I'm a teacher first, not a business person. I'm also more into language arts than math but even I could tell something was wrong with my bank account.
My sales continued to double. My revenues were up like crazy on every platform I sell - but my bank account remained the same. It's like the money was dissolving into the digital universe!
What I realized felt like a punch in the gut: I was not profitable. Every sale that came in barely covered the expense to make the item and ship it. I had been working essentially for free since, well - the beginning of my business.
To put it even more bluntly, at my current prices, I could sell ZERO wooden cutouts in 2020 and possible show a greater profit at the end of the year. OUCH!!!
Just thinking about it makes me cringe. It was a finally a no-brainer to raise my prices.
So, because i love sharing my failures and my successes with you, I want to share the TWO revelations I've had when it comes to raising prices.
The first sign:
You get so busy you are overwhelmed. You may feel frustrated with your lack of time and ability to find "balance" between work and family. You may start to resent the orders that come in because it takes you to that place of frustration. It's time to raise your prices.
The second sign:
Your sales numbers and your revenue numbers grow, but your bank account does not. Ideally, you could do a price analysis on everything you sell. The bottom line is: if you do not have at least a 50% gross profit margin on your products or services, you are facing inevitable burnout and no profits. It's time to raise your prices.
Once you've come to terms with both of these realities, your ego may take a hit. If you've been experiencing sales growth and expect to hear the "cha-ching" of the cash register from your Etsy sales and now it is silent - you may feel some fear or worry.
But remember: sales that don't make you money are NOT better than no sales at all. Focus on what is in your control (amazing customer service, building your digital infrastructure, etc.) and look for new opportunities to grow your business in a HEALTHY, profitable way.
What's your thoughts? Are you sure you are profitable? Email me at firstname.lastname@example.org and let me know! I'm always happy to lend an ear :)