By Michael Priest — festival vendor and small-business owner
A $1,000 sales day does not mean you made $1,000.
In Episode 5 of the Festival Geeks Know Your Number™ Pricing Workshop, our example product went from an apparent $8 cost to $14.44 just to make one sellable item.
Episode 6 takes the next step: what does it cost to actually sell that product and run the business behind it?
As Michael puts it: “I’m going to start spending the money that you thought was profit.”
The cost does not stop when production ends
Once the product leaves the workroom, more real costs begin competing for the dollars between your production cost and your selling price.
In the episode, the example business works through:
- Booth fees: 24 events at $100 each, or $2,400 for the season
- Travel: $50 per event across 24 events
- Selling labor: including loading, driving, setup, selling, teardown, the drive home, and unloading
- Transaction bags and packaging: costs that happen when the sale happens
- Refunds, remakes, and replacements: a seasonal allowance for costs that do not disappear just because they were not planned
- Credit-card and payment fees: another cost attached to making the sale
An eight-hour market is almost never only eight hours of labor. If your business needs the work done, that time has to be acknowledged somewhere in the numbers.
The business itself also costs money to run
Episode 6 also adds recurring expenses that are easy to overlook when pricing one product at a time: business-management labor, website and software costs, phone expenses, insurance, licenses, accounting, equipment and tool replacement, financing costs, and other recurring business expenses.
The example then spreads those annual selling and business costs across expected unit sales. That is how large seasonal expenses become a useful per-product number instead of something you simply hope the weekend's sales will cover.
Your business may need to keep some of the money too
The worksheet calls this the business-building amount. It is not owner pay and it is not pretend profit. It is money the business can retain for reserves, growth, equipment replacement, and future needs.
In the example, a $3,600 annual business-building target becomes another $3 per unit across 1,200 expected sales.
Then compare the number with the market
Once the costs are visible, Episode 6 turns to market research: low-end prices, high-end prices, and the average range for comparable products.
Your competitors can help you understand the market. They cannot tell you what it costs you to do business.
And if the numbers do not work, the answer is not to change the spreadsheet until they do. The information is there to help you make a better business decision.
The example changes dramatically
By the end of the exercise, the example product has a full cost to carry of $27.44. At the assumed $25 selling price, that is a loss of $2.44 per unit — about $2,928 across 1,200 sales.
That is a very different picture from the $17 gap we thought existed when we first compared an $8 product cost with a $25 selling price.
The point is still not for Festival Geeks to tell you what to charge.
The goal is to understand everything your price has to carry so you can make an informed decision instead of guessing.
Watch Episode 6
Watch What Does It Really Cost to Sell Your Product? on YouTube
Free companion resource
Work through your own numbers with the free Know Your Number™ Pricing Workshop. It includes the 2-page Pricing Worksheet and the 5-page Line-by-Line Guide used with Episodes 5 and 6.
Get the free Know Your Number™ Pricing Workshop
For the full pricing framework, read How to Price Handmade Products for Festivals: What Your Price Has to Carry.
Need Part 1 first? Start with Episode 5: What Does It Really Cost to Make Your Product?.
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