Sunday, December 30, 2007

Doing The Math

A week ago today I wrote about the crèche (for most guys- insert the words barn/stable type structure used in nativity scenes) I made for Michelle. It has since garnered much praise from those that see it.

One of the things most everyone has said is that I should consider making these to sell for extra income. The encouragement seems genuine and it has convinced me that the two I’ve made are of good enough design and quality to sell retail.

Though the words are kind, and very encouraging, there is one big problem with this idea. There is little money in it.

I did some research and found that quality crèche’s like the one made by Willow Tree run about $90. Knowing gift and specialty retailers typically get between 40 and 50 points margin on the retail price (margin is the difference between what the retail paid for an item, and what they sell it for), that means retailers are paying somewhere between $45 and $54 wholesale for these crèches.

So, that’s the market I would have to compete in. Knowing that my crèches would not fetch the same premium as a well-known designer like Willow Tree (mine would probably retail for around $60 and retailers would probably require 50 points margin), and that any future crèches I would make would not be made out of the free wood I found at the dump, and that the milk-based paint I use is not cheap, and that it takes me about 6 hours to make one, there really is no money in this for me.

Assuming the wood and paint is $3, that would leave me about $27 in gross profit after my cost for materials. And at 6 hours work, that comes to a whopping $4.50. The federal minimum wage is $5.45. I suppose I could file a grievance against myself, but then I would price my crèches out of the market if I had to pay $35.70 in parts and labor to only get $30 wholesale per unit.