A Crafter's Guide to Starting a Subscription Business

Lesson 6/21 - Interview with Stacey Trock of FreshStitches

 

A Crafter's Guide to Starting a Subscription Business

 

Lesson Info

Interview with Stacey Trock of FreshStitches

So I wanted to introduce to you my friend stacy truck of fresh stitches she inspired me to start the necklace of the month club and what fresh stitches is you can find it at fresh stitches dot com she makes a meager roomy patterns so little cute little animals and she has a ton of great patterns on her website and lots of great blob posts to on how to do crafty things her subscription idea is her kit clubs so she creates patterns and she gives you all the yarn you need and she packages that all up really nicely and ships it all off to so it's a very nice crafty project for anyone to take on she also teaches some really great craftsy classes so you might be familiar with her you might have seen her before if you take any craftsy classes she is also an author of three really great cochet books that you can buy an amazon but she's done a lot of stuff so I actually want toe bring her on are we ready tow talk to stacey and ask your some really great questions oh hey wait you look good how a...

re you so I know who you are stacey but a lot of us may not know who you are yet why don't you tell us tell us who you tell us who you are tell us fresh stitches and tell us more about your club you give such a good introduction, I have to say anything, neymar s o when I started, so I've been running fresh stitches since two thousand eight, so I actually just had my seventh anniversary this month, and I started just selling the digital products like you mentioned of patterns, so their instructions for people to make a stuffed animal, and along the line, I was thinking, like, why should sell some product? And I began selling kits in my shop, and it was three years ago when I started a subscription club and a friend of one of my friends talked me into it in the yard world. I don't know how many people work with yarn things, but the indy dyer's, who are people who take yarn and diet in there, you know, studios with, you know, neech colors that that kind of subscription model has been really popular and really successful, but there wasn't a way that I knew of to take my patterns and turn that into a regular subscription, kind of beyond just a monthly download thing. I mean, you could have a subscription club that's, just a monthly digital download, so I came up with the idea of having a kid club so it's a pattern for me, it's the yard, it's the eyes, and I also include a goody and so when I started three years ago, I heard you already talking about the two different kinds of subscription models I had an annual sign up so people would sign up in advance they prepaid it was actually six months, but they prepaid and then they received their kids and that was really great from a couple perspectives the prose of course, you know that model are that you have the money up front and you know exactly how many people you're going to get three months down the line when they need you know, when you're sending out the november shipment, you know, it's already this many people and so from a supply point of view it's so much easier to run that kind of club because some things I included my club might take me two months, three months to get from a sub plier so that was really great, but it has the downside that you've just mentioned when you were answering a question off at the end of that period you lose all those people and you can email them again and say, hey, ready to sign up and some of those people convert but it's like a really clear end point, a lot of people's heads all I signed up for that period and you know, maybe I'm not ready to sign up again, so I made the decision to move to a rolling subscription model where they pay every well my home runs every other month but they pay for every cycle and they receive that cycle so it's been running that way for for two and a half years on it's grown beyond what I ever thought was on and actually now it it's become the way a lot of people come to meet me, which wasn't how I originally intended it but a lot of people see the post on instagram or twitter, facebook or hear about it and that's actually there first in camera with me which is completely surprising and not how it really designed the club to start with but you were was it so how would I know? We talked a little bit about this what inspired you to start the kid club? And can you give us a little bit more insider information of how big your club is? Sure, yes, oh my maximum miss six hundred people because that I'm it's just me I don't have a new employee or a contract or anything and that's literally the most I can d'oh so you're probably talking about software methods later on I come within a dozen or two of that maximum because it's hard depending on when someone pays and when someone unsubscribed with the software I use there's always a bit of a lag like someone could unsubscribe the day before payment and I haven't had opening toe, let people sign up so there's, you know, it doesn't always meet that exact maximum, but it's huge. So what inspired me to start it? Well, it was just give it really it was giving my customers something new, so I've been designing patterns for seven years now, and I have a lot of customers who started with me. They make my patterns and it's great, and I'm really known for easy