Although I’m a freelance writer by trade, I’ve always loved crafting and have dreamed of turning my hobbies into a business for years. I’m currently working on launching a woodworking side hustle selling small handmade gifts like pens and bowls. As a result, I’ve been doing a lot of research to learn more about running a handmade product-based business.
Sadly I’ve learned that some crafters aren’t turning much of a profit. Customers on platforms such as Etsy often aren’t willing to pay enough to compensate makers adequately for their time and effort. To ensure my side hustle is profitable, I plan to focus on customers who see the value in handmade products and are willing to spend more on them.
I’m also going to try to keep my material and labor costs as low as possible to maximize profitability. Here are the main ways I’m going to minimize expenses to hopefully make my business a success.
Find Cheap Materials
One of the reasons I’m starting a woodworking business is because I have access to wood. My home is on a forested 10-acre lot, so my partner will be able to chop down trees and mill them for me on our sawmill. Although cutting down trees take time and hard labor, it’s still cheaper than buying wood at today’s inflated prices, so it’s worth the effort.
In my area, I can also find lots of free firewood, wood scraps, and pallets. It’s not the highest quality wood, but it works for some projects. Upcycling has also become trendy in recent years, so eco-friendly consumers may appreciate that some of my items are made from recycled wood.
Even if you don’t have access to cheap wood like I do, you can still apply this same type of thinking to your own business. Instead of buying materials at full retail price, see if you can get some secondhand. Many hobbyists give away or sell supplies they didn’t use for cheap. If you visit thrift stores, garage sales, Facebook Marketplace, and Craigslist, you may be able to score some deals. You could even look into buying your products wholesale instead of getting them at Michael’s.
You may also be able to upcycle secondhand items and turn them into something new. For example, if you’re a knitter, you could unravel a sweater you bought at the thrift store and use the yarn for your projects. You could take old keys and turn them into necklaces or transform silver spoons into bracelets if you make jewelry. Use your creativity to dream up unique recycled products to lower your material costs.
Speaking from experience, handmade goods can take hours upon hours to produce. Many craft business owners don’t assign value to their time or factor their labor into their pricing. But even if you’d be making furniture or sweaters in your free time anyway, you should still aim to be profitable enough to pay yourself an excellent hourly rate.
After looking at the going price of handmade wood products like pens and bowls online, I knew I wouldn’t be profitable if I did everything by hand. The amount of time it would take me would mean I’d be earning around minimum wage at best.
Instead of handcrafting each product, I’m buying tools that will help me automate most of the production process. That way, I’ll maximize my efficiency and hopefully be able to sell more items and scale more effectively.
Invest in Time-Saving Tools
Since I’m starting a woodworking business, I’m planning to invest in a CNC. A small CNC machine costs around $2,000 and can make everything from cutting boards to skateboards. All you have to do is create the design in CAD and let the machine do the work for you.
Although I’ll still need to finish the pieces by applying stains, it will take me far less time to add some final touches than to make all of my products by hand. CNC machines do require a sizable upfront investment. But over time, it will more than pay for itself, considering how much time and labor it will save me.
To reduce labor costs and increase efficiency in your business, research processes and figure out how other creatives in your industry save time. For example, if you’re a knitter, you may be able to get a knitting machine to churn out sweaters. Metalworkers may find CNC plasma cutters helpful, and jewelry designers can bring their creations to life faster using a 3D printer.
These time-saving tools can cost a couple hundred or thousand dollars but are usually worth it when you run the numbers and see how much labor they’ll save you.
Save On Shipping
Although I plan to sell my products online, I’m hoping to make most of my sales in person. I live in a tourist town, so I’m going to rent a booth at the local farmer’s market during the vacation season. My farmer’s market has affordable booth rental rates, so selling in person will be cheaper for me than shipping my products across the country.
However, if the farmer’s market in your area charges high rental rates, you can use other platforms to sell your wares locally. Facebook Marketplace is free to use, and posting an ad on Craigslist only costs a couple of dollars. Taking advantage of these platforms can help you avoid shipping costs and lower your expenses.
If selling in person isn’t feasible for you, check out our post on how to save on shipping. You may get better rates by using a shipping platform like Shippo that charges less than the post office.
It can be hard to make your handmade business profitable after factoring in material costs, labor, and overhead. Hopefully, this post gives you some ideas to help you manage your expenses and get adequately compensated for your hard work.
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Vicky Monroe is a freelance personal finance and lifestyle writer. When she’s not busy writing about her favorite money saving hacks or tinkering with her budget spreadsheets, she likes to travel, garden, and cook healthy vegetarian meals.