Picture this: You’ve been selling your beautiful stationery for a couple of years now and turning your side hustle into a full-time business…but just can’t seem to make it. No matter how much of your product you sell each month, you’re still barely scraping by. What gives?
It’s all in the margins.
What Are Profit Margins and Why Do They Matter?
Margins are just the shortened term for “profit margins.” Merriam Webster defines a profit margin as, “the difference between the cost of buying or making something and the price at which it is sold.”1
Many business owners know the grind of the first few years of being in business. Many times, their year-end profit and loss statements look more like breaking even, or just simply taking a loss. But after adjusting costs, building a following, and breaking into new markets, that number (hopefully) begins to grow over time.
Profit margins are important simply because profit allows you to keep doing what you’re doing, serving the market, and surviving the wild jungle that is entrepreneurism. Having good profit margins helps you take your business full-time and continue pursuing your passion.
Gross Income vs Net Profit
We know that we’re getting in the weeds here, but with intent. Because knowing the difference between gross income vs net profit margins helps you scale your business.
Gross income is the total amount of money made before expenses, taxes, or any other purchases are taken out. This number is helpful to get a full picture of the money coming into your business each month.
Net profit is what you have when expenses are subtracted from your gross income. If this number is negative, it’s time to start reducing your expenses. What can you change so that your profit margins are good enough for you to continue your business?
Knowing these two numbers is crucial for growth. When your Net income allows you to easily pay yourself (and other expenses needed to create and market your product), then you’re on the right track to building the right margins you need to make your business work for you.
How Can I Make My Margins Work for Me?
Many stationers know what it’s like to burn the midnight oil—especially when their stationery business is a profit-producing side hustle. Sure, you have to work your day job, but the real passion is in designing stationery. (We get it!)
Maybe that’s you right now. You desperately want to see your profit margins increase so you can take this side hustle into your main hustle. You’re not alone! If you did the math on your P&L statement and it’s just not “mathing,” it’s time to take a closer look at your profit margins and expenses. Here are some questions that will help you figure out how to increase your margins and decrease your expenses:
Ask any stationer and you’ll find that most of them dread pricing. Many stationers ask themselves these questions when it comes to pricing: “Am I pricing my items too high? Will someone pay this much for a (insert product here)? Are my prices too low? Can I keep my business afloat at these prices?”
One of the best ways to know if you’ve landed on the right prices is by making sure you can cover your expenses for making that individual item. Another thing you can do is research what other similar products are being sold for across various channels – from retail stores to Etsy. When all else fails, trial and error can help you figure out the right price per product for your audience.
Before choosing a vendor, it’s wise to compare pricing, quality, and ROI (return on investment). If a vendor is causing your profit margins to decrease, it’s time to shop around. Choose the vendor that allows you to create a high-quality product without sacrificing your margins. Product quality, customer service, value-adds like drop-shipping and fulfillment, and peace of mind are all factors to consider when working with vendors.
Another area to keep in mind is marketing. If you’re spending a ton of money on ads through different social media channels, but you’re not seeing turnover, it may be time to go back to the drawing board. Look at where most of your customer base comes from and spend more of your resources tilling that soil. Chances are, that’s the avenue that will keep giving you the greatest return.
Partner With PrintsWell to Level Up Your Stationery Business
At PrintsWell, we work with stationers from all over the country who are learning how important it is to increase their profit margins as much as possible. One of the best ways to do that is by working with a vendor that truly cares about the success of your business as much as you do. (That’s us!)
If you’re ready to level up your business and work with a printer who partners with you in your business journey, we’d love to collaborate with you. Fill out an application here and let’s take the first step together.