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By:Peter Ng



This article is the third in a series of four articles that will guide you on how you can start your own crafts business using the four Ps of Marketing -Product, Place, Price and Promotion What are the things you need to consider when pricing your product to ensure that your product is priced well enough to sell and well enough for you and all involved to earn well?

Pricing, as you might have experienced, is something many people struggle with If you've already created your product, you'll know what I mean When I first had to price my products, I checked out some marketing textbooks Replica Wristwatch. They were unfortunately of little use to me, other than telling me there were different ways of pricing the products

What are the 2 challenges of pricing?

1) Pricing at a level that attracts the buyers
2) Pricing at a level that maximizes profits while remaining attractive to the buyers

In certain businesses, the cost-plus method of pricing works very well, meaning you calculate your cost and add a certain percentage of profits However, in the crafts business, this method, while being able to give you reasonable income, may not always be the best

For example, the Harrod's bear and Paddington's bear don't cost much more to produce than a nameless toy bear, but they sell for so much more If you were to simply apply the cost-plus method, can you imagine how much you'd have lost?

The difference here is the perceived value of the item If you can make something look expensive or create something that people want, you can and should charge much higher than the cost In pricing, you will have to look at your packaging and promotion so don't be pressured to price low simply because your material costs were low However, if what you have is not unique then it may not be wise to put a high price tag on your product Your customers may be willing to pay the price at the point of purchase but if they see a similar product selling much cheaper elsewhere, you may lose your credibility and the potential of repeat purchases from them

If your craft item is not entirely new or you're just making a popular item to sell, it's easy to check the market price by visiting a few stores or checking the internet An original product is trickier because it might involve some testing before you get the right price Start by asking a few friends, especially those who share your interest in crafts A better way would be to make a prototype and then take it to your friends and the gift and/or crafts stores and ask them how much they would be willing to pay for it or how much it can sell for You should be able to get a pretty good idea

Whether you want to use the cost-plus method or price at the market price, you'll need to have a very good idea of your cost Failure to do so may result in you losing money instead of profiting from your crafts

Here's a simple checklist to help you work out your cost

1) Material cost

Make sure you list down everything, even things you are able to get for free now because you may have to pay for them later and that will affect your pricing Furthermore, even free things need time and time is money

2) Labour cost

If you're making them yourself, you need to ask yourself how much you're worth per hour then work from there Suppose you make ten of an item in an hour and you want to pay yourself $20 per hour The labour cost of each item would be $2

Remember to include packaging time and even the time you need to travel to the post office

3) Marketing cost

Depending on the sales channels you're using, the cost here will vary Yves Saint Laurent Shoes. If you're selling on the internet, you'll need to factor in your webhosting, domain name, design fees etc If you're selling via catalogs or mail-orders, you must factor in your printing and shipping cost as well

Also, if your product requires you to explain or clarify things on the phone, remember you need to factor in your phone bills and more importantly, the time you'll need to spend on the phone

4) Your Profit

This is an area which many freelancers or work-from-home business people miss It's alright to just earn your income based on your per hour worth but that would be a bad way of running a business We need to remember we're running a business here and we need to treat a business as a business This profit amount will make up for lower sales volume, increase cashflow for purchase of more materials and also fund your expansion If we don't factor this in, we'll forever be stuck with the same pay Even employees get raises right?

After you have included your material and labour cost, you should mark up another 20% to 30% or more as your profit margin However, this only represents the minimum amount that you'll accept for your product The next part will help you determine the cost you'll sell to different parties

5) Distribution Channel Markup

For most product-based businesses, a product typically flows through the distribution channel in this fashion

Manufacturer -> Distributor/Wholesaler -> Retailer

In between them, there may also be agents and if the products are sold to different states or different countries, there may be other local agents/distributors and the chain will get longer and longer

What this means for you as you're pricing your product is you will need to ensure that you keep the retail price competitive and that the various parties get their fair share of profits at the same time

