:: nss recap, the five months later edition ::

lately i've been making - and talking about making - some small and less-small changes to how this little business of mine works. i'm cutting out the greeting cards, for one thing, because i need more room.

more room in my studio. more room in my schedule. more room in my brain. more room to make other things happen for up up creative.

so this morning, in response to some chit chat about some of the still-to-come changes, brian asked me if we're doing NSS again in may (of 2012). 

i said i let my spot go for now (they wanted my commitment long ago already and i wasn't ready to give it - or my money) and i need to think about it, but that i'd been thinking no.

the thing is, i feel really resentful about attending NSS this year. despite the good feelings i had at the time and all the stuff i said about already thinking about next year's booth and all, when all is said and done i look back at that experience and i'm mad. (for more reactions to the show, see this thread of posts here on the blog.)

right before my crazy name-your-price experiment was first conceived, i sprawled out on my belly on my studio floor (i wouldn't advise this, friends. i'm really not sure when this carpet was installed but i'm positive it was too long ago for anything good to come of sitting on it, let alone lying face-down on it) and i made a little mind map to try to explain to myself why i feel the way i do about NSS.

it's all in cursive and therefore difficult to read in a photo, so i've recreated it for you and made it nice and big. if you click on this small photo (below) you should be able to read the whole big thing (you may have to click on the link and then click on "see original" and THEN once the image opens click it once more to make it full size).

basically i feel conflicted but mostly i feel mad and frustrated. my gut keeps saying NO NO NO even though there are parts of me that feel like it deserves another chance.

brian thinks we should do it. do it differently, but do it. i'm still undecided.

at the end of the day (what a weird saying that is for an event that lasted more or less one week) the event cost me $5775 including hotel and travel (we were lucky that we lived close enough to bring everything ourselves and we also used points to cover about half of our hotel expense, and we totally scrimped and saved as much as we could on things (i.e. fabric walls) but excluding food (no small total in NYC, yo). the week of the show i wrote $1176 in orders, or about 20% of the cost of exhibiting, which is decent for the week of the show for a first timer, or at least i'm told it is.

but i haven't written a single wholesale order since then. 

i've tried, i suppose. i sent follow-ups to over a hundred individuals and shops that expressed interest at the show. i've offered incentives and such. i've been getting good industry press (the editor at stationery trends sends me individual requests for specific images she'd like to include in each issue, for example, and there have been others - a few magazines and such). and oh! i had interest in my calendars from kate's paperie.

but the stars haven't aligned and my heart hasn't been in it. i don't like that i get sales leads emailed to me weekly as a result of my appearances in stationery trends. i don't like adding those names and contact info to my now extensive list of retailers. i don't want to call them or send them anything. i'm a designer, not a sales rep. i like doing certain kinds of marketing directly to the people who will end up with my things in their homes, but i don't like all this sales work trying to convince other people to want to do additional sales work on my behalf. it doesn't feel right. 

so i've got time, still, to decide. i'm sure that in january there will still be spots available for the may 2012 show, just as there were last year when i signed up. but it's hard for me to figure out what could happen to change how i feel about the 2011 experience enough to make me want to give 2012 a go.

:: the more you know... ::

even though it makes me a bit sad if i think about it in a sad way (tautology much?), i've taken some steps these last few days to stop doing greeting cards. i did inventory, i removed all of the cards from my etsy shop (because my own shop tracks inventory, and my etsy shop makes that confusing and all not-worky), and i reduced the price by 25% for now.

which means it's time to stock up because it won't be long before they're all gone. i don't keep a lot of inventory on hand because i don't have a lot of space (my attic studio is small and not conducive to storage, what with it being unheated and uncooled and slanty-ceilinged). 

here are a few you may not know about, but should:

bitter / sweet dichotomy card

cah-gah-gen terrible twos congrats card

if you're happy and you know it

hero

i have a secret

so yeah,

thinking of you

crazy love X - tv shows

have a lovely wednesday, friends. sorry for the very sell-y post. i'll be back later with a link to my guest post on a practical wedding, so there's that!

