Welcome back to Part 2 of our series on The Trifecta. Yesterday, we talked about making a living with client work.
The Trifecta is the three ways you’re able to make money with hand lettering:
- Client Work
The reason I recommend products as your second stream of revenue (as opposed to your first) is because they are a longer term investment. With client work, you can do a project and get paid, but with products, you need to put money in and wait before you get something out. Even then, it can be awhile before you’re profitable.
When it comes to hand lettering, you can obviously make whatever products you like. I’ve seen people have the most success with prints and t-shirts, but the sky’s the limit.
T-shirts tend to be more popular, but prints have better margin. I recommend diversifying. Remember, not every product is about generating direct profit. Sometimes the most important product is a Loss Leader.
Loss Leading Products
For awhile, I had a laser engraved, wooden ampersand keychain available in my store. I really wish I still had more, but my manufacturer stopped taking custom jobs and finding a new manufacturer is difficult (more on why in a moment).
This keychain was not cheap to produce. Even producing in bulk, it came out to roughly $3.50 per item. I sold them for $8. Now, before you jump to the conclusion that I profited $5, let’s not forget these other costs:
- Bags – $0.50
- Sticker – $0.50
- Keychain hardware – $0.50
- Packaging – $1.00
- Shipping – $2.00
We’re already at $8. Not only that, but this doesn’t include the time it takes to stamp bags and manually assemble the keychain hardware. Sure, you could do it yourself, but remember, that’s your time. What else could you do with that time? Probably make more products or do client work. In which case, it might make more sense to pay someone else to do assembly. The point is it’s an additional cost however you look at it.
Why did I do this? Why did I sell an $8 product that costs me more than $8 to produce?
It’s simple: I want to create an experience.
Your First Product is an Experience
The biggest mistake people make is thinking they need to squeeze as much profit out of whatever sale you make. But where the real money comes from is repeat business.
It’s much easier to sell to an existing customer than it is to acquire a new one.
What’s the easiest way to get a customer? An amazingly compelling offer.
A beautiful, custom, laser engraved, wooden ampersand keychain with custom bag, sticker, and it’s all shipped to me for free?!
See, the free shipping part is intentional too. I eat that cost because it’s a more pleasant experience. Amazon has also changed the landscape by conditioning us to expect free shipping, but that’s another story for another time. $8 is already high for a key chain. If you threw several dollars on top for packaging and shipping, you’d be in the double digits. That just won’t work.
But in our case, it’s ok to sell it for $8 because we’re playing the long game. Think about it: they essentially have my logo on their keys that they stare at every day!
This is going to cause them to think about my brand. It may be the single thing that keeps me top of mind for them. It may be the reason they buy a shirt from me, or remember to listen to my podcast, or join the Community.
Loyalty First, Profit Second
If you try to squeeze all the profits out of your first products by cutting corners to expand margins, you’re going to hurt your sales in the long run.
Apple spends a lot of money on their packaging. They could certainly squeeze more margin out of that department if they wanted to, but the unboxing process is such a huge part of the experience that they are willing to invest a lot. It’s difficult to make direct ties to any one thing that causes a customer to buy again, but the packaging is yet one more thing that says “quality” when you think of Apple.
Stop thinking about your first product as a way to make money. Your first product should be an experience for people. Your second product is where you make money.
Your first product should be an experience. Your second product is where you make money. There’s no second sale without a first experience.
I remember MailChimp did a t-shirt giveaway some years back. There was no contest or anything. They simply announced that they were giving away shirts. All you had to do was enter your address.
Sure enough, a few days later, a super-comfortable shirt printed with water-based ink arrived in the mail. It was tri-blend. They didn’t cut corners. This was totally free!
Can you imagine how much this cost them? I wore that shirt all the time. The experience created a very positive connotation with their brand for me. I also didn’t buy anything from them for a year or two.
Was it all for naught?
Then it came time for me to start up a newsletter. Can you guess who I thought of first?
I ended up being a paying customer of MailChimp for three years before recently upgrading to Infusionsoft. Even though I’ve moved on to a different email service provider (simply because my advanced business needs have outgrown MailChimp), I still think very fondly of MailChimp and recommend them to everyone! That’s powerful.
