I look at my sales every day and do bookkeeping every month, but a couple of times a year I really dig deep into those numbers and use the info I crunch out of them to help me make some decisions and steer the course of my business.
I don’t usually share a lot of behind-the-scenes businessy info here, but these posts have generated a lot of interest in the past. I know a lot of you run (or hope to run) your own businesses, and I’m happy to share what works for me and some of the info behind how I make my decisions.
So that first graph up there is a look at where my pattern income comes from. I make money from advertising on my videos and the occasional teaching gig or magazine sale – but the vast majority (over 90%) of my income comes from the sale of patterns and supplies in my shop and in my Etsy and Craftsy shops.
So what sells the best?
Quilt patterns account for 22% of my income.
And more than 3/4 of that income comes from just four patterns.
More quilt patterns! I’m planning to release four new quilt patterns this year. I’m working on farm animals right now, and then I have some really fun surprises planned. 🙂
What’s my next biggest segment?
That’s the Cuddle Club, the Party Animals and the new Dress Up Bunch Club. All three of these launched in 2014 (the Dress Up Bunch in December) and they’ve all done very well. BUT – that 19% of my sales number is a little misleading. The Cuddle Club and Party Animals cost me a lot of money to sell. I need to order all the supplies and pay to have them shipped to me, and then it takes me a lot of time to bundle them into kits, pack them and ship them. When it comes to profitability (very different from revenue/income) that top graph actually looks more like this.
Clubs move down into 5th place with just 10% of my profits. (And, incidentally, quilt patterns move up, with 31% of my profits.)
Ten percent is nothing to sneeze at – and I really love these kits – so they’re definitely going to continue. But. . .
Digital patterns are more profitable than kits. That doesn’t mean I’m going to stop selling kits. I really get a lot of joy out of packing them up. And as someone who lives in a remote area nowhere near any kind of craft store, I’m really committed to offering my customers access to the exact same high-quality materials I use in my own work. But I need to figure out a way to offer pattern-only membership in the clubs to people who don’t want or need the materials. I think I’d get a lot of new sign-ups that way! This is especially important for those who live overseas, because the international shipping charges are killer. I’ve got an idea how I’m going to do this and hope to have it all set up and working by mid-February. So stay tuned! For those of you already in the clubs who want to switch to pattern-only – I’ll have a way to make that switch easy and painless.
Also – The Dress Up Bunch Club was a smart business decision because it’s the predictable income of a club without the cost of materials or the packing and shipping time. Plus it’s going to be loads of fun!
Tools & Supplies
Next up in income (but not in profitability) is Tools and Supplies. This is much the same story as the kits – it’s an expensive category to maintain because I have to buy and store inventory. 11% of my profit comes from the sale of tools and supplies, but it’s not a category I’m actively growing. I sell what I use. I only add something new when I discover something new and wonderful that I think I’ll use all the time.
They account for 15% of my sales, and 21% of my profits.
The quilt patterns are easy to break down – a lot of sales come from a few very popular patterns. In the softies category I have a lot more patterns – and a lot more favorites. So to get a better handle on these sales, I broke it down again by type of softie pattern.
The Cuddle Style softies are the ones built like Franklin the Fat Cat and Bertie Bunny – very fat and huggable and fun. There are a lot of them, and they’re the bestsellers of the bunch.
The Dress Up Bunch is the next big category – it includes both the dolls and the clothes.
Creature Camp – my book about making softies – gets its own sliver, followed by Lanky style softies. That’s the new Elliott Elephant and Milton Monkey.
It’s worth noting here that I released only one Lanky pattern last year – in December – and it still managed to capture 2% of my total sales all on its own. I think this is going to be a strong style of softie. And what’s not to like? I love those long, weighted arms and legs!
Here are the bestsellers by name. . .
This is a very different picture than the quilt pattern sales, where over 75% of sales came from just four patterns. Here the top ten patterns account for just over half the sales. I don’t know if one is better than the other.
One other important thing to note here is that this doesn’t include club sales – all of which are softies. I break them out separately because the labor involved with the two is very different, but if I combined them, softie pattern sales and quilt pattern sales would be pretty much tied.
These are all the kits that are not sold as part of a club subscription. They account for 10% of my sales and 7% of my profits. Like the clubs and tools & supplies, I really need to think about the cost of materials and the amount of time spent packing them up – but I love having them and I’m planning to keep adding more.
Holiday kits are clearly the heavy hitters here. Do you think I’ll do the Christmas Club again? You bet! I’m already gathering ideas.
10% of my income and 14% of my profits came from felt pattern sales. This is really what my embroidery patterns have turned into.
Take a look at that Christmas Club again! The kit graph showed people who had bought the materials kit – this is people who bought the digital pattern. In fact – the top three patterns were holiday clubs.
Keep those holiday clubs – and keep them fresh and interesting!
And that’s about it! Embroidery patterns and finished items are in there, but they account for such a tiny % of my sales and profits that I’m not putting any energy into them.
Putting it all together
That’s a lot of info – I know. It takes me a few days to digest it after I crunch all the numbers. But here are a few more thoughts to leave you with. . .
There’s a saying that gets thrown around a lot in the craft business world.
Do what you love. The money will follow.
I hate that expression.
I’m all about doing what you love. My husband and I are living proof that you can absolutely make a living doing what you love.
But I hate the suggestion that the money will just magically appear from somewhere.
It’s a constant balance to make sure that what I’m doing has a market, that I know how to reach that market, and that I price my products properly.
There were a lot of times in this report that I talked about how much I love a particular pattern, or how much fun I have packing up kits – and that’s important. But it’s not the most important thing. Let’s take those kits, for example.
Every time I have a new batch of kits go out I spend several hundred dollars ordering in supplies. Then I obsessively track those orders to make sure they arrive in time for the kits to go out. Depending on the kit I can spend 1-3 days cutting and prepping materials and assembling the kits, and another day printing labels and packing and shipping the kits. That’s all in addition to the time spent developing pattern and making the final sample, taking the step-by-step photos, and writing the pattern.
I love cutting the materials and laying them out in orderly piles. I love packing the eyes and beads and whatever else in tiny little ziplock bags. I love rolling the kits and watching the piles of finished kits grow while the piles of materials dwindle.
By paying close attention to the dollars spent and tracking my time spent, I know that these are not the most profitable items in my shop – but they’re profitable enough for me to keep making them.
Embroidery patterns – on the other hand – were not. Even though they had no material costs or packing time involved, the time spent developing the pattern, stitching up the sample, writing the pattern, and listing it in three shops – was absolutely not profitable. I was actually losing money with every pattern I published.
So I stopped. Of course! Because this is a business, not just me “doing what I love.”
I was able to turn my love of embroidery and hand-sewing into a collection of embroidered felt patterns that are profitable. Not huge – but they’re profitable enough to be a sustainable part of my business.
If you’re doing this as a business and not as a hobby (which – if you’ve read this far – is probably the case) it’s very important to pay attention to the numbers.
For the next couple of months I’m going to be paying a lot more attention to tracking my time – how much time I spend on the different parts of my business. I’ve downloaded an app called TimeSheet to help me, and I’m going to be using that to make sure I’m being accurate on some of the things that are borderline profitable. I’ll report back on what I find!
If you have any other business questions for me – ask away! I’ll be doing a few more behind-the-scenes business posts this year and I’d love to know what kind of info you all are interested in!