The Cost, Part 2

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In my last post I wrote about the devaluing of human labor in the world of fast fashion. Realities like that lead many of us to want to shop (and not shop) more ethically. If you’re reading this post, it’s likely that you care about buying fewer, better things, and even things that are made by hand. You already understand that means paying more, but that the value is greater. You’re buying something with a story, with meaning, and you’re supporting a small economy that is bringing some good into the world. This is a shift in consumer thinking that I am grateful for, and that makes a business like mine possible.

But. I have noticed that, with the proliferation of Etsy shops and handmade markets, a myth has grown up. The myth says that it’s possible, in 2019 America, to have a booming business making things, by yourself, by hand, one at a time. If you are one of the unicorns who has found a way to do this, go you! Tell me more. But if you are someone who has started a business like this and are wondering why it’s so damn hard, it’s not you. Or, if you’re a person who cares about supporting ethical businesses that add some wabi-sabi and warmth to an otherwise uniform and industrialized marketplace, read on.

One of the most common questions I’m asked is, How long does it take you to make a bag? At its face it’s a pretty bland question. So why do so many people ask this? I’m sure there are different reasons. But I think many folks are applying a formula that makes sense to them: The price of a thing should cover the cost of the materials and labor, plus a little more for “overhead.” So, when they ask me how long it takes me to make a bag, they are doing a calculation in their head, to decide if my price is fair. I think this is why the question always makes me squirm.

If only the formula were that simple, and if only it could result in a sustainable business. (Throughout this post, I’m speaking specifically about a business like mine: a small operation where physical products are made to order, and where the person running the business controls the production in-house.) The fact is, producing the thing you’re selling is just a small part of growing and running a business like this. Likewise, the cost of production is just a small part of the total costs involved. So, if your price covers just your production costs (materials + labor) with a little extra on top, a couple things happen that, in my experience, cause the whole system to grind to a halt.

The first thing that happens is that you can’t afford to pay anyone to help you, because, when you’re working on a very small scale, your price only covers your own labor, which you expend on making the thing you’re selling.

The second thing that happens is that, because you are spending all your time and energy making the thing you’re selling, you can’t devote any of your resources to finding people to buy the thing you’re selling.

It’s pretty dang demoralizing to be pouring physical labor into your product only to come up for air and find that there aren’t enough (or any) people to buy it to make it worth your while. And, in the era of Etsy and Instagram, it can seem like every “maker” around you is somehow succeeding at the nearly impossible, making a decent living by making things by hand. We all wish it were possible for anyone with a passion to put out their shingle and make an honest living working with their hands, but this is America in 2019, not 1950, and the economy doesn’t allow for that anymore. Or at least, having a life like that requires sacrifice (“Do I really need health insurance?”) and luck (“I’ve gone viral!”). I’m sure there are handmade businesses that have hit on a good formula, perhaps where the product is fast and cheap to make so more time can be spent on finding customers; but for people dedicated to improving and refining their craft over time, this is not likely to be the case.

I’m still figuring all this out. Here are a few things I have come to, that might be obvious to someone with a business background, but might not be if your first calling is making:

1. Marketing is the lifeblood of a business, and can’t be an afterthought. It takes time and money. It also doesn’t have to feel icky (it’s taken me three years to figure that last part out—more on that later). Starting a handmade business usually isn’t an “if you build it, they will come” situation. It’s about building lasting relationships, and that takes work.

2. Businesses have to grow to be successful. Capitalism 101, I know. But when you’re doing something for the love of doing it—I love designing and making bags—it’s hard to be convinced of that. The growth doesn’t have to be extreme, Silicon-valley growth. It can be slow, and intentional, and can even be actively limited. But you have to reach a certain scale to create efficient processes, afford to pay people to help you, and devote your time to creative and life-sustaining work instead of the grind of getting each order out the door.

3. The Internet’s not real, and if you feel like everyone is succeeding but you, you’re just wrong about that.

If you’re interested in some fascinating and transparent price breakdowns from ethical, made-in-America companies, check out these posts from Elizabeth Suzann and East Fork Pottery. Their production costs, for the example products they show, account for 34% and 26%, respectively, of their final prices. Quite different from the cost + a little extra formula I mentioned in the beginning of this post. I’d love to hear your reactions to those numbers, and this post in general, in the comments.

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Margaret Hennessey4 Comments