Anyone here sell physical products?

[suzannemoore]

@fluffykits Is that $200k after a base salary? I'm about to start making products out of my decade old service based company and curious about the margins after all the overhead. Also, how many employees do you have. I really have probably 100 questions but I know we're all busy as hell here.

 

[fluffykits]

@suzannemoore That includes any salary, it’s just me and my wife right now, it’s a full time job for both of us and we only pull out what we need to live for our household.

I would say, you have to be aiming for at least 100% profit after all your costs are accounted for. All the little things eat away at your profit, I usually will price my items under my competition, but at the same time, profits still need to be made, it’s a fine line.

 

[kmichonanchored]

@fluffykits When you say 100% profit are you talking about basically earning 2x after all costs and expenses?

 

[fluffykits]

@kmichonanchored Yes if your thing costs $100, I try to walk away with $200 minimum AFTER credit card fees, web fees, overhead costs etc. (doesn’t include salaries that is a different category for me).

 

[kmichonanchored]

@fluffykits I appreciate your response. Im working on just getting profitable enough to keep the business alive, but I’m eager to get to a place where this can be my sole occupation. I love what I’m doing, and would love to be able to pay myself a livable wage so I can focus 100% on it. Having metrics like what you shared is good insight. Much appreciated.

 

[fluffykits]

@kmichonanchored You should go for maximum profit, if I could do 1000% I would but it’s not feasible for my sector.

 

[kmichonanchored]

@fluffykits I totally agree. My products have a ceiling, so my goal is to drive down landed costs as much as I can.

 

[suzannemoore]

So you're doing $400k in sales and have $200k to pay your two salaries and/or reinvest with? That's not a bad business for the family.

 

[fluffykits]

@suzannemoore Yes this is roughly my numbers right now, but I’m spending a ton on R&D and prototyping right now so we don’t use much profit for ourselves, we live comfortable but we don’t have wasteful spending on personal lives, we chose in this season to re-invest as much as possible into the business.

Yes I’m very thankful to have gotten into this business, maybe one of my kids will take it over someday.

 

[suzannemoore]

@fluffykits Being your own boss, while harder most of the time, definitely comes with its own benefits.

 

[kmichonanchored]

@fluffykits That’s amazing! How are you generating those sales? Through social media and email? And are you doing that all yourself or hiring out people?

I tried selling DTC when I first launched, but it was costing more than my product cost. I was assuming that my price point wasn’t high enough for that to be profitable (24.99$). I’ve since been focusing on Amazon and wholesale/retail.

In toy and game, retail is dominated by sales reps. Adding more titles goes a long way to getting those groups interested. And Amazon is still a work in progress…but dominated by Hasbro in my niche.

All in all, I feel positive about the reaction we’ve been getting, but I need to focus on some smart/creative ways to continue to grow sales.

 

[fluffykits]

@kmichonanchored SEO is my main method to generate sales. If your margins are not high enough you might need to make bigger orders at your manufacturer to get the cost per unit to be less. But you need to know your market inside and out, and have confidence you can sell your inventory.

 

[mista_b]

@fluffykits This is motivational - Well done

Also feel free to check out my Tiktok/ Instagram - You'll find it in one of my recent comments lol

 

[jayden_jay]

@fluffykits How many employees? At 50k you can do by yourself. But you gotta be hiring or outsourcing something to be doin your numbers now right?

 

[fluffykits]

@jayden_jay No employees just myself and my wife at this time. But next year we might have to hire someone.

I don’t like wasting money and unless we absolutely have to, I won’t hire any employees. Being as busy and stressed as I am is a decision, and a sacrifice, I could hire someone to help with shipping but I’d be losing 30-50k a year, so instead we do it all ourselves and use that money to grow, for R&D and prototypes, and inventory.

I design my own items, have an engineer I contract for 3D modelling, and I have a manufacturer make the items. I will say that I don’t like using China, and I know it’s not practical for everyone, but I make all my products in Canada, but my industry sort of allows for the premium attached to a domestic made product.

 

[kmichonanchored]

Wow…that does sound difficult. Does your business model involve finding clients to make the products for, and having to manage the sales channels for them?

 

[frizzybear]

@kmichonanchored I’m about to start…this week! gulp

 

[suzannemoore]

@frizzybear My advice is to do the smallest possible run to see if it will sell first. Can you sell ten? I have a thousand units of something that I can't sell because the whole industry took an abrupt turn in 2020.