begin our friendly patterns, and so in my shop, I don't want to put out instructions that are more complicated, because that's not shooting my general customer, but I have a small number will not so small now, but I have a number of niche customers who want a more interesting kind of something special product. And so I started the kit club as a way of taking those customers who are really familiar with my product and giving them something more advanced, and so that's, how it got started, and it had a couple benefits, kind of like in the back of my mind that I was thinking about the same time, so one huge benefit of starting the club is it allows me to add more things to my shop, not just in the way so you just mentioned when something because un exclusive, so you could take a item and then put it in your shop, but the other big benefit is if you do wholesale ordering, you'll know that a lot of places have maximums. So it's a great example is last month's kick club, I can tell you, because the secrets out I included some locking stitch markers which or something crucial years use that were hard shake. I couldn't find a u s distributor for them, so I ordered them from japan. The minimum was twenty five hundred dollars. Well, for my normal shop, it's really hard to justify spending twenty five hundred dollars in mean about thousands of these two parker's so but if I may, I knew I had the club and I was guaranteed going to be able to take six hundred of them out. Then all the sudden buying one thousand stitch workers doesn't sound so crazy, so that's been mom has just been a huge, successful way for me to make my shot better because it gives me access to these wholesale suppliers that ordinarily are sort of like, I don't know, andi also also for my to the way my whole system has worked. Now it totally made sense to buy a three hundred dollars postage printer because I'm printing a thousand dollars and posted a month now, and so it's subsidized my business in other ways. That now make the whole rest of my business move a lot more smoothly and obviously that having a consistent source of income because my club is full constantly is really beneficial because the winter's really crow shea time summer not so much so having a more consistent cash flow is really useful to ok, so we just talked a little bit about pricing in this first segment of this course how do you do? Your pricing is I know you do a little bit differently and what what what are the thoughts that you you think about when you yeah, you're pricing so pricing is tom wicket I'll start off by saying I have not raised the price since I started it three years ago, which is super tricky to handle. So when that's also one I've just switched away from patel but that's one thing you need to think about if you're doing papal they don't allow you to increase the price of a subscription and that includes shipping. So when I started and it's gone down now because the dollar is very strong internationally but I had about thirty percent international customers and I estimated of a club shipment would weigh eight ounces I had so the second month I did I when it was still an annual payment the usps raised its post posted trees and people had already paid how much it would cost a ship and I lost money and basically because I had to pay so much to get the shipping out to my international customers, eh? So that's an advantage of the continually subscribing one if you're allowed to raise the prices. So what I did when I started wass I like I wanted them to be the same price is my kids, my regular kits, which is also a controversial decision, because there certainly merit to making this exclusive product mohr expensive than your regular items. On the other hand, people are receiving a complete surprise, and they may not like it, so I figured the best way to get people interested was to make it the same prices my normal kids in order to do that. So I calculated the cost of my materials, which of course is an average because each time they're getting different things, and I have had to make the theatrics size of what they received slightly smaller, because this also includes a goody on day, I'll talk about what a goody is include something specials are reason to be in this club instead of just buying a pattern off of the shelf. And so that cost has to be budgeted in, and so the components of minor, the raw materials for the yarn, printing, the pattern, the packaging and also the time it takes to wind it so the yarn comes to neon cones and I rewind it into smaller balls that's the exact right size you need so I basically sat down wound different ones and I have a formula for this is how much I can afford a product this is how much I can afford paying myself eight dollars an hour tow line things on and I picked that just well, three years ago I was in our sounded okay if I needed to contract it out to someone, then I would feel comfortable saying, oh, I budgeted in that amount of time for winding now so my club and I'm not saying I recommend this hat is exclusive in one of three different kind of ways it would have been clear if I only picked one, but people might receive a goody so like I said, the locking stitch markers, acute paris scissors, whatever some kind of physical thing, it also could be an exclusive pattern, so in that case I spend the time or my hourly wage working on an exclusive new design that's not available to other people and in that case, the goodies a little