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Top 5 Ways to Focus on Profits for your Handmade Business in 2023

Updated: 3 days ago

If you're anything like me, you've spent some time with your handmade business and you LOVE it - but - let's face it, profits haven't been a priority. And yet - the upshot is, the more profit you walk away with, the more craft supplies you can buy!!, okay so that might get some of us in trouble but, you get it - PROFIT is the end game!

So - what are some low cost, high margin ways for you to rake in more profits this year? There are plenty of ways out there to turn your art, your craft, your fancy new CNC machine, or your newfound passion into a profitable business. The key - FOCUS!

Let's Start with some Basics!

WARNING: I am not an accountant! There are more resources out there that will give you the more formal calculations for Gross Profit Margin, Cost of Goods Sold, Net Sales, etc. In the spirit of helping our readers get started with some basics, we're making this much easier with some simpler methods. These are not intended to be used for formal bookeeping purposes :)

Now, let's make sure we're on the same starting page before our countdown to profits!

Let's say - GROSS PROFIT is equal to GROSS REVENUE less Cost of Goods Sold (or...expenses)

and let's say GROSS PROFIT MARGIN is equal to (GROSS Profit / GROSS Sales) * 100 - usually expressed as a percentage. This percentage can be used to measure overall health of a business OR it can be used to measure the health of any ONE tactic in your business. For example, a new product, a new exhibition, a new partnership. The higher the profit margin, the more attractive that singular activity could be.

A high profit margin activity or service or product is one that yields more than your average activity, service, or product! Easy right? Here's an example

  • Adding up her costs, Lori estimates that she spends $4.75 per each bar of soap that she makes. At $9 per bar, Lori sells her soaps at an average of $4.25 gross profit. At this profit amount, her gross margin per bar is 47% (4.25/9.00). By most accounts, this is a great profit margin! However, this does not account for waste since Lori has to keep an inventory of the soaps she does not sell at each event. She would have to sell more than 230 bars of soap just to pocket $1000 profit.

Many of us in the handmade business overlook these types of equations because we think - hey, I am making a profit on each piece I sell and I'm selling at a consistent pace. However, over time, this thinking can eat away at our success. Consider this example instead...

  • Three times per year, Lori holds a class on soap making. She partners with her local church to use their kitchen for a small fee ($50), and she invests in some supplies she'll need for about 15 people in the class ($100). She includes giveaways and gift baskets for her students so not only will they be raving fans after spending some time with her, but they'll be more inclined to buy from her after the class. Now Lori is spending $150 per event and she's charging $60 per seat ($900 revenue). At 15 seats, she's already made $750 profit in her first class x3 classes and she's pocketing $2250. The profit margin is much higher at 83% (750*3 = $2250 / $900*3= $2700) and Lori has not even counted the benefit of having follow-up sales at each event!

Bottom Line!

Handmade businesses are on the rise and becoming more popular than ever before. The handmade industry is booming right now and expected to keep booming as our economy weathers the upcoming economic storms. Whether you’re creating jewelry, candles, soap, or any other type of handmade product, there are plenty of ways to turn your craft or art into profits but you must have discipline and focus on the per item and per activity profit margins. Measure them, plan for them, measure them again! At the end of the year, you'll be glad you did!

And now - our Countdown to the Top 5 Profit Strategies for your Handmade Business

Number 5: PRICING! Know your Value, Price it RIGHT

What's the biggest reason artists and crafters stop selling? Pricing gives them nightmares and ultimately makes them give up and go back to giving their items away. It's true - pricing is a challenge, but there are so many resources out there now to help you in almost any medium determine your value and price appropriately.

If you're not sure how to price your products - do your research! Start with all the ways you should be looking at your costs. Yes, you have materials but you also have packaging, tags, business cards, etc. Get some help reviewing all of your costs in an average year and write them all down into categories. You'll find that you have overhead expenses, production expenses, advertising, and other items that you'll need to consider.

Next, consider how much you want to pay yourself. Not all arts and mediums and maker products are the same. Some equipment takes years to learn to master. Even painting should be considered a skill years in the making. Not just anyone can pick up a piece of clay and turn it into a piece of jewelry. Similarly, not all pieces are the same. Some of your products are more complex and take more time than others. Take that all in and then determine how you'd like to be paid by category.

Finally, consider a markup percentage. All retail businesses do this and so should we, as handmade retailers. Markups give you some freedom to offer sales on older inventory while still covering your costs, and giving yourself a wage. Markups are a way for you to value your inventory and therefore the assets in your business. They don't have to be huge and they don't have to be uniform across your entire list of products. But, they do help you determine a final asking retail price.

Number 4: AUDIENCE! Don't waste valuable resources on the wrong audience

Now that you've determined your pricing, it might sound cliche, but you really must know your audience before you decide to sell to them!! There are dozens and dozens of different ways to classify your audience as you prepare to sell.

  • Are they young? Are the old?

  • Are they setting up their first home or their 100th home?

  • Are they professional? Are they free spirits?

  • Are they fanatics? Are they religious or spiritual?

Before you load up your van or trailer or truck with all the things you plan to sell at this event, ask yourself if you're taking the right product at the right price to the right venue! And, don't waste your valuable resources taking the wrong product or the wrong priced product to the wrong venue!

