How to make more money from selling handmade products (part 3)

Here's part three of my series on ideas for making more money from selling handmade products. In part one I considered the impact of increasing your prices and in part two I thought about using higher quality materials. In this third part I'd like to share my thoughts on what happens when you reach your capacity and don't have any more time to give to the business. Is there a way to make more money from the hours you put in?


Part Three - Remember that your time is money

When I started my business I had plenty of time and very little money. If I could save a few pennies by doing something myself I would. For example I didn't buy board backed envelopes for posting out my cards, I used normal envelopes and cut sheets of recycled cardboard to size to stiffen the parcels and make sure the cards wouldn't get bent in the post. It was much cheaper this way as board backed envelopes are expensive, and my hand cut cardboard inserts did the job just as well.

This is sensible to start off with because you need to keep your costs low and sales are probably slow so you have the time. If I could save a few pence on each order by doing a little extra myself I'd have a bit more profit at the end of the week.

But then you start to get busier and you have a lot more orders to fulfill. Once you reach capacity and you are making as many products as you can your time is no longer a cheap resource. You don't want to spend time doing things that you could pay other people to do. Your unique talent is in making the handmade products so you want to spend as much of your time as possible doing this. Therefore it might become sensible to think about outsourcing where possible.

I'm not just talking about the big things. When I first read about outsourcing I thought it wasn't for me, because the articles were talking about hiring someone to run your social media channels or manage your marketing. And I'm just not at that point yet. But think about the really small things - is there anything that you spend time doing that you could pay for someone else to do and therefore have more time to make products? Switching over to using board backed envelopes was a good starting point for me! Yes it added about 12p to each order, but it saved me so much time. And when you are working at capacity you have to remember that your time is money. In the time I saved cutting up cardboard each week I could make up another journal for a customer.

To see if it's cost effective to 'outsource', work out how much time you could save. Then convert this into an hourly wage that you want to pay yourself and compare this to the extra price of paying someone else to do it for you. For example, if you want to pay yourself £10 per hour then every minute of your time is worth 17p. If you can save a minute of your time and it costs you less than 17p to do so you will be making more profit.

Here's the costings for my envelope example:

I now spend a lot more on packaging, but I have more time to make up orders so I'm bringing in more money each week. I'm ashamed to say it took me a long time to get this and my husband had to convince me it made financial sense (he's an accountant!). Doing things more cheaply by doing them yourself isn't always the best option.

Here's another example from my business. I use a lot of A4(ish) sheets of brown paper. I used to buy the brown paper in rolls as it was much cheaper, then cut it to size myself. Doesn't take long to do one or two and saves a few pence per item. But it takes ages when you're trying to do 20 at a time - time that could be spent making more products. Now I buy brown paper in A4 sheets so I don't need to cut it to size. It costs a little more but my time is more expensive, so overall it is cheaper.

Making your products is the skill that is unique to you - the skill you can really charge for. So what do you do that isn't making that you could outsource to someone else? Buy your business cards instead of printing and cutting them at home. Buy materials pre-cut to size. Buy gift boxes instead of wrapping things. Buy accounting software to keep track of sales. Save yourself some time and make a bit more money.