smaller because I've spent the time doing this other thing also could be a new technique, so I'll make a video tutorial and come up with a new technique that's exclusive to people in the club and also in that case you know, I'm moving around the components of how much you are and they get how much time I spend to optimize it. It does make it kind of unclear to people made sense when I started, because I when I started head of really core group of customers, I knew them all, and they all knew and we signed up like, on I get something special who cares what it is? Yeah, it's special now that people, this is an entry point to hell, they find me they're like, wait, do I get a pair of scissors? Or do I get a video? Wait, does this one have a video so it's a little it could have been done better, but what you get when you just keep going and going and going so yeah, that's, how it runs and that's, they'll get some exclusive content and the price varies bait, and sometimes if I'm packaging something really small and I'm saving the money on shipping, then I can get that money to and spend a little more on a goody so that's it's, sort of a whole ecosystem that I use to price it on dh. As the club has grown bigger, some costs have come down actually so my printing costs have come down, which is great because I used to be printing them at the local corner shop full color, you know and now I shipped them out and that allows me to spend money on well, the price of yard has certainly gone up in the past three years on dh also I can spend more money on the goodies that go in it so that's all part of the equation wow it's a lot of moving parts, right? Some of them it s so your kid club is also a mystery, right? Do you think that that was the right move and how do you communicate that clearly to your customers? It's really hard so like I've been alluding teo the kid club itself has become this thing that I mean people don't even know me sometimes we'll just say, oh, I heard someone talking about the prestigious club and they find my side and it's you know it's on pinterest and so for the customers have come to me that way it's really hard to it explain what is so the photo is some yarn and it says it's a mystery and that's the best way I can convey it because if you show a picture ofthe this one shipment people really do get attached to o it came with a goody with the retail value of six dollars or it came with the whole skein of yard where is that might not be the case all of the time so the landing page I you know I say may do this or this and I'd give some examples but I've been really careful to not, you know, put I don't put any the branding of the kit club on a specific photo of a shipment because I don't want people to think that that's representative of what they're going to get but that is that's the hardest thing and I think if I had to do it again, I would pick one path like say you're going to get a pattern that you've seen before with a really nice goodie, for example, or it's only going to be exclusive patterns and nobody or something like that because it does make it hard to explain to people exactly what they're going to get and I've had it's only been about three cases, but I have had people they get their first shipment, they had really hoped for an exclusive video and they just are really unhappy and they unsubscribed after the first one, where in reality they get an exclusive video every three kinds, but they don't hang around long enough to find out and that's, you know, it's sad I don't want people to think I'm purposefully manipulating them, but it just varies and depending on when you sign up, you're going to get different things. So you also have specific strategies that you used to think about timing and the frequency of your kit club? How did you decide all of that? Yeah, so I the kid club takes an immense amount of time. So it's a full two weeks of winding, packing, shipping sometimes now it's three because I have a little baby at home who requires time so and I also my husband's, a professor so weak and he's also australian, so we go back to australia for a month for christmas. There is no way I could schedule shipping around that time, and I also know I couldn't do it every month. It would just boggle my mind it would take away from my business the rest of the business that I'm running and also the product I don't know to someone wanted him every month, so I decided to do it every other month, and my shipping times basically started with saying I can't ship in december and then they started from his ownership. January, march, may, september, november on dh that's where that really find that the product people are happy to get six times a year it's, sixteen dollars and that's pretty affordable for most people to get six times a year, if you have different kind of products, like if I shipped out stationary supplies, that could be something that's really practical to get every month, but the amount on dh I'm just I'm not just taking something, putting it in the envelope and sending it out. The winding takes so much time that that having it every other month was really just a decision I had to make, ok, but I can also see if it I mean, there are times I think about, like man, this is going really well shut down this tow, the business, you know, and just like so and down subscriptions all the time and that certainly ah, path that other people have done because people love the subscription model they love