June 9, 2010

Craft Show Economics: Do the Math

Filed under: Growing Your Business — Tags: , — Meredith @ 10:03 am

Summer is craft show season, and I know a lot of my readers are gearing up to apply and attend various shows around the country. Before you fill out those applications, make sure the show is going to be profitable. While some of you are thinking “of course it will, it’ll be a huge show”, I’m wondering; have you done the math?

Let’s imagine you sell handmade bags and you’re going to Renegade, a fairly large show. Your booth is going to cost $325.00. Now let’s take 2 scenarios:

Pre-Show Expenses:
Scenario 1: You are doing a show for the first time; you need to buy a tent, signage, booth decor, display equipment, etc. This can easily set you back $300.00. You are also from out of town and have to spend 2 nights on a hotel plus meals. With a budget hotel in a major city and inexpensive meals, you’ll still spend at least $300.00. Let’s say you live 5 hours drive from the show and spend $50 on gas and tolls. (I’m assuming there are 2 people going to the show since doing a large show alone is pretty difficult.) Since you are spending 10 hours in your car round trip and there are 2 workers, there goes 10 hours in labor. If you even want to make $25 per hour you’ve spent another $500. (10 hours x $25 for 2 people.)  At this point your expenses are $1,475.00 and you haven’t been to the show yet.

Scenario 2: You’ve done shows before and have all the equipment and you live near the show so you don’t have to pay extra for hotels and eating at restaurants. You are only out $325.00 so far.

Now let’s look at labor:
We’re still looking at 2 workers, and let’s say you spend a total of 24 hours on labor. (2 workers x 8 hours at the show = 16. 2 workers x 4 hours of packing up product, driving to the show, setting up pre-show, tearing down post-show, driving home.) If you’re sticking to the $25 per hour model, you are spending $600 on labor here.

So far:

Scenario 1: $2075.00 has been spent
Scenario 2: $925.00 has been spent

Profit Potential:
Let’s say our show goers sell bags for $50.00. The bags take 1 hour of labor to make and cost $10.00 in materials. The total cost of a bag is $35.00 so each bag sold makes $15.00 profit for the business.

Scenario 1: You need to sell over 138 bags in 8 hours to break even ($2075/$15)

Scenario 2: You need to sell over 61 bags in 8 hours to break even ($925/$15)

Can you sell 8-18 bags per hour? I can’t answer that for you, but it’s something you have to consider. If you want your business to earn a profit you need to sell a lot more than that. The math above is just about breaking even.

If you say the show is about getting exposure, consider this: can you get more “exposure” by going to a trade show, or advertising online? How many people will see your products at this show and how many of them are important to be seen by? (Meaning are they buyers for stores you’re trying to sell in, etc. And if so, is there a more cost effective way to target that audience?)

Compare craft shows to online ads:
For $850.00 you could buy a mini ad on Cuteoverload.com which receives over 4 million impressions. Will 4 million people hear about your brand at the craft show? If your ad gets a .25% click-through you’ll have 10,000 people visit your website over the course of a month. Will 10,000 people visit your booth at a craft show? If you get a 1% conversion rate you’ll sell 100 bags. Your business would see a profit of $650.00. ($15 per bag x 100 bags. Subtract the $850 cost of the ad.) Meanwhile, you haven’t spent your weekend in a sweaty crowded booth.

I can’t tell you definitively that you should advertise online or where, nor can I tell you whether you should do craft shows. I personally prefer to spend my money advertising online because it’s what has proven effective for me, but every business is different. With any business expenditure it’s important to do a cost benefits analysis and make some projections on cost and profit potential. To help you out, I’ve put together a profit and expense worksheet for craft shows. You can download it from the link below:

Download my FREE Craft Show Profit and Expense Worksheet

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17 Comments »

  1. Doing the breakdown of the math really helps get the message across. Great post (& great for people to think about the risk of not breaking even if they shoot for the big shows!)

    Comment by Courtney - Meylah — June 9, 2010 @ 10:31 am

  2. thank you for that money insight… I have done big shows and not broken even… and small shows tend to be hit and miss… It’s important to consider whether it’s really profitable–short and long term.

    Comment by lara — June 9, 2010 @ 10:36 am

  3. Great post! For new entrepreneurs, it’s so helpful to have the numbers broken down showing the reality of such events. These are the nitty gritty details of trying to launch a craft business that are often kept in the dark or not talked about. Thanks!

    Comment by Cassie — June 9, 2010 @ 11:11 am

  4. Very good points – Every penny really does count in business and costs can add up quickly! Wonderful insight…

    Comment by Molly — June 9, 2010 @ 11:19 am

  5. Great post!

    People often ask why I do not do shows and I always tell them that in the big picture I would have to sell hundreds of $10 earrings to break even so I don’t bother and stick to marketing my website. They never seem to get that its a much greater cost then that of the entry fee!

