The question I hear the most often from sellers who have a craft fair or market
coming up is "how much stock should I take?" And it's a fair enough question.
You don't want to take too much and not sell everything and have so much stock
left and you certainly don't want to not have enough so that you miss out on
sales. So what's the right amount here?
Well today I'll share with you three formulas to help you figure that out.
I also have a free calculator that I've created so that you don't have to worry
about the math and you can get it in the link below this video. Let's dive in.
Hi, I'm Deb and I'm the founder of Tizzit.co,
a membership community for makers and handmade shop owners.
Today we're talking all about craft fairs and I want to get right into it with
formula number one.
The first formula to decide how much stock you should take to your next live
event, craft fair or market is what I call the "breaking even" formula.
The reason it's called like this is because you want to have at least enough
products that if you were to sell out, you'd at least cover your costs.
So it's kinda like your minimum if you wish.
So what you need to do for that - and again calculator is just below and will
help you figure this out - is to add up all of the different costs that you have
for going to this event. It could be anything from travel expenses,
if you need to pay for accommodation somewhere, gas/petrol,
food - anything like that,
seller fees or entrance fees of course to the market or craft fair itself,
the setup for your booth, any merchandising,
any things that you are purchasing to make your booth look pretty,
or maybe packaging,
marketing materials like business cards or flyers that you might have with you
on the day. All of these are your event costs.
Once you know what that number is,
you want to take that number and divide it by your average profit per product.
So, for example,
if I know that my cost for one event that I'm going to in a few weeks is $500
total and that on average I make $25 profit per product,
then I know that to cover my costs,
I need to sell at least 20 products.
Formula number two is based on what I like to call your money goal.
It can be a revenue goal:
how much revenue do you want to make from this particular event,
or it could be a profit goal,
which I tend to like even more because that's the money you actually keep for
yourself, so how much profit do you want to make from this event.
But the question in any case is:
how much money do you actually want to make at this event?
Then you need to make sure that you have enough stock to reach that goal.
So let's look at those two examples. First, if you're using a revenue goal,
you wanna take your revenue goal,
so let's say I want to make a revenue of $1,500 at this event,
and add to that the cost that you have for participating in this event.
Let's keep the $500 example that we've used.
That's a total of $2000.
You then need to divide that up by your average price point.
Let's say your average price point for your product is $34.
That means that you need 59 product sales to reach that revenue goal.
On the other hand, if you're using a profit goal,
then you want to use that profit goal, add your event cost as well,
so if my profit goal is $1000,
my cost for going to the event is $400 then I want to divide $1,400 by the
average profit - not price, the average profit per product.
That will give me the number of sales that I need to make to reach that profit
goal. In this example it's 67.
Formula number three is based on foot traffic or attendance to the event.
That's a little bit harder to use because not all event organizers are going to
be able to give you a foot traffic or attendance number,
but bigger events definitely do. Events
that have been running for a while know how many people they expect to come at
the event.
You can ask them and they should be able to let you know "usually we have x
amount of people coming to this market".
Once you know that you need to understand that of course not everyone at the
market will buy from you. That would be just fantastic.
An okay conversion rate would be 1%,
a good conversion rate would be 3% and a great conversion rate would be 5%,
meaning that if 5% of all the people that are coming to the event are buying
from you, you're doing pretty well. So based on that,
the formula would be foot traffic or attendance number (how many people are
coming) times that conversion rate.
That will give you an estimated number of sales at that conversion rate.
So what I'd recommend you do - and again it's all in the free calculator,
done for you in a spreadsheet so you don't have to do it yourself,
you can download it with the link below - is have a number for all of these
different conversion rates.
So if for example there is an expected amount of thousand people coming to the
event,
then at 3% that's approximately 30 sales that you are going to make,
at 1% only 10 sales, at 5% - 50 sales.
That gives you an idea of the amount of stock that you should bring to the
event. Before you leave,
I want to give you some very important last tips so that you know what to do
with the estimations that you're going to get from using those formulas and the
calculator. These numbers are a minimum,
and that means that to get to those goals, for example, your revenue goal,
your profit goal, or just breaking even,
you need to sell out of every single product, all of them gone,
which is really not super likely because there are different colors and
variation to what you sell. So you can't just say, "oh, I need 67 sales,
I'm going to make 67 items" because you don't know,
maybe that person would have liked it in blue, but now it's only in yellow,
so they're not going to buy. And so you're only gonna make 66 sales.
That's a simple example,
but just to tell you and explain to you that the numbers you are going to get
are a minimum. Based on that,
my recommendation is to a least double the numbers that you're going to get from
the calculator so that you can accommodate for a variety of price points and
colors and just really a variety in your stock.
And also so that your booth doesn't look empty because there's nothing worse
than an empty looking stand up or table.
My next tip would be to make sure that you offer different price points.
It should always be the case anyway within your product collections,
but it's even more important at a market because you want to be able to have
products that attract people to your booth because thare are big pieces that
they see from a distance and that really gets them to your table and to your
setup.
But then maybe that's out of their budget and that just helps you to get them
in,
but what they want is more of a medium to lower price range because it's a bit
of an instant purchase, right?
They didn't necessarily come here with a budget for what you are selling -
unless it's around Christmas, then maybe they do have a budget.
But what I mean is that you want to be able to offer different price points to
really get them at "I can't really afford this necklace,
but this pair of earrings there - I may as well just get them".
So make sure that you offer variety in this regard.
Next is make sure you grow your email list.
So I know you're at a live event and so it seems a little bit weird to think
about online marketing,
but really use that foot traffic so that even people who aren't purchasing from
you on that day can find you back online and you can keep in touch with them.
You can have just a sheet of paper where people can write down their email to
get updates or discounts from you.
You can have a giveaway on your table set up - anything you'd like to make sure
that people write down their email somewhere so that you can keep in touch with
them. And finally, if you have a lot of stock,
make sure that it's not all crowded in your booth and that you keep that below
your table in boxes or whatever set up you want to use.
But make sure that you're not just overcrowding your table because you're better
off refilling it during the day. And lastly,
remember that the calculators and those formulas will give you estimations and
they are also based on averages. There is no real rule.
Use that as guidelines but then really use your experience.
Experience is going to be key moving forward when you start to do more events.
That's it for today, guys. I hope this video was helpful for you.
Don't forget your free calculator.
The link is just below so that you don't have to worry about doing the math.
And thank you for watching.
If you'd like to get more videos like this to help you start and grow a
successful handmade shop, then make sure to subscribe to my channel.
I release a new video every Tuesday,
always with the goal to helping you build a successful and profitable handmade
shop. See you next time.