Covering costs - what number are you using?

[The Efficacious Gentleman]

A general question, as it can relate to both markets and online sales. When people say 'I made x times my booth fee' or 'I only have to sell x bars of soap to cover the cost of my online shop' what figure are people going on? Do you compare the total sales or the profit from those sales?

So if a market costs you $50, if you take $100 do you consider that making double your fee? Or do you look at the profit from your takings (maybe $50) and say that you broke even?

What about your time spent at the market, too?

I'm not a market person and I plan on only doing them occasionally, but it is something I see spoken about and wonder how people look at it.

 

[Dorymae]

If I were to use that example I personally would compare net sales although I have a feeling most people use gross sales. The reason I don't use 4xbooth fee or whatever is because it does not encompass all aspects.

The market could be a bad choice and you could be losing money making 4x the fee. Alternately it could be a great choice even if you only make 2x the booth fee. There is too much to consider, including the advertising and exposer the market gives your company.

I have a feeling that people say 4x the booth fee to give the impression that a market did well.

A recent market I did last week had a fee of $15. In gross sales I took in $182. Net sales were approx $130 for 6 hours work (including driving time and set up and break down). This was an okay market considering the exposer I received. Not fabulous but much more than 4x fee.

 

[The Efficacious Gentleman]

That is the one reason I would do markets - as loss-leading marketing investments. If I make actual money from it, after all costs (my time included) are covered, all the better, but it wouldn't be the focus.

 

[Dorymae]

That is the one reason I would do markets - as loss-leading marketing investments. If I make actual money from it, after all costs (my time included) are covered, all the better, but it wouldn't be the focus.

I edited to give you an actual cost breakdown of an actual market. Hope it helps.

 

[The Efficacious Gentleman]

But the sales also includes the costs of the product. How much profit did you make ( not asking you to say directly, just a rhetorical question) from the $180 taking out the bar costs, and then the market costs?

 

[pamielynn]

That is always an interesting comment (made 4x my market fee!), especially from newbies It's certainly awesome to cover your fee for a show, but, we recently had a new soaper show up at our weekly farmers market and she happily announced that she made 5x her market fee. Well, great... but the fee is only $10! I would be supremely pissed if I only grossed $50 on a market day, as I have to get up at 4am for this market.

My mom likes to call and ask how I did at a weekly market (there's a lot going on with that question, but I'll spare the details) and gets excited when I say "Oh, we did $600 in sales". But then I have to remind her that I didn't actually make $600 in PROFIT. I think she thinks that I get to go out and spend $600 each week, after market, and doesn't understand why I don't "take home" $600.
Sigh....

(edited for grammatical errors.. the ones I found, anyway)

 

[shunt2011]

Exactly, there is a big difference in profit and sales. I don't think folks are taking all that into consideration when they say 10X or 50X their fee. You have to take into account the cost of the product, packaging, time etc.... then you can cry. Fortunately I do my markets and show primarily for the fun of it. I have no visions of getting rich by any means. But, it does make a small bit of money at the end of the year so I'm not complaining. Now I just need to get my spending under control. I'd make more money if I could do that. :crazy:

 

[pamielynn]

"... then you can cry" hahahaha! Right?

Markets make good money for me and it's how I got my name out locally. I don't enjoy getting up in the dark of early morning, but it's worth it for me. Spending.... now THAT'S a real problem

 

[Muskette]

I use "10x booth fee" as a way of standardizing how busy/successful a show is for comparison purposes when considering other shows, not as a way to determine how many dollars in sales or profit was made. Basically, it puts the sales volume in context with the fees paid, in a way that's measurable and comparable. While it's true there is a big difference in sales vs. profit, there is also a big difference in booth fees from show to show. A big show with high attendance will generally cost more than a small farmers market, so saying I made $1000 in sales at show x, or I made $150 in profit at show y, is really not any clearer, as the booth may have cost $10 or $100, and it could have been a 4 hour show or a two-day show.. When it comes time to determine how financially successful a show is, I use actual numbers and calculate my profits, then divide by how many hours the show "cost" me, including the time to make the soap and travel time.

 

[DeeAnna]

"...loss-leading marketing investments..."

When I was doing fairs and shows (as part of what I do in my day job, not soap), I also viewed it as a marketing tool. And to a modest extent, I think it worked.

But I have to tell ya, when I set up for the 3rd or 4th or 5th time at a given show and was pretty sure as I set up that I probably wouldn't even come close to breaking even on expenses, it was hard to view the event as a success on any level. I eventually came to the conclusion that an event in which sales are poor is not even a good marketing tool -- I'm most likely presenting to the wrong crowd.

And I do look at net sales, not gross income, as well as the value of my time when deciding what is break even. I have never viewed success as "I made X times my booth fee".

That said, I know markets have their ups and downs and sometimes it takes some time for buyers to become familiar with a business, so a person has to take a bit of a long view about the matter.

 

[SplendorSoaps]

Personally, I find that a more useful calculation for me is profit percentage over X times booth fee. Again, this is just a personal preference.

For example, at a recent show I did $332 gross sales. The cost of goods sold (including my time to create them) was $92.21, with a booth fee of $50. So after expenses (COGS + Booth Fee), my profit was $189.79, or about 57% of sales. For me, I feel like anything over 50% profit is generally a good show using this formula. Of course, this does not take into account paying myself an hourly wage for the 5 or so hours of my time that I spent at the actual event. It does however, take into account time spent making the products, packaging, etc. If I used this example and paid myself $10/hour for the event, I'd only be at 42% profit, which I'd still say made for an okay show.

Can you tell that I love geeking out on accounting.

ETA: As another poster pointed out, events like these have a marketing component to them as well, which is difficult to quantify. I know that I've made many repeat customers by doing a regular farmers market.

 

[Dorymae]

But the sales also includes the costs of the product. How much profit did you make ( not asking you to say directly, just a rhetorical question) from the $180 taking out the bar costs, and then the market costs?

130 is the net sales. 182 was the gross. product cost was about 35 and booth was 15. i should note, i sell more bath products than soap.

 

[cmzaha]

Unfortunately I have more than one market that are real money losers, but attend to support the market owners. Last night I sold $15 which consisted on 2 rubber duckies and 2 vendor priced soaps. Yeah, we won't even talk about the 6 hrs my hubby and I were both there. Now that folks is a real money loser, even without a booth fee, and I do not have to do an accounting spreadsheet to know that one. When I was or when I have to pay booth fees I am always when I at least cover booth cost, here some are upwards of $75 for just the weekly markets, then I always hope I can start making product costs. Does not happen often here anymore competition is to high and people are not buying at the markets. All my vendor friends, including food vendors, tell me all their markets are extremely slow this year.

 

[The Efficacious Gentleman]

130 is the net sales. 182 was the gross. product cost was about 35 and booth was 15. i should note, i sell more bath products than soap.

Ah, okay, I thought you might have meant that, but to me Net Sales is not the same as Net Income, so I didn't want to assume.

 

[Dorymae]

Can you tell that I love geeking out on accounting.
.

I do too but I suspect it is because I was a bookkeeper for 20+ years!