getting something as a surprise. But like you were saying before, I think having an independent shop is a pretty important part of my business because when something becomes un exclusive or if there's leftovers, then I can put it in my shop and it's it allows me to balance the two pieces sort of better. So for example, theon, I'd buy on cone's. Like I said, while cone is four pounds, maybe with that number of cut it's over, you know, I bought twenty, twenty cones or whatever I might have a pound or two of a color left over just because of how I had to buy it. That's now, something I can use is a product to put my normal shop, so if I have the orange, maybe I'm going to sell more caterpillar patterns next month because caterpillar kids, because I have that orange already supplied, so I like the components moving together the way that they do and that's just the timing that worked for me. Stacy. So before we let you go, do you have any general parting advice? You just want to share with everyone I know your soul of information? Yeah, just so much oh, post it note. So? So the point you were saying before about are you do come out debate? I didn't mess it. I don't necessarily think you need a huge audience, but what I do really believe is that you need an audience that trust u so I think a club is about trust with your customer, so they're giving you money and waiting a month, six weeks who, you know, depending on how your timing works and you're just going to send them whatever you feel like, sending them that's a really strong trust relationship, so I think I do believe you need to have and active following it could be twenty people if those twenty people want to hear or half of those twenty people want that thing that you're making that's great and I think that's enough but I you know, I hang out online and I've seen clubs that just start out with absolutely no following and I don't think it's a customer like so I want to send them a year's worth of money right now like I've never seen any product that they've made and to that point I also recommend if you're starting to plan out the first six months because you want it to go smoothly and starting any new kind this is basically a new business, right? Even if you are already selling product x, the subscription model is basically a business within a business and there's always going to be hiccups I've had times where this supplier was running behind or this thing like recently I had some crazy thing where like, you know, the customs of this thing coming out of ireland got held up and those things happen and you want to give a smile who's experienced your customer now I'm at the point where I have a enough connections and enough extra supply where if a disaster happens I could just fill in with a different pattern a different yarn but in your first six months I really think it's important to have every kind of almost everything, all your ducks in a row so that you can smooth over anything that might happen because it's such a breach of trust if you second month into the club oh, sorry, I don't have any of the stuff and I've taken your money that looks really bad for your business, so I definitely recommend that the and I alluded to this earlier because I have so many things to say that I think you also want to think about how the subscription works in your business funnel. So in my perfect world, what I really like is for customers to become familiar with my patterns, and then once they've done most of the easy one, then step up to the subscription club. Like I said, it doesn't always work that way, and if I started again, maybe I would rethink it, but my subscription club is slightly more difficult patterns, and so you want to have an idea of how your club is going to fit in with the rest of your business and how you wanted to interact and how you want to leave your customers. So if someone came to me, is that heist ese? I'm new to crashing, I wouldn't say join my club, maybe if you have a different kind of club, you would say, you know, that's, the best way to get samples of what I do, join the club for three months and then pick from my store. So I think you want to think about halid. It fits in with your business. Is it an introductory product to your business? Or is it something that's exclusive for long term members to keep them around? So those air just a couple, you know, parting thoughts that I have have any questions for stacy before we let her goal. Yeah, we have one question here. Hi, stacy. I have a question for you. I admire the fact that you do patterns because I needn't cochet, but my brain likes people like you because you have the pattern and I can just do it and have fun. My question, though, is do you see someone selling the finished product is potentially being profitable because I see how you make it so convenient for folks, they have everything they need. They don't have to find the eyes or the right yarn. It's a great idea on dh. I'm just trying to figure out a way with making the finished product. How can it still be profitable with the time involved in what? Not so serious that's a huge it's, a huge question, so I'll say a couple things, um, okay, you so here so one thing is that it's really hard in general to make meeting and crush a profitable for resale, and if you're thinking of that is your business model, you have toe put a lot of movie pieces together. One thing about my club is that I always include one hundred percent full yarn ten is a