:: stop doing ::

i mentioned this a couple of months ago: the stop-doing list. it's a list of things you're going to choose to stop doing so that you can do something else. it's a priorities list from the bottom up. and it's hard.

it's hard cutting something out. it's hard admitting that something you love just isn't as important to you as something else you love.

over the summer i made a stop doing list for my business, and even though writing it was hard, i knew it was right. 

but i still haven't actually stopped doing a single one of the things on the list. and i need to. there needs to be room for other things. 

so here's the story, friends. i'm going to stop selling greeting cards soon. that's the first really big, really impossible-feeling item i'm going to tackle. i'd like to turn over that part of my business to someone else if someone out there wants it. i'd like to find someone who wants to grow an indie paper business and i'd like to sell it to them for very little money - the break-even cost of my current inventory plus a small amount for copyrights, current accounts, etc. we're talking in the low thousands here, max.

i'm going to spend october looking for a buyer and if no one expresses interest then in november i'm going to start selling off my inventory at a reduced price in my shop. 

:: figuring the break-even ::

statistics are slippery things. 

they're not just numbers that line up and present themselves to you in the shape of answers.

or at least, they're not effective that way. certainly it's possible to make them do that. it's possible to enter all the raw data into your little spreadsheet and then find some averages and such and call it a day.

but there's more to the story.

there are different questions you can ask the data. different filters you can use. there are important comparisons to be made from within the data. there are freak-occurrences to account for, or not to account for.  

if i want to defend my experiment i can look at the numbers one way; if i want to poke holes in my experiment i can look at them other ways. if i want to answer questions about what, exactly, people paid me for, i need to root a little bit deeper.

...

my first time through the data i added everything from the experiment up and i compared it to two important numbers i use in price calculations all the time: my break-even price and my retail price. (i plan, also, to compare to a third number i use all the time: my wholesale price. but more on that later this week.)

according to those comparisons, the data looks like this:

total named price (excluding paypal fees and the price each customer paid for shipping) across all 33 orders = $7916

total break-even price (which pays for all raw materials plus the labor required to print & assemble each order, labor which i have found ways to keep to a minimum (i order almost all of my raw materials at their finished sizes, for example) and which i bill at my standard rate of $60/hour) = $8445

total retail cost = $17832

so voila! the total named price covered 94% of my break-even price and about 44% of my retail price (usually wholesale = half of retail, so that's not too shabby). i was thrilled! whee! (yesterday i said in the comments i think that it was within 4% of breakeven -- i was wrong. sorry!)

but as i started to work on this reflection article i'm working on for another blog next week, and i started noticing that 17 of the 33 orders were for completely custom designs, i started to realize that the picture i'd just painted with those numbers - the one in which i danced my happy dance because i'd been paid for my raw materials and almost paid for my time printing, cutting, and otherwise assembling all those orders - wasn't really a very accurate picture.

because those two important numbers i compared everything to, the ones i said i use all the time in price calculations? they're for the designs in my "catalog" so to speak. for the designs i've already designed. the designs that require a bit of time for me to typeset each couple's individual wording and change everything to their particular colors (chosen from 48 colors i've pre-selected) but that require no new design work.

those numbers - the break-even price and the retail price -  really only compare fairly to the prices of the 16 people who ordered "catalog" designs. for those 16 orders, the numbers bear out like this:

total named price across all 16 non-custom orders = $3471

total break-even price = $3720

total retail cost = $8073

so these customers paid 93% of my break-even price (43% of retail). yay! awesome! woohoo!

but then what do i do about the custom-design folks? the 17 orders i received for completely custom suite designs? if it's not fair to compare them to my catalog designs, then what should i compare them to? how do i figure out what the data from these orders means?

figuring this out means taking an honest look at my own value of my work, and i don't just mean my hourly rate. 

now truthfully, each custom design is different. each situation is different. despite the fact that each order gets a set of prototypes to choose from and then up to two rounds of revisions to the chosen prototype, each custom project takes a different amount of time. a different amount of effort. a different amount of personal investment. a different amount of pushing the boundaries of my own aesthetic. a different amount of joy on my part, even. a different amount of technical design-software illustration-technique expertise. so it's hard to even begin to come up with a number of design hours that need to be included in my comparisons here.

but i decided that a fair estimate of the total number of design hours required by these particular 17 custom orders is 50 hours. i've completed a few of these seventeen and have done enough custom wedding suite design in the past to think that this is a reasonably fair guess. at $60 an hour (and before you non-designers in the bunch balk at this, consider that this hourly wage is before self-employment tax, before rent, before all business-related overhead, before the cost of maintaining a website, before advertising… chances are good that if you're employed and you make $12 an hour, the company you work for is paying out significantly more than this on each of your worked hours) this amounts to $3000 worth of custom design work ordered in september.