This is something that we learned very early on and warrants a good story! I thought I had found a fantastic opportunity to sell my resin jewelry and Christmas ornaments at an indoor mall show. I was going to have a captive audience of Christmas shoppers! And, who doesn't love to give unique handmade jewelry gifts at Christmas right? What I didn't know was that this indoor mall opportunity was in the middle of a Menonite community. This community is highly utilitarian - meaning, if they were going to buy anything, it would have to have utility in the house, it would have to serve a purpose, not just decoration. Of course jewelry has no usefulness and so I sold zero jewelry. I did however sell the only set of coasters that I brought! Coasters! Useful! KNOW your audience and bring what they will buy and you will improve your sales and thus your profits.


These days with social media, we are always being pressured to grow our followers, increase our likes, and expand our reach. The more followers you have, the better opportunity you have to create a sale - right? I say - WRONG! Unless you're already monetizing your followers and you're approaching 6 or 7 figures, you're going to want to understand Customer Acquisition Cost (CAC).

This metric, CAC, measures the effectiveness of your efforts to acquire leads and then convert them to customers. In the simplest terms, it's about capturing the right kind of followers - COLLECTORS, or at the very least, RAVING FANS. These are two very specific types of followers that are more likely to buy from you and therefore be worth your advertising dollars.

Consider the following stories:

  • Lori is a master at social media! she posts every day and usually has a trendy video or catchy live stream. It must be working for her too because she's got a ton of followers compared to Rita.

  • Rita doesn't know much about social media but she still has a respectable following on Facebook. She joins all these public groups and finds friends who have expressed an interest in her art. She extends a personal invitation to them to follow her on social media and they share her pages with their friends too.

Who do you think has the lowest CAC and actually gets more sales? Rita!! That's right because the quality of leads who engage with Rita are much higher since they already share a common interest. Lori's techniques are going to get her a lot of followers who are basically looking to keep their feed fresh and fun - not specifically buy her product.

To keep your focus on profits, concentrate your efforts on lowering your overall CAC and improving your methods of acquiring customers. Focus on getting people who would be considered collectors or raving fans of yours - not just fans of social media.

Number 2: Collectors LOVE Collections!

Now that you've mastered your price point and you've built a following of collectors-who-will-most-likely-buy, you can improve upon your profits by thinking in collections! You see, a collector is most likely going to buy more than one thing - especially if it compliments the thing they are obsessed about. So, be ready to change your mind about building one-of-a-kind things and instead find ways to see your work in groups or collections.

I have learned this first-hand almost completely by accident! One of my first commissions involved a glass piece in a frame for a child's room. The customer wanted a sea turtle with some transparency in the background so that it could be displayed with the sun shining behind it in a window. In my naieve point of view I was concerned about whether or not I had correctly interpreted the customers' desired piece. Did he want baby turtles? Were they to be swimming up or down? Did he want blues or turquoise? So many things could go wrong!

And so I proceeded to prepare a total of 4 art pieces for him to choose from! I knew I could sell any one of them so I wasn't worried about inventory. I was more concerned about word of mouth at the time so I wanted a happy customer! He was so happy about his piece that he actually bought ALL 4!!! It was as is if something clicked for me and from that day forward, for ANY commission, I always made 2 options for the customer and I have NEVER once had the second piece refused. I made Collectors out of each of my commission orders.

This is yet another opportunity for you to be creative with you product ideas! Maybe you make leather goods - sell me a wallet and matching purse! Maybe you're a potter - sell me mugs that match your plates! Maybe the collection is by color or maybe by theme - by smell, or by size. The options are pretty unlimited!

Number 1: KNOW your GREEN DOT

I once caught a Ted Talk that was brilliant - but - of course I can never remember things very well and I've since lost the name of it. It was a talk designed to resonate with technology entrepreneurs but I thought it was brilliantly laid out for almost anyone who has ever thought about owning a business. I'll do my best to do it some justice - it went like this...

You have a brilliant idea for a product. You build it and you're successful at selling it. THIS is your GREEN dot. Stay focused on your GREEN dot. Most businesses fail when they take their eyes off the GREEN dot and stray to the left and find the yellow dot. Or, to the right and find the Red dot. Before they know it, they've got dots of all sorts of colors and none of them are doing as well as the GREEN dot. Never take your eye off the GREEN dot if it has served you well.

There is something about your product that is uniquely YOU - no one else can duplicate it. It sells well for you because you have added that bit of magic to it and it's your GREEN dot. Trust it! Maybe you still have to find your GREEN dot? That's okay too! Once you find it, you'll know it! And then, don't take your eye off it! It's that ONE thing that your buyers want from you and only you. It's a high profit margin, high sales, low CAC piece of delightfullness that only YOU can provide to your perfectly groomed audience. Take a picture of it - frame it - and have a special plaque made for it...THIS IS MY GREEN DOT. Look at it every day!!

Of course I'm playing tongue and cheek here. Hopefully you get the point. When you're starting out, and you're lucky enough to HAVE a GREEN dot - stick to it. Anytime you stray from it is an opportunity to eat into your profits so consider it an experiment! Businesses do evolve and they need freedom to do so. However - when you stray from the GREEN dot, it should be done methodically and with a plan to create the next GREEN dot. And the next, and the next.

That's a wrap!

Hopefully you found some gems in this blog post! Thank you for reading along and I look forward to your comments and suggestions!

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