App Review: Square

Okay, getting back into the swing of writing this blog (how do you like the new theme?). Sorry I didn't post much for a while, between moving, getting used to living with another person again, selling events and life in general made this blog not a high priority. However now it's holiday preparation time so I'm going to be writing more. This includes this new App Review feature.

As I use new apps in my business I'll write reviews here about my experience. First up is one you may have already heard of: Square.

Square is a payment processing app that can be used on iphone, ipads, and most android devices as well. A little card reader plugs into the headphone jack that you can then swipe a credit or debit card with. The Square app lets you enter the amount of the payment (including sales tax if you have it set up for that) and processes the cardin seconds.

I've had the Square reader for a few months but I didn't have a chance to really give it a good run until late June when I had a booth at PortCon. It was a very busy event with a lot of people, many of them using cellphones and other devices that could affect reception (and did for phone calls). I was able to process payments for customers very quickly and I think the app must not use much bandwidth because I never had a problem with the reduced reception due to the number of people on the local cell network. At one point at the event the ATM in the hotel ran out of money so being able to take credit and debit cards made me sales when otherwise customers didn't have access to cash.

Pros:

• Card reader is mailed to you free after signing up.
• Fees are low, just 2.75%
• The app is compatible with most smart phones
• The app is pretty simple and straightforward to use
• Works in areas of low cellular reception (though obviously you need some reception or wifi available)
• Deposits are made very quickly
• Good stats available
• Business directory you can add your business to, though this is most useful if you have a B&M location that customers can visit.

Cons:

• You have to own a compatible smart phone or tablet which can be pricey.
• The card reader takes some practice. You'll want to use your own credit or debit card to practice swiping at home until you have it down (don't worry, you can swipe without charging the card). Don't go to your first selling event without practicing first.
• Some customers are wary of doing payment processing via your phone but as it becomes more common that seems to be fewer and fewer.
• The app can drain your battery so it's best to be in a place that has electricity available to recharge or invest in a portable power source for your phone and make sure it's fully charged.

Overall Rating: 5 out of 5. I honestly wouldn't consider doing a craft fair or other event now without one. If you prefer to keep all your payments with one service Paypal now has a similar service called Paypal Here which I have not used.

The Pychology of Free Shipping

Many handmade sellers are skeptical of free shipping, because free shipping isn't free for the seller. This attitude though ignores the psychological aspects of how you set your prices. Here are the two most common scenarios for free shipping:

Always Free - The seller offers free shipping all the time. In this scenario the seller has to build the cost of shipping into the price of the items.
Free as Sale - The seller occasionally offers free shipping as part of a sale or promotion. In this scenario the seller needs to have a high enough profit margin all the time to afford to run discounts*

However why offer free shipping when you still have to pay for it? For the same reason that a seller would offer 10% offer or run advertising: as a promotional tool. "Free" is a very powerful word and for online retailers an easy and affordable way to bring in extra business. In fact at least one consumer researcher has shown that shoppers will often pick free shipping over a discount even if the discount would save them more money.

For the time being I'm only offering free shipping as an occasional discount but with the prices for my raw materials and postage going up I'll soon have to revise my prices and I'm debating whether I should build the shipping costs into my prices. Regardless of what I decide in the end, free shipping will remain a valuable promotional tool for me and other online retailers.

* In my opinion this should be all sellers. If you don't have a high enough profit margin to be able to afford to discount either for a sale or for wholesale buyers then you don't have enough profit built in to adequately reinvest in the business and pay yourself a reasonable amount for your time.

Successfully Promoting a Sale

With Black Friday and Cyber Monday at hand here are my tips to running a successful sale. Feel free to reply with your own ideas.

ON ETSY OR OTHER SHOP
1. Edit your shop banner to announce the sale. This can be fancy or just adding a line of text in an eye catching color.
2. Also add text describing your sale to your shop announcement AND your Etsy profile
3. Edit your profile image to announce the sale as well.
4. Post in teams announcing your sale (make sure the team rules allow it first)
5. Add relevant tags for your sale, especially any official tags like "Black Friday Etsy"
6. Edit item titles to reflect the sale and put sale information at the very top of your item descriptions, I recommend edit express at craftopolis.com/ to make the process faster


OFF ETSY
1: Blog it, several times. I recommend once a few weeks out, again a week or 3-4 days prior, then finally on the day of the sale.
2: Post it on Facebook as an Event with all the details of the sale then share the event on your Facebook page. Again several time leading up to the sale.
3: Tweet the sale with a link to your shop, again several mentions prior to the sale and while your running the sale. Careful not to flood your feed with announcement tweets, every few hours is good.
4: If you have an email newsletter, send an email to your list announcing the sale
5: Post to deal sites like bigcrumbs.com
6: Run an ad on Google Adwords or Project Wonderful
7. Etsy on Sale automatically shares on their front page sales set up through the site.

