Create Your Collection Plan
So now we're going to start creating art collection plan all right s o we have got a pyramid on the price structure so we're going to start combining them now gotten emerging emerging the pyramids the egyptians on the the pricing I'm trying think the equivalent I dug myself into a hold and I can't get out of it all right so let's just move swiftly on just pretend I didn't talk about the egyptians and then let's bring their revisiting the variables back okay, so the levers oh shoot this has gone crazy talk okay s o we have from my memory uh we have, uh, raw materials um we have uh cutting make we have trims we have miscellaneous that's all in the making it in the selling it we have retail price and we also have profit okay profit has disappeared on this particular product for some reason I need to rework that to kind of bring the profit back in so this is probably what you're you're you're wanting this is a full breakdown of every single cost so we started out with I'm going to focus in...
on this first of all because this is what we've been talking about ok? Ah bottom level a bottom layer price of fifty or mid layer of seventy on our retail price of one hundred for the top layer ok, so this is what we've been talking about I'm going to walk you through all the different columns that I put in. This is a very simple pricing sheet. It's. Something that I build on a google doctor. An excel sheet. It's. I'm terrible of formulas when it comes to I do very basic stuff. And then I just kind of step away and I make a cup of coffee. And I hope when I come back that it's fixed s o I keep things very, very simple because I think it's the best way to do it. So here is a section of the actual making. This is my cut make. Okay, so here we have the cut time in minutes. How long actually, takes me to cut a piece of fabric out how long it takes me to press it. And so it and these three combines is a number of minutes will bring me to my cost of cutting make now I worked it out. I'm just reminding myself I was looking at paying myself twenty five dollars an hour. Ah, that was my weekly. There was my hourly. Although right now, it's also my weekly pay on that works out of forty two cents a minute, okay, so I work out my minute cost. Um and a lot of big manufacturers do that's why I'm not sure if everyone here what kind of works out there minutes is it's when you're making when you making clothes when you're making sure it's just like oh time to make a cuff take so many minutes and that's how they build a cost prize which I find fascinating anyway so I've done this here so for my basic scarf that started the basic is going to take me five minutes to cut the material out five minutes to press it in ten minutes to sew it which brings my cm two eight dollars forty my raw material r m raw material for yard I got it right this time is fifteen fifty my yield is how many yards is how how much I need so my yield is what I need one yard to make one scarf my my label on my miscellaneous five combined simply so I could get all the columns on the slide but you could you could easily break it out and be super detailed so my label on the miscellaneous is to sixty my miscellaneous includes my shipping on my logistics and stamps and envelopes and things like that which brings my total cost twenty six fifty so if I stick to a retail of fifty it gives me a profit forty seven percent for my midprice scarf I worked on a certain very similar basis I have my cut is five my pressing his five it's going to take me slightly longer with twenty minutes sewing and the reason why is I'm going to use a contrast colored thread and when you're serving with a contrast thread you want to be very very exact with what you do because any slight problem with detail really shows to that to the eye so I want to take slightly longer time so actually so the second one it gives me an increased cm still only using one yard I've reduced my miscellaneous costs a little bit on this I played around with a variable cause I just want to see where the price lands because I'm aware that I want I think more customers are going to buy this one because it's slightly more interesting how the contrast stitch still going to be kind of fun so I think and this is just me thinking right now without any proof because I haven't sold it yet but I think it's going to it's going to land in this area so I want to make more profit from this this is where my most of my customers are I may find that after kind of selling them they're actually these guys a better stronger the basic wants a stronger it still means I can adjust my variables and come down so my total cost his thirty seventy or retail is seventeen my profit is fifty six I do the same calculation for the topside only remember I'm doing two different scarf sewn together now so I wantto essentially cutting two different things out. So my cut time and my press time is going to be higher it's going to be greater. My yield is going to be bigger because I need I am using two yards. So my total cost prize is going to be more it's going to be fifty forty, approximately which retailed one hundred is going to be fifty percent. Okay, so this is my price and she that I would use generally I would probably build out wider. And I would I would split the label of miscellaneous out. Um, I really keep it like that. Just kind of split the label and miscellaneous our. I think everything else kind of works for me has the details. If I started to include additional details, like a print or something like that, I may want to put the prince cost on there as well. A zone option is an extra column, but right now this is the kind of the basic pricing shape that I would work with pricing sheet there's. Some people in the chat room are saying that this looks a bit detailed, maybe it's more than they typically do. Okay, what is? I guess the question is what happens if you don't follow this specifically like this is really going to help people keep everything together but what could happen if you have a simplified version or if you're not keeping track of these numbers how could that sort of hurt your business? Yeah it's a good question so it's it's okay to use a simpler version every every every brand has a different way of working every brand is a different way of understanding what their costs are I think and in the key thing