Hello beautiful people!! As you can see, I’m still doing my assignments for the third course in the certificate and they’re beyond amazing 🙂 Today’s post (aka course assignment hahaha) is about understanding Production Costs, and how they affect your profit margin when you are designing for a few pieces versus when you’re designing and selling in bulks.
In a previous post, we talked about creating an accessory piece out of unconventional materials. My piece was a pair of paper laminated earrings. I created the illustration myself, printed and laminated it. In my current assignment, I’m calculating the production costs if I were to produce a single pair versus if I would to produce them in bulks. When I started making the calculations, I figured that It doesn’t make financial sense to produce a single earring as the labor cost would be a significant overhead and I wouldn’t be able to sell my earring, so I decided to make the calculations as if the minimum quantity to produce is 30 earrings and then divided the numbers to get the cost per earring (as you can see in this post’s featured image).
What I learnt is that producing in bulks is more economical and efficient. For example, I put 3 hours of labor into making a single design, printing 30 of them on a single sheet of paper, and laminating this sheet and then cutting it off to produce 30 different earrings. This time wouldn’t be much less if I were creating one pair, since I would still be putting the same amount of time in the design, printing and lamination. The only difference would be in cutting the laminated sheet into 30 different parts and attaching the hooks.
I hope this post gave you a good overview on how to set a simple pricing strategy for your products. It’s very similar to what you would do if you’re a small business owner even if not in fashion 😉