Pricing For Profit from Beth Andrus on Vimeo.
Archive for the ‘Selling’ Category
Thursday, July 22nd, 2010
Pricing For Profit
Thursday, May 20th, 2010
Fear Revisted
Fear Revisted from Beth Andrus on Vimeo.
Tuesday, May 18th, 2010
Who Doesn’t Hate “Sales”?
Selling our services and products in any way, is, at the very least, unpleasant, and for most of us, completely dreadful. But if you own your own business, you are a sales representative for your company 24/7 – even if you have a sales staff. It is a fact of business life.
I recently got an email about a product that actually interested me. I responded, stating my interest and asking the price. I received an email with the information I requested and a suggested date for a live demonstration. I replied that I was unavailable that day, but let’s try for another time. I then received an email saying, “I understand if you feel the setup fee is too high” (it wasn’t), and they thanked me for my time. They heard “no”, instead of “I’d like to know the price” because they were anticipating rejection.
This negative assumption is something you want to avoid at all costs. It will help if you rid yourself of feelings of dread. To do this, you must shift your perspective.
First, build your confidence about what you’re offering. If you’ve gone to the trouble of creating a business around a product or service, you must believe in its value. Take the time to actually list the benefits of this product or service. If you have trouble being specific, start with the problem, or problems, that are solved for your customers.
Once you’ve done this, make a few copies of the list and keep one at your desk, one in your wallet, etc... Read it frequently. This will solidify your belief in what you’re offering, and help you to feel confident.
I also suggest finding a few marketing and sales blogs that resonate with you. There are tricks and tips that you can learn from others that will definitely help. And even if you don’t fall in love with sales, you will at least feel like you kind of, sort of, know what you’re doing.
Wednesday, April 7th, 2010
People Love A Deal
Or to be more accurate, people love to feel like they’re getting a deal. The psychology of this is evident when people spend tons of money at a sale on things that don’t really need, and then describe the experience in terms of how much money they saved, not how much they spent.
Psychologists at the University of Pennsylvania conducted an experiment using loyalty cards. Patrons of a car wash were given one of two different vouchers. Both promised a free car wash after eight visits, but one card had eight blank circles, while the other had ten circles, with the first two already filled in. This card made the customer feel as if they were already ahead, and also made the company seem as if they were generously donating these first two visits.
78% more of the customers who received the ten-circle cards completed the promotional requirements. The two freebies implied they were already on their way to completing the necessary visits, so they immediately felt invested in the process. And they perceived they were getting something for nothing. A similar approach is the buy one – get one free.
If you are truly offering a deal, use this information to help you gain customers for your business. But do not use it to manipulate people into believing they are getting something of value, if they are not. This information can help you make sales, but it is also a cautionary tale. When you have that intense desire to buy something, and feel that if you don’t do it now you’ll actually be losing out, step back. Then take a few deep breaths and really evaluate your potential purchase. If you still want it, get it- if you can afford it. But if you have any doubt, walk away. (How’s that for conflicting messages.)
Tuesday, March 16th, 2010
Lucy & Ethel Start A Business
I was watching I Love Lucy last weekend. It was the episode where Lucy and Ethel go into business selling Lucy’s salad dressing. When they realize they’re losing money on each individual jar, Lucy says “We’ll make it up in volume.” She could not have been more wrong, which makes for a great episode, but our businesses aren't sitcoms.
I am always a bit surprised at the number of people who set up their business and start selling, without having a clear picture of their costs. If you don’t know your costs, you can’t know if you’re making a profit. I know I’ve talked about this before, but let’s review…
Revenue (money that customers pay you)
Direct Costs (everything that goes directly into making your product – setup costs, labels, packaging, any materials used in production, production labor, and anything else needed to produce an item)
Gross Profit (Revenue minus Direct Costs)
The Gross Profit is then used to pay your rent, phone, advertising, employees, yourself etc… Whatever is left is your net profit, so hopefully you have something left.