is as long as you understand what your every element which goes into your product and making sure that you allow for every element doesn't matter how you laid out its understanding is not being called out and just thinking that all that is to a scarf is a piece of material if you don't add in that the logistics or the hang tag then that's going to come out of your profit that you're going to lose money because you don't anticipate it so simple simple charts are absolutely fine I'm all for simplicity I don't I don't think you need to over complicate when you're working on pricing it's just being aware of every element and including it ah that would be my number one point because it will eat into your profit and you will not make the money you think you're making that's nothing that's the key takeaway for that are you okay? Explain how you got the cme the costume make forgive me a few party no no absolutely so the common make is it's cutting out the fabric and it's it's making the actual item ok so it's pressing it and it's sewing it these are minutes. Okay, so I know it's for working on a twenty five dollars an hour I'm looking at forty two cents a minute. Okay, so in here this is five times forty two ah told my head I can't we work this out with the lights shining on me but um so it would be basically twenty minutes but forty two cents a minute would get you to eight forty ok, that makes sense. It is that pretty standard twenty five dollars an hour. I know I just pulled a number out there because I because I live in san francisco and it's it's insanely expensive I just thought, you know, with the minimum wage I kind of looked at that and I just thought, ok it's I need to be between kind of light I think twenty five minimum wage but that would be if I found that the price was too high then this would be one of my variables it's my hourly right would be would be my variable I would bring it maybe bring it down to twenty an hour workout my minute right from there and then use that um just add minute right to work with this which would then bring the cm down so I'm I'm starting out with this because I think that this could be a workable cost but as they go into business and I still explain and you know, experimenting with the time maybe I need to adjust it I think it's fair to start at like for examples and so I do what I do I can look at graphic designers and what they make do you think it's fair to start off with what the average hourly is for that or do you think that puts you in a bad spot? I would look to see how that affected your price with your competitor analysis I think that it's when you're starting out it's a love is a lot of trial and error right? And I'm just put I just played these numbers in thinking this is what I I think this's a kind of a genuine pricing exercise that I did for this for this business I have no idea honestly because I haven't sold these cards if it would work this right, but what I would do is is I would start at this I would understand where my flexibilities and my wiggle room on my variables and I'd adjust it but you have to start at one point so I think starting out with with this is well graphic designers work with an hourly basis use that work out your minutes then do do the costing process and where does that leave you with a retail and how does that sit with your competitors is it too high too low you know adjust accordingly that's what I would do yeah um all right so again reminder our mid section has come back from its coffee break it's now complete complete again so kind of a question really is kind of rhetorical question how finally is your plan at this point I would say it's it's a structure it's his finals you wanted to be these air kind of movable variables and movable levers as they are um so it's a structure that you control is completely flexible is we're just talking just now it's you take a number you have to work it into the system and it's it's a lot of work but you're one in this business to work and you wanting to sit in the right place for people to buy the products so it's it's definitely a worthwhile exercise going through this okay so we have another example of a great product line these guys eyes lady confetti riot she's a big fan of creative life actually so big shot out she she watches it all the time is actually coincidental and still I found this product first of all and I had a conversation with her so this lady has a great product line she has a very kind of light logical structure for me she starts out at the entry level with sixteen dollars printed tea towels she then in the mid mid level she has thirty bucks and she does little purses with kind of cute prints and also pillows, you know again matching prince the top level she disease handwoven coasters for mugs ok forty it's such a nice simple price structure this this kind of nothing complex about that the product intensity or diversity is great very simple one side printed down here here you have something a little bit more complicated both involving zippers visit parana pillow a zipper on a pouch here the prince line up exactly colors lineup top section he had the mug coasters um you have kind of slightly different color schemes going on here you have the green which ties in here you have the blue which ties in there you have the black and the white, the black and white but more work has gone into this. You know, this is this is kind of like finishing off and weaving and know a lot more work has gone into this. Putting a zip in is not easy I'm making it sit properly is absolutely not easy, you know, so looking at this kind of taking a step back and reviewing it from everything that we've gone through over the first session so far you can see a kind of a buildup. You can imagine that she's making pretty reasonable profit on these elements according to the price. If you think about the raw material base that she's using, she has a very cohesive line when it comes to the message and the brand, because the prince kind of tie in really nicely together and it just it's is quite a minimal products offer. But it's actually very rich and that's what I really like about this it's, very easy to go into the store going I can I want to buy a pillow for my life from my so far and I by like this. But oh, I also this is kind of really cute, and then I could also buy because this color matches