Assessing Product Margins, Growing Shop Sales & Brainstorming Launch Strategies
Episode 528: Show Notes
Hello friends! It has been a minute since we have talked about the other businesses we run. We thought it was high time for a little update because Abagail has something new and exciting that she has launched (by the time you hear this it will have been out for a minute). We are going to talk about that but we also think there have been some decisions that we have made very intentionally in our side businesses that we want to break down the logistics behind.
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We share these things with you, first of all, because it is fun to chat about, but it is also fair for you guys to hear this part of the process because it gives you a look behind the curtain of something new and growing. It also shows you the reality of how a lot of entrepreneurs and small business owners are, which is multi-passionate!
Percentage of Sales Kept Using an Affiliate Model Versus Selling a Product
Abagail started her blog Simply Home a few years ago but had to switch things up because her life changed and the previous focus of the business stopped making sense. She changed the content of what was on the blog but still had to change her product to match it. She believes everybody needs to address the question of effort versus return. She had built a six-figure business but what she took home at the end of the day did not add up. This was because she was mostly making money through affiliates but using this model, she could only keep 25% of what she made. She then decided to start Fawn Print Co with her sister where they sell digital prints. This model is far better than affiliates because when you make your own product with your own pricing and keep your costs low, you can keep up to 80% of what you make. We are all about profit at Boss Project but the fact is that when you are starting your own business, you have to think about what percentage of sales you keep!
How Emylee Changed Her Business Model and The Benefits of This
If you are thinking about what the margins of what you sell that you keep are, there are so many different facets to look at. For Emylee, she has made some choices to offer a higher-end product with higher costs but also higher margins. She started her business using polymer clay and resins, making earrings and more, and the way she structured it was by using a sell-out model with a small inventory. The problem with this model is that sales drop dramatically on days that aren’t launches. So Emylee decided to start making charm bracelets using higher-end materials. This meant she could keep the materials with her and if somebody ordered, she could make the product that day and ship it the next. The plus sides of this model were that her average order value went up, she added an extra product to her offering, and she could promote things long term on Pinterest. The majority of her sales still come on restock days, but she has found that her sales in between have picked up too.
Strategic Decisions Abagail is Making To Ask The Prices She Wants
When Abagail thinks about it, she feels like she is starting over, but the truth is that she is just shifting focus. For context, her shop has been open for a month, and she is just a few days away from her launch. She wants to transition into physical products in the future, but for now, she is happy to keep her product digital. She needs constant sales so has to figure out how to keep up that urgency, and has made some strategic decisions for what to avoid so she can keep consistency up. She did not want to put her product on Etsy because to compete in her category, she would have to drop her price. She found that she was able to ask for more if she sold straight from her website. In any case, other people in her niche charge up to $1,500 for a print but offer framing and printing too. As far as the future, Abagail feels she might even get into selling paintings. It is a strange category because you can either go deep or wide but the wider you go, the higher your costs. She is excited because as an influencer, she can appeal to her influencer connections and they can help her sell her product to their audiences.
Permitting Ourselves to Try New Things Based on What Feels Right
Emylee thinks it is funny that Abagail started another business with somebody else when Emylee made a pointed decision to start her business alone. Abagail has always wanted to start a business with her sister so in a way she was fulfilling an old promise. They also make a great team though because Abagail’s sister is a brilliant designer while Abagail has the sales and marketing expertise. For Emylee, the reason she wanted to start a new business alone was so that she could make all the decisions. She still feels she could use some accountability but she and Abagail have a great dynamic where they can give each other honest feedback for each other’s side businesses. Abagail is excited for the long-term impacts of these decisions and knows that even though their businesses are separate, there will be a lot of cross-over. Many of her clients for her other businesses have come through Boss Project in any case. For Abagail, the main takeaway from today’s conversation should be that firstly, listeners should permit themselves to evolve. Doing something new doesn’t invalidate old decisions. Secondly, it is important to remember that if things change in your business, you can’t ignore this question of margins. We need to constantly be checking in with ourselves to see if our margins are worth the time we are putting into our businesses!
Why Abagail and Emylee have Both Chosen to Go Deep Versus Wide
Emylee has framed her decisions as a way of selling more but her choices have also been all about margins. Her charm bracelets take far less time to make so this new model presents her with a margin relating to time saved. They are the closest thing to a mass-produced product Emylee is making. With resin, a lot of adjustments will need to be made to scale up production because of its toxicity and the time it takes to cure. Emylee would have to get more employees to be able to scale up. It’s a question of deep versus wide again because Emylee has gone as deep as possible with her products, and going wider would require learning new things. This also worries her because she feels her customers are attracted to her products due to being handmade. Abagail believes though that if a person designs something, they don’t have to make it too for their audience to still want it. As far as Abagail’s business, the reason she chose to shift into digital prints was to go deep on a product she already had all the knowledge she needed about. As we wrap up, we want to say that we hope this episode was effective as a sounding board and a peek into our minds and the things that we are toying with as we continue to grow and try new things!
Quote This
We talk about profit and all this stuff but when you are talking about building your own business, you really need to think about what percentage of sales you are keeping.
Highlights
Percentage of Sales Kept Using an Affiliate Model Versus Selling a Product. [0:03:45.1]
How Emylee Changed Her Business Model and The Benefits of This. [0:09:29.1]
Strategic Decisions Abagail is Making To Ask The Prices She Wants. [0:15:20.1]
Permitting Ourselves to Try New Things Based on What Feels Right. [0:24:23.1]
Why Abagail and Emylee have Both Chosen to Go Deep Versus Wide. [0:36:15.1]
ON TODAY’S SHOW
Abagail & Emylee
The Strategy Hour Podcast
We help overwhelmed and creative entrepreneurs break down their Oprah-sized dreams to create a functioning command center to tame the chaos of their business. Basically, we think you’re totally bomb diggity, we’re about to uplevel the shiz out of your business.
KEY TOPICS
Margins, Side Businesses, Wide versus deep models, Strategy