Typically wholesalers will accept a lower markup than retailers because they work with higher volumes and because they need to ensure that the retailers have enough to earn If you're just starting out, you can be your own distributor and go directly to the retailers This allows you to earn more or give a greater markup to your retailers but because you or your staff will need to go to the stores, it will require greater effort on your part

Retailers will as for a minimum of 20% to 30% markup for most products, depending on the products I may be spoiler here but many products are marked up hundreds or thousands of percent In my own store, I only retail products that I have at least 30% to 40% (usually more for craft products) unless the product is so popular that I can sell a lot more to justify the lower markup With a healthy margin, I have some room to do promotions or clearance sales so even if the product doesn't do too well initially, I can do something about it without losing money

It is very important to keep yourself focussed on your core competency and earn from that Some people get greedy and try to do everything themselves and earn from every stage of the distribution channel It may sound attractive but don't forget that to do everything, you will need to do a lot more work and you only have 24 hours a day

To become a wholesaler requires a lot of running around from store to store Retailing requires significant capital to startup If you spend time on these, you will not have time to create your products We all work with limited time so you will need to choose your business focus wisely Ultimately, if you learn the power of leveraging then you will be able to create a company that controls the whole process However, our focus here is about starting a home-based crafts business so that is out of the consideration for now

The whole idea is to do very well in what you focus on and let the experts in the other areas help you succeed in the other areas If you find that you are good in product distribution or retailing instead of craft-making, you might want to focus on those areas and source your products from others

If we are able to implement the win-win thinking in our business, we should be able to at least do ok At the end of the day, business is about making money If your suppliers or distributors or retailers can earn well from your products because they move fast and they have high markup, you can rest assured they will put in that extra effort to promote your products ghd iv styler. Some people try to save a few percent here and there and cut down on others' profits While this might sound logical and prudent, it might work against you in the long-run because your distributors and retailers will gravitate towards whatever is making them the most money If you are in doubt, err in favour of the distributors/retailers without compromising your minimum amount (see part 3 of this checklist) and you won't go wrong

5) Check against the market

Lastly, you should always check your pricing against the market instead of just plucking a figure from the air If it's an existing product, check your price against your competitors to see if your price is competitive You don't have to be lower In fact, try not to be lower because low price often indicates low quality as well Don't compete on price Compete on quality instead You just have to ensure you're not so way off the market price that people would not even consider buying Once you've gone through this thought process, I'm sure you'll be able to come up with a good price

With the internet, it has become much easier to do price research Just go to Ebay, Yahoo, Amazon, Froogle and other price-comparison sites and you will be able to get a good feel of the prices around However, if you are going to sell in retail stores, do go and take a walk to check the prices because there can be a significant gap between the prices at brick-and-mortar retail stores and internet stores

The last thing to note for pricing is that price is dynamic The market is changing all the time and so does the price, especially for trend items Evergreen items can afford to be priced the same for long periods of time because of a slower but steady demand Trend items because of the demand can often start out with a very high price but as demand dwindles the prices will go down as well
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By:karthic karthic



How small business CRM can become the one man army for your small business

Ever heard of a one man army? The one person who single handedly wins a war by completing myriad tasks all alone? Yes, we are talking about the likes of John Rambo and that is exactly what small business CRM can be for your business.

It can kill those small patch applications that you have been relying on in the past to complete various tasks, combine them all into one and bring about a sense of uniformity and automation into the business.

Small business CRM are specially designed for small businesses so if you ever thought that they are going to be too expensive for you or that you cannot adapt to it, then think twice.

Rapid changes

Today, there are enough small businesses also in place that are competing with each other for the top spot.

If you are one of them, then you need to stay a notch ahead of the rest to ensure that you will emerge the winner.

One of the best ways to ensure that you do this is to get a good quality small business CRM.



Tips to find the right small business CRM
? Should easy to install and requires no hardware installation.
? Should be completely easy to use and requires no training.
? Manage all the tasks like payrolls, bills, customer database, demographics etc can be completed with a few simple clicks.