a little person before you know it. You kind of go in wanting one item and you've come out with for any kind of going but it's also a great place to shop for christmas present. So you constantly going to go back there because it just draws you there's a there's, a logic to how she's built her collection. So you see this lady again a little bit later on a cz another example, because for me, it just it stood out as being a very strong line in that respect. So so really, I use it to kind of test the market if you putting a print putting a prince structure hello, putting a price structure and so attached to those captors pillows on my mind is on cactus right now using the price structure. Tio really test your market saying this way talked about I have no idea where these prices is going to work, but I'm going to go in at that price level, and I'm going to test it. I know what my variables are, I know how to adjust it very slightly, and I can always rework increased decreased slightly ok? And that I think his key it's keeping it flexible, especially when you're starting out or if you wanted to re validate where you are. Ok, um all right, so when building out your plan, ok, think about your variables. We already had a kind of a brief chat about about some of them, this three that can adjust and explain why be great to get some kind of ideas down on paper? Chris would be great to hear from from some of the core brand you have on there in the chat room, what they think as well, fatima, what do you do your variables right now, he talked a little bit about the room into some of your materials are flexible what are your variables? These variables? You mean what goes into the cars? Yeah. What is flexible? What can you kind of increase decrease slightly if you just kind of you could listen give me one. I'll be great. Um I just actually increased one of my most simple casted rains there's actually, this does the silver version of you know I need to show this right now but the silver version of this one um and I increased it because people kept asking me why is it so cheap, huh? And yeah, I think there's a psychology behind when something is someone looks at something and they automatically have ah idea in their mind how expensive it could be and it's much cheaper they think that immediately there may be a problem with it. So um that's one that I raised up to space off of well, feedback. Yeah um and it's definitely very flexible that's crazy psychology again created before you know it. Yeah. Chris what do we have anything interesting? Yeah, we have ah, nice comment here by paintings by kate gilmore says one interesting variable for handmade items is that you get faster at making a certain type of item as you do it more and more one more times so the time spent maybe less but the quality may be higher than when you were first starting said I get the last bit so time spent on making the product may be less but the quality may actually be higher when you first start because you've gotten so good at it so efficient at it that the end product is actually better but you're spending less time on it nice that's it that's a good problem to have less time higher quality yeah absolutely it's a couple of quick questions also keep me in what we were going through this show and see we have one here from amy and we had three other people vote on this one so people are curious and maybe this is something that we get into a little bit later but amy wanted to know does time spent marketing and running your business figure into some of the pricing methods that we talk about here ah it should do it hasn't so far um I think yeah that's ah very valuable question you know what it's not something that I consider that's called me on the hope a little bit but it's big it's good I like being called on the whole um no I mean that's I mean I do I do a lot of my own kind of social media of my my own stuff right now I don't factor that in I just because I I think we kind of build that into our everyday life but we don't put a cost on it I think probably makes a lot of sense to build it into your toe having a marketing costs and work it as an hourly rate again figuring that in so you would have potentially I don't know what you guys think cnn raw material I kind of pay our marketing aspect dissident yeah I have like a little because I don't pay for marketing breast say so I put someone I put things in a marketing budget that maybe people wouldn't necessarily consider putting in a marketing budget like the majority of the cost that it would cost me to do the national stationary show right I put a lot of those costs in a marketing budget because a huge part of doing that show is getting your name out yeah I'm building your brand yeah so anything that I spend money on the intern builds my brand I will at least but partial part of that into a marketing budget right yeah I mean I think with the structure that I put together we would probably fall into the miscellaneous section which I would build higher so rather than having like a two dollars I would kind of build that assad percentage but actually that's a good that's a good note for self on my on my business have better stop paying for my marketing time but yeah especially if you didn't kind of trade shows yeah definitely super expensive yeah that that one in particular is a killer? Yeah. And when they're noticed, a lot of people on at sea don't seem to build into their cost structure are things like that, etc fees and credit card fees. I used to complain like, oh my god, I'm not making money, they charged, insightful. You have to build it in your price structure. Yeah, absolutely. And I would put that into the miscellaneous miscellaneous is fit for or it's all those areas where you pay our marketing the cost of selling it and it's yeah, it's part of the deal. Yeah, there are a lot of those kinds of easy you can actually use ism tax write off. Yes. So good point. Yeah, it would have separate those costs, right? Yeah, so you'd recommend basically having, like, a separate section for that which is easy to kind of identify. Yeah, and I think it also depends on if you are just starting out your business, because if it it's going to into investment in overhead, that's, different way of thinking about it, then two years in and this is just another like product line you're launching or something, right?