consider with making money and it can make us uncomfortable to talk about it, but I am here to normalize talking about profitable products!