Friday, April 6, 2018

Financial Preparedness: Starting A Cottage Industry as a Secondary Stream of Income: Part 3 ... The Cost of Doing Business


In part 1 of this series I shared how I arrived at ‘what to do’ for a cottage industry.
In part 2, I shared how I funded my cottage industry.
In this post, I’m going to share how I’m handling the cost of doing business.
One of the things I was surprised at when starting my little cottage industry was the many options out there to help you get your business up and running.  Another thing I was surprised at was how much each of those options cost.  Yes, everyone wants a piece of the pie or your profits.
Each and every option I looked at charged anywhere from 2.9% plus a fee to 3.5% plus a fee for EVERY transaction.  Add the cost of materials and supplies and you’ve got what you have to have in order to break even, even before you think about paying yourself for doing the work.
In order to keep the final price of each item in my shop down to something that others could afford to purchase I had to look for free ways to do business.  I set up a page on my blog, A Working Pantry, for Pillowcases by Patsi which was free.  I then set up a page on Facebook and used their ‘shop’ feature which can also be set up free.  For handling online payments I chose Paypal which is not free.  They charge 2.9% plus a fee for every transaction.
As Pillowcases by Patsi grows and sales increase, I hope to be able to expand and use some of those options that I researched.  In the meantime, we’ll keep doing what we’re doing, paying as we go, investing back into my little cottage industry and working hard to expand it into a secondary source of income.
This concludes this series on how I’m starting my little cottage industry.  I hope it’s helpful to those who’ve asked.  If you have any further questions, keeping in mind that I’m very much a beginner, feel free to ask.  I’ll do my best to answer your questions.
If you have any tips or words of wisdom to share on starting a cottage industry from home, please feel free to share.  I’m open to any and all advice!
Thank you to all who faithfully share the offerings of Pillowcases by Patsi, I notice and I do so appreciate it!
If you’ve purchased pillowcases, thank you!  You have helped get this little venture off the ground and again, I so appreciate it.  If you were pleased with your purchase would you consider leaving a review in the review section of Pillowcases by Patsi Facebook page?  It would help others feel more confident to order.  
To all who have offered words of encouragement, tips and advice, thank you!  I read and take into consideration each one.
Come follow A Working Pantry on Facebook HERE.
You can also follow me ... on Pinterest!   
patsi
      She looketh well to the ways of her household … Proverbs 31:27


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11 comments:

  1. You have dons so well and I wish you continued success! Everything that I have seen is just lovely.

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  2. You might look into Square or Venmo to accept cc payments. When we did, they had a deal where the first $1000 worth of transactions had no “handling” fee! And taking credit cards online or in person with point of sale readers for our phone or iPad really increased our business! Those point of sale readers are especially great if you do any sort of craft fair!

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    1. Thank you gardenpat! I'll look into it.

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  3. Hi Patsy and I am so happy for you that your cottage industry is going well. It takes time to get established and get stocks but you will get there.

    You are right about the fees and charges that are charged and you pretty much if selling on auction websites such as Etsy or eBay have to add around 15% to you price to cover those fees.

    There used to be a good article on Etsy on how to price the items you make so you make money for yourself. From memory though it was to triple your making costs of materials and add in the fees that you are charged as well. It would be well worth looking at that article on there.

    You are right to keep to the lower cost ways to do business and I am thinking of doing the same with other options we have here such as Gumtree which have free listings and an option of local pick up for customers.

    Keep us all updated on how you are going as I for one would love to know.

    Sewingcreations15.

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    1. Sewingcreations15, I have heard or read that same formula for working out what to charge but if I did that the final cost would be higher than what I'm charging. Deciding what to charge is a most difficult thing to do. Finding that balance of covering cost and making a profit verses keeping the price affordable is not easy! I will continue to share the 'behind the scenes' side of my cottage industry as I go along. Thanks for your sweet encouragement!

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    2. Patsy very true and sometimes the formulas for pricing your goods don't work compared to what the current economic climate is.

      I too like to keep my items affordable and usually check prices of similar items on the auction site I am on, and then go lower so they are more affordable too.

      The way I look at it is if your handmade items are selling they are definitely at the right price point.

      Cheering you on from the sidelines on our cottage industry continued success :) .

      Sewingcreations15.

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  4. Dear Patsy,
    Thank you so much for sharing. I didn't know that about PayPal, but I guess I should have! I think pricing and shipping options/cost have been the most difficult aspects so far with planning things out. I want things to be affordable and fair, but I also know my time has to count for something! I've been figuring up costs for materials and then checking competitors' prices as a guide so see where I fit.
    I hope your cottage industry is a real success! Everything I've seen looks lovely.
    Love, Kelsey

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    1. Kelsey, you hit the nail on the head and thank you for your sweet words of encouragement!

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  5. Hope your business goes well Patsy. You work so hard, you deserve to be sucessful.

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