How it will benefit you?

? These powerful business solutions will power you ahead of the rest by improving customer satisfaction and decreasing retention.
? All the common tasks which occupied your time in the past will now be completely automated.
? This will lead to a far more focused and precise business model that works incessantly towards customer satisfaction and wastes minimum time in meager tasks.

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By:Casey Gollan


You know what I find funny?

Most people start a business so they can enjoy the benefits of the 'extra' money and wealth that owning a business can create

Yet many business owners have no idea about understanding their own financial statements And that's where their money is!

To me it's such an irony

And it's something that I definitely rectify with every client I work 1-on-1 with

By the time they've finished with me - they know their financials like the back of their hand鈥?in fact they showing their accountants a thing or two鈥?br />
Over the years I have noticed that most small business owners don't look at or understand their financial statements

This can be for any number of reasons

Maybe your accountant hasn't taken the time to explain it to you

Maybe you don't want to learn them - after all who did understand math's at school, or enjoyed doing it?

In my experience I have found that the typical business owner starts a business because they have the drive and the personality to influence and convince people

And I have found that on most occasions, not all, that type of a personality doesn't enjoy doing paperwork and financials

And that's okay鈥?but to make it as a successful business owner and add another million or so to your business - I suggest that you really become excellent at reading and understanding financial statements

Because the best and wealthiest business owners do

As with any area of your business - you should know what you're doing - but it doesn't mean you have to do it

So employ people to do your financials - but you've got to have the knowledge and the experience to know that the people that you are employing are doing it properly

And this is certainly the case with your businesses and your personal financials

If you don't know how to read and understand them, you'll wind up in big trouble with them at some point in your career鈥?be assured of that

So start now

Don't fall into the trap of LEAVING it to your accountant It's the biggest mistake you can make Replica Watches. You should be doing it WITH your accountant

If you have an accountant now that you started with, the chances are that your business is heading into areas that they are not as competent in Because when you started business - your business was small and you probably weren't making great money So you probably hired a 'lower end' accountant at that time

And that's fine You just need to know because as your business grows this 'lower end - accountant' may not have the skill set to cope with your growth

It's like different levels of sport Soccer Jersey wholesale.

Take for example football

There's local football, inter-district football, state level football, and National Level football

As the level increases - so does the expertise needed by the players, the coaches and the administrators

And so it is with Businesses

It's the same with me

My skill set is excellent with taking $1 million businesses up to $2 to $5 million I can work with businesses that are smaller than that, or that are bigger than that - but I'm perfectly suited to the niche of taking $1 million business to $2 to $5 million

So I concentrate on businesses in that niche

Above this mark, or below it comes a whole new set of skills that I don't particularly want to be involved in

Now back to you鈥?br />
You've got to take an active role in creating your financials

Ideally you should know all your expense categories so that for any payment made in your business you know which category it should go into

And you should know all your allowable tax deductions Like the back of your hand

It's your business, your money and your life - so control them

You should also have up to date and accurate financial statements

Some of these statements you should be looking at daily Some weekly, some monthly Some quarterly

And you should be actively involving your book keeper and your accountant in this analysis So that you're all up to date and focused on growing the business

It's what all top business owners do, and it's what helps them to continue to grow and prosper - so that they can not only grow their business - but enjoy the rewards that only a well controlled and profitable business can provide

On my 1-on-1 Business Coach Program I'll take you through a process that will have your head spinning with how easy it is for you to understand your accounting reports And how easy it will be for you to understand your financial position

I'll also take you through the best ways to work with your accountants so that you are kept up to date and accurate so you know exactly what's going on in your business all of the time

It's such a refreshingly simple 'demystifying' process that all of my clients love once they've learnt it because they really know where every cent of their money goes It gives them more control and understanding of their business

They all realize just how important knowing their financials is for their business growth and success

Know your financials like the back of your hand

Copyright 漏 2006 by Casey Gollan All Rights Reserved


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