    Comment by Sierra — June 9, 2010 @ 1:00 pm

  6. This article is very misleading. Unless you’re paying someone to make the bags and go to the art fair for you, the profit would be $40 per bag. 61 bags in 8 hours at $40 profit would equal $2440 in your pocket.

    Comment by Dan — June 9, 2010 @ 2:18 pm

  7. @Dan, I think you misunderstand. I am calculating labor as part of the expense of doing shows and making products. This is separate from your company’s profits. If my company nets $3000/month and I need that money to live on, my company’s actual profit is zero. That means I can’t afford to grow and invest in my business. I can’t afford to hire help, I can’t afford a more expensive marketing campaign that will ultimately grow my business, I can’t invest in new equipment that might make my production work more efficient, etc. etc. It sounds like you don’t consider labor cost as part of your business expenses.

    Comment by Meredith — June 9, 2010 @ 2:32 pm

  8. Costs are more, but the potential for more gain is there as well. I’ve found that a good rule of thumb is a good shows earns you 10x the show entrance fee. If you can’t fit your expenses (with labor) in that amount, you should consider doing a different show.

    One more factor you didn’t take into account – the pre-show prep time for getting your booth ready, especially the first time. I spend a good 20 hours just figuring out what I needed in the way of tables and signage, the best arrangement, pre-show set up in my garage, how to transport it, where to store it when I got home, etc. Luckily, that gets easier the more shows you do.

    Comment by Isette — June 10, 2010 @ 7:46 am

  9. Yes pre-show prep time can add up, especially for first timers. That’s a line item on my profit/expense worksheet. 10x entry fee might be a good gauge. I designed my worksheet to get people thinking about each cost tied to doing a show (compared to potential income).

    Comment by Meredith — June 10, 2010 @ 8:38 am

  10. I love the way you showed the math breakdown. This is fabulous! I know so many people who are doing their first craft fair this summer. This is perfect for them! Thanks so much for the helpful post- I’ll be linking.

    Comment by Rachel — June 10, 2010 @ 10:29 am

  11. This is a good reminder to do the math and research before investing in shows and ads. If what you’re currently doing isn’t working – re-evaluate. The math above is over-simplified though, there’s more to it than that. If you don’t know yet where you should be selling, take calculated risks. I get advice from other vendors and show organizers, so I don’t need to try as many things by trial and error.

    I invested in doing shows because that’s where my customers are. I have an online shop and got ads but I didn’t get the ROI. That doesn’t mean I won’t try them again. A show I did last December was somewhat disappointing – I broke even. Less than a week after the show I got a custom order from a woman I met there. She is now a loyal ‘referring’ customer – and a friend. No matter where you sell, inform yourself so you can make good cost-effective decisions for your business.

    Comment by Jennifer — June 10, 2010 @ 3:48 pm

  12. Definitely true that you can only go so far with projections and analysis. There’s always some trial and error with growing your business. My goal with this article was just to get my readers thinking about what’s realistic to expect from shows as far as income, based on every expense I could think of and potential sales after those expenses. Is there an expense or aspect of sales potential you think I’m missing? I agree that you can make valuable connections at shows but my point was it’s important consider whether it’s the best and most cost-effective way to make those kinds of connections. For some it might be, for others not so much.

    Comment by Meredith — June 10, 2010 @ 5:57 pm

  13. This is why it drives me crazy when people ask me for a discount at a show! We don’t just show up with a smile on our face! It takes hours upon hours to not only make and design everything to sell, but to order supplies, including raw materials, postcards, business cards, boxes, etc. We have to design the display and buy stuff to make it with, then actually make it. We have to get to the show and arrange dog sitters/baby sitters, etc. It’s nuts how much goes into a show – and (in general) if you’re not selling at least a minimum of $2500 – take that show off your list or rethink your product line or sales strategy!

    Comment by Beth — July 7, 2010 @ 10:07 am

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  16. Why would you ever suggest “cuteoverload.com” as an ideal target market for a crafter? (I just checked it out and it looks like the cheesiest site ever?) Am I missing something?

    Comment by Sarah Southerland — December 4, 2010 @ 7:41 am

  17. I think you missed my point. I wasn’t recommending cuteoverload to all crafters, I was using it as an example. I can’t recommend any ad venue to all crafters, because target demographics vary.

    That said, I don’t recommend writing off an ad venue just because you find it cheesy. Your target demographic may not. It’s better to have a full understanding of who your customers are, what they like and where they hang out. I certainly sell tons of product on my ecomm site via other sites I have no interest in.

    Comment by Meredith — December 4, 2010 @ 8:53 am

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