Please don’t make me look!
May 5, 2007Happy Cinco de Mayo! In my inbox are 2 emails from Mr. New sourcing agent and I’m scared to open them… So there they sit all in bold taunting me because I’m to chicken to open them. In 1 of them I know he is answering my request for a meeting on Monday May 21. He is about an hour and ½ away from me, but I have friends in the same town, so I’ll make a little vacation out of the day. Mr. Original Agent I have met with a few times and even had dinner with, so I feel like I know him better. (Nothing like breaking bread over a bottle of wine to really get to know a potential vendor!) All my dealings with Mr. New Agent have been over the phone and via email, so this was my attempt to reach out. Hopefully he says he’s free. The other email… not sure. Okay, let’s find out… I’ll be right back!
If you like the feeling of being nauseated 4 out of 7 days a week, then by all means become an inventor!!! Just kidding, BUT you certainly have to have gut made of steel to take all the ups and downs thrown your way, that’s for sure! Bad news, he can’t meet on the 21st, good news he is free (as am I) on the 17th. That was email #1. Email #2 is where the nausea sets in. He got his quotes from the factories and there is 1 thing I am unclear about which will either make it bad news (price does include packaging and transportation) or REALLY bad news (price is only for the 6 charms excluding packaging and transportation). Bottom line… the cost to manufacture is way too high to sustain a business. Havening said that though, in my original plan, I did factor in that I MIGHT have to sell my first 500 units at a break even or even a loss just to create the demand that will drive up volume and lower costs.
Right now I am looking at my “start-up cost analysis” and I estimated my initial production run of 500 units to cost me several dollars more to manufacture then my wholesale price to my retailers, so I did figure the first run to be at a loss. (Boy oh boy am I glad I was realistic with my numbers!!) So, lesson so far: you might have to suck it up and sell your product for less then it costs to make in the beginning. The market will not let me charge $40.00 for my product. I know that from doing very thorough primary market research with my prototypes. The market has told me what it can bare; now I’ve just got to get my volume up so I can lower costs. As time goes on, I don’t see consumers willing to spend more for my product, so my job is to bring my costs down. (Also… still waiting on Mr. Original Sourcing Agent) Can’t wait to see happens next week!!
I’m so glad the kiddies are giving mommy a good long nap today… mommy needs it
Leslie Haywood, Founder and President of Charmed Life Products, Inventor of Grill Charms™ www.grillcharms.com
May 6th, 2007 at 5:46 am
Hi Leslie -
You’ve just hit on a harsh reality of starting a business with your own products. I’m now calling it the “give-away” stage. In the apparel industry, the ’sample’ run costs at least 3 times what the production run will cost. So you should expect your first go through to be more expensive. Of course, we don’t get 500 “samples”, and so you should be concerned if the too-expensive price is an always price.
Our personalized blankets required me to come up with a unique manufacturing process and as a result, they are high-end items. But we are also constantly identifying points in our manufacturing process where we can cut costs - so have hope that it will get better.
I just want to add not to underestimate how much of your product you’ll have to give away to build your brand. We’ve given a lot of product away for press and publicity, and it has really paid off. But it was something I underestimated in my planning.
Also, it comes down to targeting your customer. Something I’m constantly working on. If your charms will be pricier at first, your target store will be the pricier stores. But just keep your faith - you can figure it out.