They got way more out of me than what that shirt cost. But because they started with a loss leader (in this case, something totally free), they got my loyalty. It’s Relationship Marketing 101.
Look, now I’m talking about them in a blog post! That’s the kind of thing I’m talking about.
Remember earlier I was telling you about the $8 keychain that was essentially a “break-even” product for me? What I didn’t tell you is that it was actually worse than that.
See, what happened first was the manufacturer did a batch and it came out wrong. As in, we had to reproduce it. The entire run. This isn’t Walmart where you can just return all of the products and get your money back. This is high stakes stuff. We tweaked things and I had to pay for another run.
So it was really much worse than $8 in cost when it was all said and done.
What did I learn? Request a sample. Whenever possible, ask for a sample product or sample run before committing to a large batch.
Pay attention to how the manufacturer communicates. Are they friendly? Are they helpful? Do they let you know what to expect?
It’s hard to find a good manufacturer. It takes time and, as we’ve seen, it can be costly. It’s such an investment in all respects, that my wooden ampersand keychain has remained out of stock since last year. It’s a process you need to take very seriously and dedicate some time to.
Most of the manufacturers I use are on the pricier side. They’re not cheap by any standards. But that’s exactly why I like them. They use quality materials and their customer service is unparalleled. I like working with and supporting other small businesses because they have an attention to detail and understanding of small business that works well for me.
Long Term Strategy
Let’s say you want to sell shirts with your hand lettering. I gave the example of a keychain above as a loss leader, but you could also use your first shirt as a loss leader. You could debut it at a really good introductory rate to bring people in and give them a great experience with your brand.
Make sure they know it’s an introductory rate and that they are aware of what the full price will be when you launch new products.
No, not every one of your early customers will buy your second product at full price, but some will. That first impression is key.
Because you’re overlapping from client work, you don’t need any of the money you make from products to pay your bills. You have two choices: you can continue making $20 every week or two from your one product, or you can reinvest all of your profits (PLUS some investment money from client work) back into production of new products.
Eventually you will have something substantial that actually can support you by itself.
Physical Products Are Not Easy
This is a slow climb. There’s a reason I don’t recommend starting out with products. But if you’re in it for the long haul, it can slowly become a very solid source of revenue for you.
Don’t be discouraged that it takes a lot time to build up a physical product brand. We’re aiming for long-term sustainability here. Sure, you could constantly run discounts and try to drive sales for a short period to get as much revenue as possible, but then what do you have?
You have a chunk of change, a dry spell ahead of you, and a discount brand. That’s no good!
It’s much better to build it the methodical way that will allow you to create a premium brand that has a loyal fan base of regular customers.
Start Simple & Do More of What Works
It’s tempting in the beginning to try a bunch of different things. Prints, t-shirts, mugs, bags, hoodies—they are all super tempting. But hold the reins back a little bit and start simple.
I’d recommend starting with either a single product or launching with something like four variations of it. That way it’s clear that you either have one product to buy or enough options that people feel like they have a choice.
I started out with a single t-shirt. It has since sold out about half a dozen times. Why has it been so successful?
A lot of people getting started with products see other people selling and they want to do the same. The problem is there’s no demand. People don’t actually want your stuff, they’re not asking for it, you’re just making them because you want to sell it.
You have to make sure there is demand first.
Don’t just make the shirt you want to make. All that’s going to guarantee is that you have 48 copies of it in your closet and you won’t have to do laundry for a long time.
My first shirt was in response to a tremendous amount of feedback I received on Instagram about this particular design. I wasn’t asking them if they wanted to buy it, they were going out of their way to tell me they wanted to buy it on shirts!
To give you an idea, I didn’t sell products until I’d been hand lettering daily for over two years.
If you want people to actually buy your stuff, you need to give them what they want.
How do you know what they want? By listening. By observing. What posts of yours on Instagram have done well? What’s working. Do more of that! What are people asking for prints and t-shirts of? Do more of that!
Are they not asking? Create more work! Keep going! Remember, this is getting into the longer-term more advanced strategy for creating diversified sources of income. Don’t worry if you’re not getting requests for products yet if you’re just starting out.
Keep showing up and keep creating.
Tomorrow, things will get a bit meta as I talk about making money from teaching hand lettering. Stay tuned!