Wednesday, February 8, 2012

The Reality of the Handmade World

I love the Handmade Marketplace.  I'm sure that is no surprise.

I have loved every minute of creating and building my Handmade Business.

I love the community of Handmade Business Owners.

But there is something that I think too few people are admitting, and I think it's time we start to talk about it.

The reality of having a "handmade" business is that you will probably not make money.  I don't say this to be Debby Downer... I say it because it is true, and I think people need to start admitting it so that we can find a solution.

I have many, many friends with handmade businesses.
I have a couple of friends with handmade businesses that are living off their income.
And I have one friend who turned her handmade business into a "real" business and now has a warehouse, a full staff, and a husband who quit his job to run her business full time. 

Last year I read an article in Inc. Magazine about Etsy.  The article stated that in 2010 the 400,000+ sellers on Etsy sold $314,000,000 worth of products.  It went on to say, "Three hundred and fourteen million dollars is an impressive sum, but it amounts to about $785 per seller after commissions - and before taxes.  It seems fair to assume, using statistics that the company has released, that there are fewer than 1,000 sellers who make $30,000 a year or more, and a mere handful who make more than $100,000.  As one of the site's top sellers wrote in a blog post in 2009: 'Your odds of making $10,000 per year [on Etsy] are better than winning $10,000 through the Powerball, though not by a ton.'  The only Etsy millionaires, it turns out, are Etsy shareholders."

When I read this article I was astounded.  Mainly because in 2010 I generated almost $20,000 in sales on Etsy {and I lost money}.  In 2011 I generated over $35,000 in sales on Etsy {and I made about $1300}.

So if I am one of the top selling stores on Etsy, {which according to this article I am} then the truth is... having a handmade shop is not a very successful way to make money.

I think {and this article also pointed out} that part of the problem is that most of the shops on Etsy are run by Hobbyists... people who are doing it because they enjoying crafting in their free time, and not people who are trying to run a successful business.  The problem with that is that Susie Hobbyist sells her handmade invitation for $2 {while anyone running a professional stationary business would tell you that her costs far exceed $2}, so Emmy Entrepreneur, who charges $8 per invitation cannot compete with Susie's pricing. 

So what do we do about this?  What do those of us that would actually like to be paid for our time and supplies do to make our business profitable?  How do we make handmade work???

I don't know for sure what the answer to this is.  If I did, Much Ado About You probably would have made more than $1300 last year.  But I definitely don't think that it is hopeless.

The reality is that most start-ups take three to five years to become profitable, and this handmade craze has really only just started in the last three to five years.  Hopefully that means that more and more of our businesses will begin to turn the corner in these next few years.

But I think the question that I am facing {and I'm sure some of you are too} is can we make it another few years???  And in order to make it, will we have to leave the handmade dream behind and embrace the small business reality of mass production?  And wouldn't it be great for our country's failing economy if we could figure out a way to make this work?

These are all questions that I am wrestling with.  These are all reasons why I'm not sure what the future is for Much Ado About You.

I think the first step is talking about it.  If handmade is going to work, I think we need to start educating our customers on the value of handmade.  We need people to understand that buying handmade will cost more than buying at Target or Costco, possibly a lot more, and then we need to see if there is a market that will value that cost and support it.

What are your thoughts?  Do you have a handmade business that you are struggling with?  Do you buy handmade?  Are you willing to pay more to support Small Business and the Handmade Community?

By the way... don't feel bad if you are not.  I realize that not everyone feels passionate about buying handmade, and that is totally okay.  I am not trying to make anyone feel guilty about shopping at Target or Costco... I shop at both places frequently.  But I think there is room in the market for both.  Do you???

Let's talk about it.


  1. When I shop for something, I set an amount that I'm willing to spend. That's the reality of budgeting, no matter how poor or rich you are.

    Then I check out local and handmade options. If nothing is within my budget, I opt either to not buy or to buy mass produced items. I'm willing to pay more than mass produced prices for handmade or locally produced items, but I'm not willing to pay more than I can afford.

    I love your calendars, but I can't afford them the way my budget is prioritized. I'll make do with reusing the cover on the one I have and printing my own calendar pages for 2012.

    I'll usually choose someone I know first, local business next, long-distance online third. I'll often choose locally produced over 100% handmade. In other words, if it is made on a machine in Portland, Oregon by a family-run business, I'll choose that over handmade by someone in Portland, Maine.

    I'll consider the materials used in what I buy and how those materials are sourced. I'll pay more for fair trade and sustainable materials, but again I won't pay more than I can afford. If that means I go without some things or can't support Emmy Entrepreneur or Larry Local, then so be it.

    If I'm shopping on Etsy, I'll search for what is below my top price. Then I will check ratings and feedback. Then I pick the lowest price from the top rated. That means I am probably buying from Susie Hobbiest a lot of the time right now.