more expensive yard and then you confined in joan's or michael's or a big box store so I use yard that you would find in a l y e s, which is a local yarn store and people get it they say like it's the nicest yarn they've ever worked with because that's part of what my club is. So from that perspective, if you're going to take this really nice quality armed and then so that the club is sixteen dollars a month, how much are you going to sell us of animal for if you've paid me sixteen dollars and then are going tio resell that it's going to be tough people are in the club because they want the fun of the package and that's kind of what they're paying for. So from that perspective that resells going to be really hard the separate point, though, is can it be profitable to take a pattern and find the yarn through your own sources? Maybe it's purchasing at wholesale, maybe it's purchasing a lower quality yarn? Maybe it's you know making smaller items so that the value of the yard doesn't play into it whatever works that can be profitable but you're probably going to have to source your garden specifically for that business you know usually if you're intending to use something for business purposes the club isn't the cheapest tony called how did you know what I mean because I'm working on giving the members of really valuable experience that isn't quite suited for them reselling it they're welcome teo and people do do that as a way of fueling their hobby money but it's not really a business one question is how do you know question for stacy how do you know when you are ready to start doing subscriptions yeah so one answer is you never know I e you have something you never know until you're like in the thick of it um the other answer is if you I feel confident in your product I think you're ready to start right so you can come up with some ideas for three months in a row you're kind of ready to start I knew that my customers were interested in a product I was offering I had experience selling kits I don't think you necessarily need to have experience selling that specific item I mean may sold necklaces for a heck of a long time before she started the necklace of the month club and the criteria is I have some ideas that will work for this club also really important to you think about like I said how it fits in with the rest of your business if making these exclusive items is all consuming for you either cognitively or physically then can the rest of your business take that hit so I had my business streamlined enough that I could dedicate two whole weeks of packing and processing to the club I wouldn't have been so happy if it meant I never published another pattern or I never put something else new in my shop because I wouldn't be content moving my entire business to a subscription model so it has to do with how much time you have the confidence that you have in your product and you're never going to really know if your customer base is ready but if you have feelers that they're people who would want a little something special from you then that's a good sign that you're ready also you may hear it different ways like a customer is not gonna be like hey I really wish you started a subscription club because I would subscribe but something like one thing that was the trigger to me is someone saying why can't you do x you know so why can't you do this kind of thing and my answer was it wouldn't sell really well in my store but the criteria for selling well in a store in your store and selling well in a subscription club is different because usually your subscription club is a much smaller component than your full store so you're hearing like a man I really wish like may did drinks because I e t drink like then that's a sign like maybe there's a club like the fruity cocktail of the month necklace club totally a really good idea and once you're hearing like the whispers and then why can't you be doing this that's that's a sign to that you're ready and clubs don't have to be big depending on what kind of product you're offering ten people fine I mean the way we price our product it should be with an eye towards making it profitable at any level and so if you produce something and there's no minimum on what you produce so if it's re skating arnor the hand carving stance I don't know whatever you d'oh if you could make it profitable and you only have ten people it doesn't matter I mean most of us don't publish publicly how many people we have there's no pressure to do so because it's only going to grow unless you do like a really bad job and to steal everyone's money it's only going to grow from there and so I think if you can get a couple people together and you have this idea and you know put it out there and if it doesn't sell oh well I mean you made the product and you can then put it in your score big ass what do you use now instead of papal? Can you go into why you changed and for all those payment platforms take a commission for transaction? Do you work that two to three percent fee into your product cost as well? Or do you eat the fee? Yes, I'll answer the second question first because it's short ivan online business I don't have a retail store and I just sort of the two percent is just the cost of doing business for me. S oh yeah, I guess at some level I calculated it in when I started, but now it's just part of paying to keep the lights on to it for me, it's just a operating costs, so the why I switched so I'll say a couple