If you're trying to make money from your handmade shop online,
be it a side income or full income,
it's really important to be able to set realistic goals.
In this very practical and short video,
I want to help you quickly calculate how many visitors you need to get to your
shop each month to reach your income goal. Let's get started.
Hi, I'm Deb, the founder of Tizzit.co,
a community of makers and handmade shop owners.
This is going to be a very short, very practical step by step video.
To make money you need to make sales and to make sales people need to find your
store and visit it. In other words,
you need what's called "traffic" to your store.
And it's really a fine balance between traffic and conversion,
which is the sales that you make from that traffic.
Sometimes I get makers asking me why they're not making sales,
when in fact they're actually making decent sales for the amount of traffic that
they're getting.
Their problem is really that they don't know how much traffic they need and so
they think they have a sales or a conversion problem where really the problem is
that they need more traffic. The reason is simple,
not everyone who visits your shop is going to make a purchase.
That would be way too easy and beautiful and amazing. In fact,
the industry standard,
the e-commerce standard is 1-3% conversion rate.
Now for a quick little definition here,
conversion rate is the number of sales that you've made over a month or a week
or whatever time period you decide to work with divided by the number of
visitors that you had in your shop in that same timeframe,
times 100. For the purpose of this video,
we're going to assume that your conversion rate is 2% so if you know that yours
is actually higher - which is awesome by the way - or lower,
then you can of course adjust the calculation.
I just need to use an example here so I'll use 2% as an example.
And the question we really want to answer is when you're working on your social
media, when you're working on your SEO,
when you're working on any of the marketing strategies to get people to visit
your shop,
what is a realistic number to aim for that's going to allow you to actually make
the sales that you want to make and the income that you want to make from your
shop.
The first step that you need to take is to calculate what your average sale
price is.
For this example we're going to take $80 as the average sale price because it's
easier to work with round and simple numbers.
So for this example we'll use $80 but of course replace that with whatever your
average sale price is, and if you don't know that,
what your average item price is.
The second step is to write down what your revenue goal is.
And for this example, again,
we're trying to keep the math nice and simple for us so we can follow along
without the need for a calculator.
We're going to say that we want to make $5,000 a month in revenue.
Careful, that's the revenue that you want to make with your shop.
It's not the actual income that you want to pay yourself. That's not your salary,
that's not your profit.
That's the total amount of sales revenue that you want to make over a month.
Then the next step, step number three,
is to write down how many sales you need to make to reach that revenue goal.
To do that, we're going to take your revenue goal,
your monthly revenue goal - in our case it's $5,000 - and we're going to divide
that up by your step one number,
which was your average sale price - in our case $80.
What that tells me is that to reach my revenue goal with an average sale price
of $80 I need to make around 62 sales each month.
Now the last step,
and that's step number four is to determine how much traffic you need to bring
in every month to reach that goal of 62 sales that we came up with in step
number three. And to do that,
we're going to do a quick little math equation here.
You want to take that number - 62 in my case - sales goal that you came up with
in step three,
you're going to multiply this by 100 and divide that by your percentage of our
conversion rate. In my example, it's 2%.
What that gives me is 3,100 visitors per month.
That's how many people I need to make visit my shop each month to be able to
have 62 sales that month in my shop.
So let's make sure the math stacks up here.
If I've got 3,100 visitors in my shop and only two out of 100 of them are
buying, I do get back to 62 sales.
3100 times 2% is 62 sales.
So Of course this number would change a bit if one month you happen to sell more
lower priced items or more expensive items,
but this is a great way to get a general idea of what you're looking at when it
comes to driving traffic to your store.
Because I know that it's not necessarily easy to get traffic to your store and
once you start getting a few hundreds of visitors,
you start feeling really good about it - and you should because that's awesome
and congratulations on getting there!
But the reality is that you might need to push that even further to a few
thousands to actually reach your revenue goal and your income goal.
Now my last tip also is that traffic is wonderful,
but if your conversion rate to start with is below 1% then you might want to
work on improving your conversion rate before generating more traffic.
And If you need help with that I'll link to a video that I made that's called
"are you getting views but no sales?".
And That's all about how to actually increase that conversion rate and get more
sales for the same amount of traffic each month.
I hope this helped and make sure to let me know below; I would love to know,
if you are willing to share with me,
what your traffic goal is after making that calculation and if it is far off
from what you thought it was. And Thank you so much for watching.
If you thought this video was useful, please subscribe to my channel.
I come up with a new video every Tuesday to help you grow at start and grow your
handmade shop.
And I'll also link below this video to my free resource library just for makers,
full of workbooks and guides and checklists to help you really grow your shop
and turn that into the successful handmade business you deserve it to be.
Thank you so much and I'll see you next Tuesday. Bye bye!