Materials – this is one of the simplest areas of costing.
Well, I say simpler…
It’s simpler as in, it is what it is, right?
You buy a sheet of paper, a tube of paint, a roll of material and the cost is the cost, that goes into your numbers (after all we all need to know our numbers!) job done.
Largely that is absolutely correct however there are a few things you need to shift when you move into making a business from your creativity.
When you’re running a business you need to be making enough money to pay yourself a decent living (not scraping by!).
In order to do that you need to be able to charge a price that the customer will be happy to pay andgives you that living.
Looking at lowering your material costs can help achieve this.
Let’s start by looking at 3 areas:
- Where do you buy your materials?
- Can you get bulk discounts?
1.Where do you buy your materials?
Are you buying them from the same places you did when this was a hobby?
If the answer is ‘yes’ it may be useful to take a second look…
If you’re buying a particular brand of paper, paint, material etc. have you approached the manufacturer directly to see if they have wholesale accounts?
Many of them do, you may need to pay up front before you can get a credit account but some manufacturers give up to 50% off to people who are then reselling – that’s worth looking into!
2. Can you get a bulk discount?
You may have had no initial luck from point 1 above or you may be buying from smaller suppliers who simply don’t have a wholesale area.
It is always useful to ask the following question – ‘How much would I need to order to obtain a discount?’
This is a really nice way to get them to think about this if it’s not something they’ve considered before, it also gives you an idea of how much stock you would need to carry in order to obtain a discount.
It may be that you don’t have the initial cash flow to accommodate the purchase at the moment but you will now know how much you need to be turning over to make the purchase worthwhile – it also feeds into point 3 below!
Collaboration is such an amazing tool and in this situation you can use it in two ways:
-For those items where you can get a bulk discount but don’t have the cashflow or need for that many at the moment – ask others in your community if they use that item too, this is especially good in generic items such as packaging, see if you can club together and get that discount!
-If you use local businesses as part of your value system see if they will be willing to exchange a small discount in return for publicity or something else that you may be able to do for their business?
Asking politely is always worthwhile – 90% of businesses want to help each other and if the answer is ‘no’ you’re no worse off!
Remember it takes Teamwork to make the Dreamwork!!
I hope these tips help and feel free to reach out with any questions.
Do what you love and be kind to yourself.