    I don't know what the answer is, but I think there are a lot of variables that go into what you buy and how it affects the local economy and the global environment and your personal finances and lifestyle. I don't think it is as simple as "always buy handmade."

  2. I posted this on the facebook page too.

    Great post! I buy handmade as much as possible and am a complete etsy junkie. I put my handmade "business" on the back burner last year. I wanted to spend more of my time with my family than fulfill orders or blog...especially blog. I found myself consumed with getting a post up or a tutorial, etc. I decided one day that, although I loved my blog followers, I wanted to "follow" my family more. For me, it has brought an enormous amount of peace to my homelife. Plus, like you said, the money was not that great considering the time devoted to making items. Now my "business" is my hobby. I embroider here and there, craft in my spare time and make quilts for my friends or to donate. While everyone else I know is on pinterest I am enjoying time by our fire pit or sewing clothes for my daughter. One of the best feelings in the world is to give a handmade item to a friend and for them to genuinely appreciate it. That "pay" is worth its weight in gold. Again, great post. Glad you discussed the reality of the handmade world! It needed to be said. :)

  3. I adore handmade things, but can rarely afford to buy I have to make them with my own hands:-) We are on a very tight budget and there isn't money to spend on gorgeous handmade things. I know they are worth every singe penny, I just don't have the pennies...haha. I cannot justify buying a greeting card for even $4 on Etsy, which is the approx. cost of one at Hallmark too...I make some pretty cute ones by myself, or hit up a .99 section somewhere. I would love to have a policy of buying handmade, but at this point, I buy "commercial" products or I DIY. Almost every thing I have ever browsed for on Etsy has been significantly out of my price range. Bummer:-( Someday, perhaps!! I'd LOVE it if there was a someday that included so many wonderful things!

  4. Love this post! I've been talking with some friends about having a handmade business or not this year too. I have sewn for years and years but decided to go on etsy in Nov of 2010 to have my own business. Well, I've done well but I wouldn't exactly call what I do a business as I'm either super slow or super swamped! It seems like I'm either too busy to enjoy what I'm making or wondering why no one is buying my stuff??? I love making things...sewing and knitting. And for awhile I went without sewing or making stuff and I was very unhappy going to a part time desk job everyday. However,the desk job was money that I could count on week after week. As long as I put in my hours I got paid. With handmade you never know what your week to week is going to be. And I've found that I have spent lots of time and money getting fabric, needles, thread, binding, etc. Sometimes, I feel like I'm spinning my wheels running all over the place to find the right material or a specific material for a customer and working so hard just to make a dollar. I've put my family on hold during holidays to work on orders, let my house go being a mess, bought take out so I can work on orders, and stopped taking care of me.This year I decided no more putting etsy before family.
    You see last year my dad who had been sick of liver disease for over 5 years (my hero)...became very ill in February 2011 and I was forced to put my business on hold. I began caring for him full time and sewing was an outlet when I needed it on some of those late nights up worrying about him. In June of last year he passed away from kidney failure and my world was brought to a stand still. All my orders and all the stuff I'd been pushing myself so hard to make, didn't mean a thing during that time. I realized then that family is what matters most and what we do with our time here and how we do it is all that will matter to the ones we love the most. My dad lived his life in service of others and his family. He was one of the hardest working men I've ever known and we were all loved and better kids for knowing him and having him be our dad and such a great role model. I returned to sewing in November 2011, five months after dads passing because I needed that outlet again to pass the time and to help me thru my grief.It was just this past month that I thought should I go back to doing this as a business or not??? Is it really worth it??? I keep selling things but is it right for me?? I decided after reading this post that my reluctance and second guessing is my heart telling me that I know what to do. I'd rather have a hobby and know that I am taking care of the ones I love and myself than make a few extra bucks. I'm never gonna be the next "big thing" in the handmade world and that is finally OK with me! Sure, I'll keep sewing no doubt but I'm looking forward to making things and not feeling like I have to sell it. I'll have a few things on etsy and when they sell they sell. But I'm thinking of other ways to use my gift of sewing, like giving my handmade items away to friends or perhaps looking for ways to donate items to charity or my local children's hospital etc. Good Luck and God Bless! I've been a fan of your planners for quite sometime now. I just ordered my second one over Christmas and I love it!

    1. Let me just say...your post (minus the personal story about your dad) could be out of my mouth exactly...especially your quote: "I'd rather have a hobby and know that I am taking care of the ones I love and myself than make a few extra bucks. I'm never gonna be the next "big thing" in the handmade world and that is finally OK with me!",...this is the epiphany I have had in the past 3 months.

      I love your reply and I love this post...Im going to have to reply too.

