When you’re starting out selling your craft online, every single sale gives you a thrill.
Actually – every single sale still gives me a thrill, and I’ve been at this for over 6 years now! Celebrating each and every sale (even if that celebration is limited to a little internal shout of ‘woohoo’) is an awesome thing. You should never lose that thrill – it’s part of the joy of business.
That said… there is a really unhelpful metric out there when it comes to measuring the ‘success’ of one shop or business over another.
That metric is the number of sales a shop has made.
It’s an easy trap to fall into – especially when you start comparing the progress of your business to other people’s businesses. Most online selling venues (Etsy, Madeit, etc.) have the number of sales listed for public view. That is a great thing… for potential customers. It is a figure that gives the customer a quick measure of how long that shop has been in business, and how many other customers they have dealt with.
What it is NOT a good measure of is the financial success of that shop.
Now, I’m the first to argue that success isn’t just about the money side of things – but it is obviously a vital part of being in business. If you’re running a business, you’re doing it to make money, and that’s something you need to keep in mind every day.
But, when you start comparing how well you are doing with others based upon the number of sales you’ve made versus the number of sales they’ve made, you need to take a deep breath, step back, and start being more analytical about it.
If we get down to the bottom line, then the success or otherwise of a business comes down to… the bottom line.
That is: the revenue and profit that the business is making.
And there is no real way you can tell how much profit a business is making based upon their number of sales.
Let’s look at my Etsy shop as example.
As I write this post, I have made a total of 1,895 sales since I opened in October 2008.
That’s great – it tells my potential customers that I’ve been around for quite a long time (in the world of online sales, anyway) and that I’ve dealt with almost two-thousand customers through my Etsy shop in that time.
Now – let’s take a moment to clarify that my Etsy shop is only part of my business. I have my own website, and I’ve also had shops on many other online venues over the years, not to mention wholesale and market sales over those years. That’s the first part of realising that my Etsy numbers are only part of my business story. So – realise that when you look at one venue that a business sells on, chances are high that they are making sales in other places too.
Putting that aside, let’s go back to my ‘number of sales’.
Last year (2013) I made a total of 328 sales in my Etsy shop.
This year, as of writing (on the 18th of November, 2014) I have made a total of 380 sales in my Etsy shop. I’m guessing that will top out at over 400 by the end of the year.
Now – if you just look at those numbers, you might think ‘oh, she’s made some good progress growing her business, but it’s not a massive amount’.
However, what you don’t see by looking at those numbers is the difference in the revenue.
I may have only made an extra 52 sales, but I’ve made an almost 50% increase in revenue in my Etsy shop in 2014 compared to 2013.
Why? Because not only are my prices higher (I put the prices on my wedding rings up in November 2013, the reasons for which you can read about here) BUT I’ve also sold many more wedding rings than other pieces of jewellery – and they have a much higher price-point.
By that measure, 2014 has been vastly more financially successful than 2013 – even though the difference in the number of sales isn’t drastically different.
Let’s do a quick hypothetical comparison to clarify my point.
Say you compare my store with another store that sells scrabble tile pendants.
After a quick browse of the first few pages of results on Etsy, I’m going to say a mid-range price for a scrabble tile pendant necklace is around $7 (which is just ridiculously low, but that’s a rant for another day).
If a shop selling scrabble tile pendants at $7 per sale had made in the ballpark of the revenue I’ve made in my Etsy shop this year, they would have to make quite a bit over 5,000 sales in 2014.
Me – 380 sales.
Them – way over 5,000 sales.
To make a similar amount of revenue.
This is why you need to stop using ‘number of sales’ as a measure of the success of a shop.
Just for a minute, think about how much more work those 5,000 scrabble tile orders would be in the admin and packing side of things.
Communicating with 5,000 customers versus 380. Packing 5,000 orders versus 380. Sure – the product might be quick and easy to make compared to mine, but product crafting is only part of the work you do for each and every order.
Quite a difference, eh?
So, the next time you look at a shop and lament on ‘how many more sales they’ve made than me’, make sure to take a moment to consider what I’ve talked about today.
If you must compare, ask yourself:
What’s their average price per sale?
That will give you a much better idea of their bottom line – and therefore, how much money they are actually making… which is a much more accurate measure of ‘success’ than number of items sold.
AND – it is a question to ask yourself over and over again to ensure you’re not under-selling yourself.
Imagine – if you doubled your prices and halved your ‘number of sales’ – you’re still making the same amount of money… with half the work.
Food for thought, hmm?
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