I have a tiny miniature knitting business selling yarn, patterns etc. I love knitting, especially the tiny jumpers in 1:12 scale for the dolls house, as it is very satisfying producing something so tiny and neat. It gives me something to do in the evening in front of the TV. I sell my little sweaters on Ebay and they go quite well, and I have built up a loyal customer base. I have tried selling on Folksy and Etsy but it doesn't seem to work for me, Ebay is the way to go. Incidently, selling has been harder this year, and I think the prices they go for are lower than a year or so ago, but that is a different story.
I have been reading the Ebay discussion boards lately, and it seems that Ebay is pushing sellers towards offering free P&P. OK I thought, that seems a reasonable idea for buyers and with the start of a new year perhaps I should give it a try, but I decided to sit down and do something I haven't really done before, which is completely cost out the item and profit.
First decision is whether to go for auction or buy-it-now. Customers probably prefer the latter as they don't have to wait to buy.
At buy-it-now my price is £4.99, as this seems to be what the market will bear. So listing fees (for one item) are 40p + 30p US visibility (a lot of my customers are in the US), final value fee 49p, and Paypal commission 38p. A (large size) stamp is 75p, and the envelope and plastic bag come to about 3p. Materials are not a lot, say 10p (unless it is a cardigan, as buttons cost me 9p each, so that is an extra 45p, but leave that aside for the moment). I print most of my postage at home and put items in the post box, but have not included printer ink, cost of sticky labels, shoe leather etc. So my expenses are £2.72, and my profit is £2.27. Each sweater takes me about one and a half to two hours to make, so you can work out the hourly rate yourself.
If I list more than one buy-it-now item the same, the costs go down slightly (if they sell!) as the listing fee is the same, and there are other factors which are impossible to work out, such as Ebay giving higher listing priorities to buy-it-nows which are selling more than one item. I don't get any free listings as I am registered as a business.
So what about listing as an auction? I start at £2.99, and sometimes they only go for this amount, although anything higher is a bonus of course. So at this price listing fees are 15p, final value fee 29p, and Paypal commission 30p. Stamp is 75p, envelope and plastic bag 3p, materials 10p. Total costs £1.62, profit £1.37.
I must be mad.
Postage rates will go up in April, so these profits will fall.
Can I really absorb postage costs, or do I carry on doing what everyone else does and try to pull back some fees? At the moment I charge actual postage plus packing materials, plus 50p 'handling charge'. But then I risk poor star ratings from customers who expect actual postage only, and too many poor star ratings and Ebay firstly put your listing at the bottom, then stop you selling.
If I increase the item cost I probably won't sell anything.
I really don't know what the answer is.
I carry on because I love doing the knitting, and I keep saying I am not in it for the money, it is just a hobby. But I am well aware that some crafters do not like this attitude, and by devaluing my own work and undercutting prices I am devaluing everyone elses work too.
What do you think?