Breaking Down Your Costs

Oops! This was supposed to be Wednesday's post but I accidentally published it early when I wanted to schedule it. There will be a short post on Wednesday instead.

How much are you really making from your work? Sometimes we don't honestly exaluate our costs by leaving off some of the costs.

A common pricing system that I see is Materials + Time = Wholesale x2 = Retail but I think this formula is flawed because it doesn't take into account other costs such as shipping materials, other costs, and fees.

I use a formula of Materials + Time + 15% = Base Wholesale x2 = Base Retail however because of shipping and fees from etsy and paypal it becomes more complicated after this. I add the total cost of shipping which is postage and shipping materials. Base Retail + Shipping Costs = Total Cost This number is what I WANT to receive after fees.

Note: I actually have a sliding scale for wholesale depending on order size but 200% is what I use for calculating the retail price.

Now Etsy and Paypal do fees different, Etsy doesn't charge fees on shipping while Paypal does but for simplicity I'm just going to assume they both charge on the total amount.

Etsy fees: $0.20 + 3.5%
Paypal fees: $0.30 + 2.9%

If you are interested in the math here it is (skip to the bottom if you're not)

Total Cost = C
Total price I need to charge = P
C+[$0.30+(2.9%P)]+[$0.20+(3.5%P)]=P
C+[$0.30+(.029P)]+[$0.20+(.035P)]=P
C+$0.50+.064P=P
C+$0.50=P-.064P
C+$0.50=.936P
(C+$0.50)/0.936=P

So if the amount I need to make is $28 I need to charge ($28+$0.50)/.936=30.45
Total Price - Shipping Costs = Online Retail

I've put this information into a spreadsheet on Google Docs with an imaginary item entered into it. You can download it in Excel or Open Office format and edit it with your own numbers.

Quick Tip #14 - Custom Orders

Do you take customer orders? Do you make it clear in your shop or on your website that you do?

I've made an extra $250 this month on custom orders. They can be a great way to bring in some extra revenue for your business. In particular you can usually a little charge more for a custom order because of the extra time them take out of your usual creating time. So for this vodka drinking cuttlefish I charged an extra $10 over the usual cost of one of my standard cuttlefish for the customization of adding the tiny bottle that I had to make.

Link Round Up: Selling Venue Updates

Some of the most popular online selling venues for handmade products have rolled out some new features lately. Bit late to the game on some of these but in case you haven't seen them:

Etsy Rearrange Shops - I've been looking forward to this one for quite a while so I can balance the way my items are viewed on the pages.
Artfire Coupon Codes - Great for doing sales or discounts for repeat customers. All the other venues need to roll out something like this, it's a great idea.
Artfire Facebook Kiosk - Display your shop on Facebook, this is great if you do a lot of facebook marketing. You can use your Etsy mini and the My Stuff app to do similar on Facebook for Etsy but it's not as simple.
1000 Markets Redesign - Looking much nicer now.

Tracking How I'm Doing

Sorry for the lack of a Monday post, I was in the middle of getting a brand new blog going called the Culinary Cuttlefish which is my food blog. Don't worry it shouldn't affect this blog from now on, I plan to post to it on different days of the week (probably Tuesdays).

A couple weeks ago I posted a link roundup on using .csv files and inporting them into spreadsheets. Today I'm going to show you how I'm using spreadsheets to track how Noadi's Art is faring.

First a little about how I'm keeping track of these spreadsheets. In the screenshot you can see the folder where I have all the Etsy spreadsheets. I downloaded the .csv file for each month, renamed them with the month and year, and saved them in Open Office spreadsheet format which is the software I'm using. I also have folders for Paypal and Google Checkout files as well.

Using the data from all these spreadsheets I've compiled a simple spreadsheet that tracks my months sales for 2009 (I'll start a new one for 2010 when it rolls around). This spreadsheet lists by month the number of sales and their value for Etsy, eCrater, and Other venues (art shows, commissions, etc), and the total number and value of all sales for the month and year.

Using this spreadsheet I could make a couple charts to visualize how Noadi's Art is doing. Yes, these are my real sales figures, they aren't astronomically high by any means but I'm very happy the steady improvement I've had over the year. 

So now you see how I've organized and compiled a lot of my sales data, do you have any tips or tricks that you use?

Slow Times

I frequently see sellers on Etsy and other venues complaining about a lack of sales or a dip in their sales. Slow times happen due to just bad luck, the economy, as part of seasonal shopping patterns, or because the seller has become complacent. How you deal with this can have a big impact on your business. Here's a list of a few dos and don'ts for when business is slow:

DO step up your promotion efforts. There are plenty of ways to promote for free or cheap when you don't have the space cash for advertising in the form of blogging, twitter, other social networking sites, squidoo, directories, participating in a giveaway or contest, etc.

DON'T sit constantly refreshing your stats or obsessing about them. Stats are useful but checking them constantly is not productive. No more than once a day.