Now, if you have more than one type of product or design, it’s best to cost out each item separately. That way, you can tell which make money, and which (if any) lose money. Some people lump certain direct costs in with overhead/sales costs. If you do this, you can’t tell which products are profitable.
For example, if you have a graphic tshirt business, complex designs may have an initial setup cost of up to $500, and simple designs might be $100.
If all other direct costs are $4.00 per shirt and you sell the complex design for $9.50, that leaves you with $5.50 per shirt to cover the setup cost. You must sell 91 shirts before making gross profit on that design.
If all other direct costs are $4.00 per shirt and you sell the simple design for $6.50, that leaves you with $2.50 per shirt to cover the setup cost. You must sell 40 shirts before making gross profit on that design.
Because you pay your rent, utilities and yourself with your gross profit, you only want to carry products that earn a gross profit. You make more per shirt with the fancy shirt, but if you only sell 50, you've lost money. If you sell 50 of the other shirt, you're $25 ahead.
I have oversimplified this example, but hopefully you can see how important it is to understand how much it costs to produce your goods. I know accounting and numbers are painful for some of you, but this information will let you know what works and what doesn’t. And only then can you make necessary adjustments to your product line.
Wednesday, March 10th, 2010
Craft Fairs & Art Shows As A Marketing Tool
If you’re just starting your product business, arts & craft shows, gift fairs, etc… are a great way to test the viability of your product. You will get instant valuable feedback, even if that feedback is zero sales. Also, selling at these types of events is a relatively inexpensive way to gain visibility, build a customer base, and promote your online store.
Start at local farmers markets and annual shows in your city, and if you get favorable results, expand your reach. You can get a comprehensive list of these types of events from Craftmaster News. The annual subscription is $48.95 and includes 6 bi-monthly printed issues of the publication, e-mail updates of the latest event information, and online access to their entire database of events (updated daily). And maybe you can split the cost with one or two other business owners, to make it even more affordable.
The list includes arts & crafts shows, street fairs and festivals, county fairs, state fairs, home and garden shows, farmers’ markets, antique & collectible shows, music festivals, car shows, holiday gift fairs, and more. There are two separate lists, one covering the Western U.S. and another for the Eastern U.S.
Once you’re up and running, you need to get the word out about your product. I think this is a good way to go for some businesses. Try a local event first, and if you see some marketing benefits, check out the Craftmaster News list. You have 30 days to cancel, so it’s as low-risk as you’re going to find.
Tuesday, March 2nd, 2010
The 2nd Annual Unique Los Angeles Spring Show
The 2nd Annual Unique Los Angeles Spring Show is scheduled for April 24th & 25th, they are now accepting vendor applications, through March 10th. Unique Los Angeles puts on two-day shopping events twice a year; a spring show and a holiday show. If you’re an independent designer, it’s a great opportunity to display your products.
Unique Los Angeles events have quickly become one of the city’s premier shows for designers and artists. Last December, their holiday event was attended by over 11,000 people. I strongly advise that you apply today.
If you aren’t in Southern California, you could find a way to create our own opportunity. Do a Google search for similar events in your part of the state/country. If you still can’t find anything, you could always pull together your own event. It’s been a long, hard winter. When spring finally arrives, people are going to be ready to get out of the house. A local designer show may be just what they’re looking for. Here are some ideas to help get you started.
Wednesday, January 6th, 2010
Honor Your Customers
I can not emphasize strongly enough how important it is to honor your customers. There are many ways to do this, but they all boil down to respect and “doing unto others”.
Consider what it means when someone buys your product or service. We all earn our money by expending our time and effort. There is a personal aspect to the money we earn, and that frequently gets overlooked. When we buy something it is actually an exchange of our time and effort for someone else’s time and effort. Keep in mind that it is a privilege to have someone as a customer, and honor them.
I will be addressing different “must do’s” over the next few months, but for today:
Keep Your Word
If you promise shipping within 48 hours, ship within 48 hours. If you are inundated with orders (congratulations) and you have to work until 4:00am to ship everything within 48 hours, do it. If you say you will finish a project by a certain date, do it, even if you have to hire help and work around the clock. It may cost you, but the next time your bid will be more accurate.
