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Vicky_CO

How to appropriately spread out the cost of rent/booth fee and other expenses at the

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This is a monthly series. One of the Mods will post a business question. That question will be stuck to the top of this forum for 1 month. That question will then be moved to a sub forum called what else Business Tips. The title will be changed to reflect the question. This idea came from EvyStar along with a list of questions to ask.


How to appropriately spread out the cost of rent/booth fee and other expenses at the markets and shows?







 

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This is my opinion and only my opinion.

This question seems simple enough but it is really not.

People that make their product and also sell retail are actually running 2 businesses. They should be treated that way for the most part. You have a manufacturing side that makes and sells wholesale to retailers. Then you have your retail side that sells to consumers.

I always spread the cost for the show/retail just in my retail side. Never in manufacturing cost. For me and not for my accountant I have two spread sheets one where I have manufacture cost and wholesale sales one where I have retail cost and retail sales.

For retail I treat myself like my own wholesale customer.

Wow I maybe doing this the hard way.

How are you guys doing this?

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This the method I am currently using at the moment.

Divide your average units sold. Say 15. Stall site fee @$39 divided 15 = $2.60 per unit.

Vicky - so how do you incorporate your market stall fees across your products sold at the markets? I don't completely understand your method.

Thanks!

Evy xx

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I think we are looking at this two different ways. What I think you are saying is that you want to visually see what it cost you to sell each product at one show. Where I was looking more at the whole picture. I was looking more that you have to have 2 different pricing structures one is the manufacturing side and then there is the retail side.

This what I think you are looking for

Local Show example; (I am going general here and not getting too nit picky) 6 hour show with 1 hour set up 1 hour break down.

$100 booth fee

$25 fuel

$10 bags & receipts

$25 display depreciation

$80 wages

$240 show cost

25 8oz candles where sold at this show Cost to sell at was $9.60 plus $4.00 product cost for each candle. I could only charge $8.00 for the candle. So I made $200 but it cost me $340 to be there.

At this show I would have to sell 30 candles to make show cost and 26 candles to make product cost. I would have to sell 56 candles to break even.

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I guess I must be dense this morning...Cold here in Texas. But, I don't understand the reason for the question. As a business, you are either making a profit, or not. We don't do craft shows...too much work for too little money. We mfg many different scented products that we sell mail order, wholesale and in our retail store. We have always kept up with unit costs and base our different pricing tiers on those costs. For completing the IRS schedule C form it is not necessary to breakdown things. Total sales + opening inventory - closing inventory - Cost of Goods sold - all other costs = gross profit before taxes. Please enlighten me, cause seems like a lot of extra work. ??

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I agree David that why I stressed the spread sheet was for myself not the IRS making spread sheet to determine where you are actually making money is a good thing. Say if the actual cost of a show is really worth it or do you need to turn you sales direction elsewhere.

For me this question was about am I really making money at a show or not.

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Guest OldGlory

I'm old school. I will break down costs on ingredients to make my products, but when it comes to a show the math gets pretty simple.

Total gross profit MINUS cost of what I sold MINUS expenses (transportation, lodging, cost of booth/table) = net profit. If you wanted to create a per item profit/loss from there you could.

I have experienced wild variances in show profits and wouldn't even attempt to average them.

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I do a handful of retail shows for publicity reasons or for favors and not neccesarily to make money, although I always do as I choose shows wisely. I line item my booth fees as advertising and its an overall cost of busienss like electric, w/s, insurance, etc. Sometimes shows can vary due to weather /economy so not sure how breaking it down per candle would make any sense, you should look at it year end, but evaluate your shows based on sales whether to do them again or not. Not sure of that makes sense...it does to me :)

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Some great replies here and very different school of thoughts.  After using Vicky's calculations and factoring in an hourly wage for my time whilst at the markets, I have quickly realised that i'm not making much profit at all.  In the past I wasn't factoring in the cost of my time. I know this is not considered best practise, but I guess deep down i knew the answer.  

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I have another question then for the others who have replied those of you who do often do shows/markets and those who only sell wholesale/retail and online.   Do you factor in a weekly wage or some sort of wage, which you included in the 'cost of your item'…?  

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I have another question then for the others who have replied those of you who do often do shows/markets and those who only sell wholesale/retail and online.   Do you factor in a weekly wage or some sort of wage, which you included in the 'cost of your item'…?  

We are suppose to get paid doing this? LOL 

 

Your price structure should include cost, overhead , and profit.  The profit is where your pay should be.  However as we all know, we end up blowing that for more supplies :)

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Whilst researching pricing for profit via the Etsy Blog posts I discovered Megan Augman (http://designinganmba.com) and Tara Gentile (http://www.taragentile.com) - The Art of Earning & Pricing For Profit.  

 

i highly recommend checking out both their websites.  The information is invaluable.  I feel that all my yearning questions have been answered just by reading nearly all of Megan Augman's blog posts.   The information she provides resonates with where I am in this of my crafting ambitions.

 

Also, check out the Recommended Reading blog post by Megan.  

 

xx

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