DO work on new ideas. A new product line or variation can perk things up if people get excited about them. Besides when things do get busy you aren't going to have as much time to work on these things. The last time you want to be working on a new product type is the middle of the holiday shopping season.

DON'T look for a scapegoat. By this I mean don't look for something outside your control to blame your lack of sales on. It may exist, the economy isn't too hot right now, but you can't change some things. Focus on the factors you can control.

DO some homework. Take some time to take a class, read a book, etc. on running a small business. Your local small business association is a good reasource for this.

DON'T be afraid to ask for help. Many sellers are willing to give you some help, Etsy has a whole team full of them http://etsymentors.blogspot.com/

How To Lose Sales

I'm always covering things to do on this blog, I rarely cover things you shouldn't do. I have to give lots of credit to everyone on Twitter who helped me compile this list. Most of these are obvious and hopefully none of my wonderful readers do these but there are some people who still do.

1: Lousy photo. Blurry, dark, yellow tinged, bad background, etc. these photos don't give customers a good impression aboNothing telut your products.
2: Ignore emails. Nothing tells customers you don't care than not acknowledging their emails.
3: Lacking descriptions. How is a customer supposed to know they won't have an allergic reaction to your soap without ingredients or that a shirt will fit without the size?
4: Shipping is more than the cost of the item or extremely high. Find a cheaper shipping option or adjust your prices to balance them out.
5: Poor spelling and grammar. One or two mistakes, especially if very common ones like it's and its, isnt going to be a big problem. Howevar if ur listing make no cents, you has a problm.
6: Don't offer Paypal. Yes, I know it's owned by eBay and therefore evil in many eyes but it is the biggest player in taking payments online so you need to offer it.
7: Smoke around your products or let your pets around fabric/fiber goods. Nothing will cause someone to never buy from you again more than an allergic reaction or icky smell. If you want repeat customers smoke outside and banish the pets from your workspace.
8: Underpricing yourself. This is very common and I know it sounds counterintuitive but it's true. Prices that are too low imply cheap construction and materials. If your products are high quality you shoudl be pricing them accordingly.
9: Outrageous prices. Okay, so in the are of handmade products underpricing is a far more common problem but you can overprice your work as well. $300 is perfectly reasonable for an original painting (depending on size & skill maybe too low) but not for a print no matter how high quality is it.
10: Don't fill out your profile and location. Would you want to buy from someone who's anonymous?
11: Threaten your customers. Don't fill your policies with threats and don'ts, keep things positive but firm. For example "Items are shipped as soon as payment clears" is much better than "If your check bounces you don't get your item".
12: Unclear policies. If you only ship on Mondays, Wednesday, and Fridays you needs to state this. Be simple and straightforward.
13: Don't organize your shop. 100 items with no sections/categories is hard to navigate when looking for something specific.
14: Make a bad quality product. Strange, unusual, creepy, even ugly (chinese crested dogs?) all sell great if you can find your market, but bad doesn't sell.

Holiday Kick Off Report

So I don't typically do sales and that sort of promotion (my promotion focus is on getting the word out) so this weekend was an experiment. Here's what I did:

Free tentacle charms for certain orders - Cost negligible.
Free shipping - Average shipping cost for me is $5.40.
Advertising - I use Project Wonderful to run ads, my usual ad budget is $5 a week. I ran a campaign costing an extra $10 from Thursday until Monday.
Blogging, Twitter, Social Media - Using my blogs and social media accounts to promote my sale. Only cost was time.
Paypal and Etsy fees - $.20+3.5% for Etsy and $.30+1.9%-2.9% for Paypal.
Sales - Sold 2 necklaces and an ornament.

Total sales: $95.00
Total costs: $33.79
Profit: $61.21

By comparison last weekend when I wasn't running a sale I actually made a few more sales (including some higher priced items so my profit was much higher) so while my sample size is quite small I'd say that Black Friday/Cyber Monday did not seem to have much of an effect on my sales. Maybe it was the fault of my promotion not being effective enough or the economic uncertainty but at least from my experience it seemed to not be worth the extra costs. Especially the free shipping because that was a big loss on each order, maybe a more aggressive ad campaign would have been more effective but I need to do more experimenting with ads first.

So what was your experience like this weekend? Did you have increased sales? What sort of things did you do to promote your sales?

Black Friday

This is supposed to the biggest shopping weekend of the year. How as a small business do you compete with the big retailers or stores with deep discounts? The simple answer is you don't and you shouldn't. What handmade businesses offer is something different from mass produced goods, we provide quality and passion in our products, something they can't compete with. Your challenge is to find and entice the people who know the value of handmade and convince those on the fence.

I'm not saying that sales and free shipping offers won't help you make sales over this weekend. If you have interested shoppers those offers just might push them over the edge into buying. However if someone cares more about a deal than quality your sale isn't going to entice them because you can't compete on price with mass produced goods. I'm not writing this to discourage you but for perspective, there are lots of customers out there interested in handmade products and quality. Of course those customers need to find you but that's a topic for another post (probably many posts).