And if you have a contest, treat the winner with the same amount of respect as a paying customer. The purpose of the contest was to bring attention to your business, and whether it brought the results you expected or not, the winner is entitled to what you promised.
I know there can be circumstances beyond your control. A shipment gets hung up in customs, or your mobile dog washing van breaks down. If something comes up, try your hardest to figure something out. In the words of Tim Gunn, “Make it work.”
If there are no immediate solutions, get on the phone to your clients or customers right away. Do not put them in a position of having to ask you what’s going on. It is your responsibility to come through for them. And whatever you promise on that “I’m so sorry” phone call, whether it’s a new delivery date or a ½ off coupon for their next purchase, make sure you can come through. Your reputation might not recover from two let downs in a row.
I’m writing about this because I had a couple of frustrating experiences during December; one with a huge company and the other with a small company. On one occasion I cancelled my order and will not go back there. On the other, I let the order stand because I need this product and it would take too long to go somewhere else. But I will never do business with this company again.
Don’t risk losing your customers. They’re hard to get, but easy to keep, as long as you treat them with respect.
Tuesday, November 17th, 2009
Indigo Wild And Their Branding Genius
The other day my friend gave me a catalog for Indigo Wild. They make organic goat milk soap, lotions, etc… I love that type of stuff, but didn’t need to get anything. So why, then, did I immediately buy several soaps and a sachet for my closet?
I spent a bit of time really thinking about this, and I realized it was because of their uber successful branding.
When I was only halfway through their catalog, I was clear about who this company is. How did I know? Because of the catalog photos and copy, and the names and descriptions of their products. I connected with the picture that formed in my mind - of a company that is committed to quality products, healthy living, happy work life, respect for all living creatures, having fun, and showing appreciation for others (including their customers). Do I have proof? Not really. But I feel sure of this. And I bought from them because I wanted to be associated with everything that I was picturing.
That, my friends, is branding at its best.
I’ve written several posts about branding (here and here) because I think it is so important. You must get clear on who you are as a company, and consistently communicate those characteristics in all areas of your business. That is how you will connect with your customers.
I love to shop – for things I need and things I like. I am a consumer with (some) money to spend. I am representative of your customers, and my experience is proof that consumers like to identify with, and be defined by, their purchases. Indigo Wild stands out in a very crowded segment of the market because they shout, loudly and clearly, who they are. So take the time to figure out your identity, and then start yelling it from the roof tops. www.indigowild.com
Tuesday, September 15th, 2009
A Different Approach To Retail
Consumers are scaling back on their spending. As a result, boutiques are having a difficult time keeping their doors open. Of course, the more determined and innovative business owners have come up with a solution.
Across the country, more and more brick & mortar retailers are closing up their stores, but not all are shutting down their businesses. Some are hosting occasional weekend or day-long sales, sometimes on their own, and sometimes with other companies. Kasey Buick, of Lola B’s, stages special sales in her 100 year-old farmhouse in Illinois. If you don’t have a cool location like that at your disposal, it would be relatively easy to find a space to borrow or rent for a weekend.
Because there is no longer the overhead associated with renting and operating a shop, items can be priced lower without affecting the profit margin. And because the shop is temporary, customers know if they see something they like, it is now or never. Additionally, customers that do show up are doing so because they’re ready to buy. Because of all of this, sellers may make more on the weekend of a special sale then they would during a couple of months of working in their shop.
These pop-up storefronts offer a flexible schedule and an opportunity for people to test the retail waters. If you are ready to branch out beyond your online store, or ready to crawl out from under the costs of your shop, consider trying this new approach.
If you want to get a group together, make sure all of the products have a similar type of customer. Jewelry, women’s apparel, and organic lotion would go well together. If you group lingerie, perfume and handcrafted furniture, someone is going to lose out. You want to ensure the most sales for all of the participants.
The holidays are almost here, so it’s a perfect time to give it a try. If you’re interested, check out these sites to see how some are already doing this.