so where does the additional $3000 in design-hours go? is it part of the break-even price?

if you look at the survey questions i asked, i think a lot of people would add it to the total retail price line, but not to the break-even line. after all, 90% of respondents to the survey indicated that in order to name a fair price they would want to know my raw material costs. 63% of respondents said that if i want to somehow continue to incorporate this pricing model into my business for the future, i should only allow people to name their own price on the custom design work but charge set prices for the printing.

i get the logic here, i do. the fact is, there is a set amount of money going out of my pocket to pay for the raw materials. if i don't take that much in, then i will slowly (or quickly!) go bankrupt. but i tend to see my time the same way. i've only got so many hours i can work in a day. in a week. in a year. and if i'm not paid for those hours then they're gone.

imagine logging 37.5 hours each week at your office job and finding that while maybe you didn't have to pay a cent out of your pocket to be there, you're not going to be paid for those hours. those hours are gone and you're no better able to pay your bills. feed yourself. live.

my hourly wage is set according to the amount of money i need to cover expenses and a modest "salary" to me based on the number of hours i work in a week. that means that in order to cover those expenses and pay myself (so that i can, in turn, pay the babysitter, the mortgage company, the grocery store) i need to actually be paid for those hours. being paid less than my standard rate means working extra hours at a reduced rate (imagine if bosses asked us to do that!!) or simply not making ends meet at month's end.

for september's orders, i'll be doing the former -- i'll be putting in lots of extra hours at a greatly reduced rate. or, i'll be working the usual number of hours at my usual rate and then donating 50+ hours for free. the numbers are as follows:

total named price across all 17 custom orders = $4444

total break-even price (including custom design-hours) = $7726

total retail cost (including custom design-hours) = $12759

so these customers paid 58% of my break-even price (35% of retail). it's kinda not as awesome. these customers paid for a little more than half of my materials and half of my time. the rest is mine to absorb.

or put another way, they paid me as if i were making non-custom stuff. they did not pay me for my design work.

the thing is, i don't like writing this because i really really believe that most of the people who ordered custom work from me really believe that they were paying me for my time. for some of them i think they grossly underestimated the cost of my materials; for others i think they underestimated how long i work on custom designs; for still others i think they underestimated the hourly freelance rate required to make a living wage. for most of them it was probably some combination of all three factors.

i should note at this point that none of these 33 orders were negotiated in any way. i only tried negotiating that one really crazy order, and she eventually requested a refund instead (and it was granted, of course). these other 33 orders had almost no input from me regarding pricing except for one or two people who wanted to tell me their price first and as long as it wasn't insane i said it was fine.

so in the end, what's a girl to make of things? 

i'm not totally sure.

there was awesomeness this month and i loved it. i ended up with decent money in the coffers, payment for my labor mostly, but not enough to cover any of my design work, which was (and will continue to be throughout october - i think i've completed about 1/3 of the orders so far) significant. i learned that people are looking to be inspired. i learned that people want custom work done and they think they're willing to pay a premium for it, but they may not know how or actually be willing to.

i'm still not decided on how the whole thing feels as i sit here wearing it this october 3rd. it feels good and bad. it feels interesting and completely uninteresting. there are some surprises here for me. and there were amazing conversations about value and pricing and worth and time. conversations that made me happy and sad and angry and uncomfortable.

that part of the experiment was a wholehearted no-doubt success.

i still want to compare this with the wholesale model, which will come later this week. in some ways i see myself as having done two major experiments this year: NSS and this one. and i need to do some more thinking about the advantages and disadvantages of each.

i'll end with one last thing: i still really want to see if i can make this work somehow. i love the spirit of it. i love the customer it attracts. i've got my thinking cap on here, folks, and i hope that you do, too.

...

and before anyone points out that the analysis of the custom stuff throws the conclusions at top about the whole experiment, statistically speaking, out the window, let me assure you i've already thought of that. if i use a weighted method of combining these two categories of orders, the analysis of the whole project changes significantly:

total named price across all 33 orders = $7916 (this has not changed)

total break-even price (including custom design-hours) = $11,445

total retail cost (including custom design-hours) = $20,832

so that means that overall, the named prices covered 69% of my combined break-even cost, and 38% of the retail cost.