  5. I can't say that I would pay more for something because it's handmade. I value quality, so I would pay more for the best product out there, and if it's unique, fits my values, and makes me feel like I'm getting a solid product, I would pay for it. Which means that sometimes I shop for things at Hobby Lobby that people also make & sell on Etsy. But it also means I buy my planners through you, because they are incredibly well made, fit my lifestyle, and are super cute :)

  6. It is a tough tough business, is it not? Especially considering frugality has become this term the majority of people embrace and use. And let's face it, "handmade" and frugality are two terms that are not quite cohesive. I think you make a valid point when you feel the hobbyist out competes the entrepreneur. For our business, we only have a small portion of what we provide that is handmade but, for example, on our last order, we made $10 on a $50. We would have lost the order if we had charged any more even though are mark up probably should have been $1.50 to $2.00 more per item. It's definitely a tricky thing to navigate. Thanks so much for posting about this!!!!

  7. Hi...I love love love this post. You are so spot on about the whole ETSY movement...I have had a shop on there for about 2 years now (making paper crafts and wedding invitations)...I got to the point in January where I decided once and for all, it has to end. When I started making list of things I wanted to make for my own home or with my own kids, I realized my list was having to wait just because I had orders to fill for other people. I am closing up shop officially this month, and now just having a low-key blog about things I enjoy making or doing with my own family. I am practicing my new hobby of photography and professional organizing. Even in the past few weeks, my husband is beginning to notice I have more time, the house is cleaner, and I am making meaningful memories with my kids. I get to create for me, and it is great....I love what one of your commenters said:

    "I'd rather have a hobby and know that I am taking care of the ones I love and myself than make a few extra bucks. I'm never gonna be the next "big thing" in the handmade world and that is finally OK with me!",...

    this is exactly how I feel...thank you for posting and I love your blog

  8. I have gotten so discouraged over the years about my handmade business. But I've just come to realize that I will [most likely] NEVER make it big time. And I'm okay with it. Really, I'd like to market more locally than just always online where a lot of us are in the exact same circles. So potential customers see so many of the same products, etc....

    Loved this post!

  9. I know I'm late to this post, but I just found it and I'm so glad to read I'm not alone. I opened a shop with Etsy in March, still working me real job, thinking whatever, let's just see. It's done really good, but being hand-made, I can only take so many orders at a time because they take so long. After looking at taxes and fees tonight, I've realized how much it's not worth it! I've even taken orders with me while we've been on family vacations this Summer and have been so stressed and busy with all this while neglecting my son and husband, to come up very short.

    I feel embarrassed to leave it behind, like I failed. But, it's time to move on.

  10. Even later to this party than my last contributor.

    I never ever comment but after a bit of experience with Etsy, I thought I might chime in as a reality check for many. I own and run a smaller family business, in the printed textile business- and we run a bunch of niche websites. We finally started selling on Etsy a few months ago. Our business is exactly between homemade, and mass produced. Think studio produced, with around 900 products for sale. Around 12 people in our "studio/business". A chunk of what we do is on-demand, as it sells, the rest is inventoried in runs of 6-36 pieces. Far from mass production, but not handmade either. Not a single one of our sites, nor Etsy, on its own, would even be able to sustain itself. It is only through 9 collective Niches that we can run a business, pay our staff, cover our overhead, and make a bit of money.

    Its impossible as a crafter, or homemade creator, unless you go by the artist business model. You cannot make any money selling 1 card for 2.00, or even 8.00, since the marketing, customer service, packing, going to the post office ect will absolutely kill you. Either you sell cards for 50-60 dollars (unlikely) or you make 20 cards each time you make one- the loss on the one sale will eventually even out through the sale of the extra inventory.

    My lesson learned can be summed up in one or so sentence- there is no money in homemade- unless homemade can be scaled to "cottage industry" There is some money to be made in Cottage Industry style production and businesses- 3-4 people creating mini factories, in a local environment.

    Conclusion- more crafters should ban together- develop a plan/approach/product line, and create small run production- with tasks shared and allocated across more hands- in order to actually make money. If you sold for $35,000- you should make more than $1300. Or figure out how to sell for $130,000 between 3 people working and sharing together.

  11. A year ago, I would have agreed with this article as I was watching my wife struggle to turn her passion for jewelry making into something more than a contribution to a piggy bank. Until then, her Etsy sales had averaged about $20k a year. I'm commenting now because much has changed for us in the last twelve months. I'm staying at home to help now, we have a full-time person working in our house to help with packaging, our child, and general house chores. Yesterday our 12-month total in Etsy sales, not counting shipping revenue, went into the six figures. Our shipping charges actually almost completely cover all material expenses. We probably have an 80% profit margin and I feel more comfortable about the future of making money in hand-made items sold from the comfort of our home than the future of my salary in an old-fashioned small business that generates almost $1m in yearly revenue (which I still oversee on the side). I know from looking around Etsy that we're far from being alone - there are lots of people with thousands of sales that make more than a subsistence on Etsy...

    1. What is the name of your wife's shop?