of downsides about paypal it's either. First of all it's easy if you're starting a subscription club, everyone I know basically starts with paypal because it's really easy to make a button when you click you can't increase the price, which is a real downside if you expect to be doing this for the long term. Even if you don't want to increase your profit, the postal service tends to increase their face and your suppliers they're going to increase their price and so that flexibility is really nice toe have another the way that papal works is that when you sign up so let's say I sign up today it will bill you a month from now today there's no flexibility to change the billing day so if you need to order supplies you're counted I mean I'm not going to go into all the details but you're waiting for a certain time period to count all of these sign ups that happened over a long period of time andi also if a payment fails um it only paid that only allows a failed payment happened once before it closes the subscription out and you can't restart it s o I had a lot that was basically my biggest problem actually I had a lot of customers calling me saying why did you cancel my subscription and what had happened was their credit card got stolen and paypal do you know they didn't see the email saying they had to change their payment information and there subscription just got canceled and when you're running a club like mine that has a maximum and fills it's really annoying to people to be kicked out because there isn't space and then I have to say someone took your spot but all find some more supplies somewhere to get you one it just wasn't working for may so what I've switched to now is well commerce so I use will commerce subscriptions shopify also has a subscription plug in I'm not going to pretend it's perfect these moments, every ready tape off the shelf use subscription software I seen is basically meant for a subscription model more like amazon's cereal. So I want to get serial once a month or I really need deodorant every two weeks, so the phones work is you sign up and it had the benefit that I can charge people on the fifteenth of the month, which is great, but let's say a payment fails right? Someone's credit card expired. It starts auto billing again from when they actually pay so let's say someone spaces out doesn't pay until the thirtieth of the month. I've already needed to order my supplies by then. So there's always this little weekly room, what I've come to in the end and my club is big enough that I can do this is I just I order supplies for the maximum because someone could, technically speaking with my software sign, change their credit card information the day before a ship and still be expecting to get their product so that's really hard, I just hey for the max, you know, I get the maximum if I have extra, I sell it my shop, I haven't heard of a system that one hundred percent works perfectly, you're always sort of juggling these issues. You know, especially around failed payments is just, like, difficult. I do like the loo, calmer subscriptions and that I can download a spreadsheet of everyone who paid it's surprisingly difficult to do with some other system on dh, it allows me to do various features like put them on hold or take them off of hole older change the price, change the shipping way, whatever all of those things, it has a lot more flexibility, but it comes at a feat on guy can't it's hard because you want to plan for growth, but at the same time, you can't start your subscription club buying all the fancy things at the start, so I can't say recommended for everyone but it's a much smoother process for me. Well, stacy, thank you so much for your time. We've learned so much from you today where can we find you so that we can stalk you and follow you in social media? I am on fresh stitches everywhere. Fresh images dot com fresh stitches on twitter, I'm out there, you'll find me find her. All right, thank you so much, stacy. Thank you. All right, I think I think we're good for that was really fun and interesting, right? Learn the perspective of someone who's run like six hundred subscribers every other month, cheese

Class Description

Not sure where your next sale will come from? A subscription product or business eliminates the guess work and is a great way to secure a steady paycheck. Find out how it is done in A Crafter's Guide to Starting a Subscription Business with Mei Pak.


Mei is a veteran jewelry-maker who earns her living by selling online. In this class, she’ll teach you everything you need to launch and run a successful subscription business. You’ll learn how to:

  • Create the ideal product for your subscribers
  • Package your product to move
  • Add more subscribers every month
  • Establish and maintain organizational systems
  • Engineer an amazing customer experience and keep customers happy

You’ll learn all of the logistics for running a subscription product business. Mei will show you how to manage your tasks including how to; collect payments, get existing customers to buy a subscription, print bulk shipping labels, and much more.

If you have a product your customers love and want to earn a consistent income by selling more of it every month, A Crafter's Guide to Starting a Subscription Business with Mei Pak is the perfect class for you.


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Nuvea
 

Mei gives lots of practical information and resources in this course.