A handmade product can have a perfectly calculated production cost and still lose money at events if the price ignores what it costs to get that product in front of a customer.
Craft fair and festival selling creates costs that do not belong to one specific item: booth fees, application fees, travel, event labor, refunds or remakes, and other costs of showing up and selling.
Do not put one entire booth fee on one product
If a $200 booth fee supports sales of many products, charging the entire $200 to the first item makes no sense. But leaving the $200 out because it is “an event expense” does not make sense either.
A simple beginner method is to total your expected annual selling costs and spread a reasonable share across the total number of products you expect to sell during the year.
Start with annual selling costs
Useful categories include:
- Booth and event fees
- Application or jury fees
- Travel and fuel
- Event labor, including your own active selling time when you choose to value it
- Refunds, remakes and replacements the business reasonably expects
If your event schedule changes, update the annual estimate. A vendor doing eight local markets has a different cost structure from a vendor doing thirty weekends with hotels and long-distance travel.
Estimate how many products those costs will support
Next, estimate the number of products you reasonably expect the business to sell during the same period. Divide the shared annual costs by that expected volume to create a simple per-product share.
This is not the only accounting method, and businesses with very different products or price tiers may need a more sophisticated allocation. The point of the beginner method is to stop booth and travel costs from disappearing from the pricing decision.
Include zero-sale and weak events in your thinking
The event that produces almost no sales still cost money. If your annual model assumes every booth fee is supported only by strong events, it can understate what the business actually spends to sell.
Use realistic event history when you have it. If you are new, use your best reasonable estimate and replace it with actual records later.
The product price has to carry more than production
Shared selling costs sit on top of materials, production loss, consumables, equipment allowances, and labor. They also sit alongside recurring business expenses and transaction costs such as payment processing.
For the whole framework, read How to Price Handmade Products for Festivals: What Your Price Has to Carry.
Work the numbers with the free workshop
The Know Your Number™ Pricing Workshop separates the cost to make a product from the costs of selling and running the business so you can see both sides of the calculation.
Event fees, travel and selling costs are covered in Episode 6 of Festival Geeks.