How to determine your profit margins on your products

Years ago when my business was still in the beginning stages, I was a hot mess. My designs were all over the place, my pricing had no rhyme or reason, I was letting clients dictate the terms and I was struggling. Hardcore.

I knew that if I wanted to make anything out of this business all of that had to change. I’m sure that if you’re reading this, you probably nodded your head to at least one of those statements. Right?

So I wanted to stop and talk about the #1 thing that stopped the endless cycle of a stationary stationery business (haha see what I did there!) and allowed me to start growing.

I got control over my pricing. 

A business gets absolutely nowhere if it isn’t making money. Bottom line. I started looking at my overall numbers and realized why I wasn’t getting anywhere.

This was for 2 reasons, my prices weren’t high enough and I wasn’t making sure I was getting the best wholesale price for my items. So strategically working on these two items allowed me to expand my profit margin on my orders.

At minimum you want your profit margins to be between 60%-65% per project.

Your profit margins are based on your takeaway after your expenses are deducted from what you charged your client. My profit margins can even range up to 75%-80% on some projects now.

If your profit margins start dipping below 60% on the regular, you need to do a little bit of reevaluation when it comes to your prices and or expenses/overhead.

For evaluating your pricing:

You can start by checking your profit margin on each individual piece of a project, opposed to a project as a whole. So take what you’re charging for that piece and then what you’re BEING charged for that piece to see what your individual percentage is. You can do this for everything, the invite print, the wax seal, the envelope, the liner, etc. What is the profit percentage for EACH piece? If all of a sudden you realize you are only making a 20% profit on your wax seals and liners, maybe this is what is bringing your overall project percentage down and you can start by adjusting those prices!

You will have times where some items are a little lower with their profit percentage, but some are higher, creating a good balance. The goal is to make sure that your project as a WHOLE maintains that 60-65% profit margin.

For evaluating your overhead:

If you find that your individual pieces have low-profit margins, but you’re not able to or don’t want to raise prices too much, you can also evaluate where you’re getting those items. Are you getting the best deal/price on them from a wholesale or fulfillment vendor? You can shop around and see what else is out there that will allow you to get a better cost on that product and raise your profit percentage without raising your pricing necessarily. 

With anyone I work with through coaching or masterminds, I give them the Profit Percentage Calculator that I created so they can easily input their numbers and see what the percentage is from each project. 

The Profit Percentage Calculator keeps track of your individual expenses for each project and based on the expenses you enter in and what you charged (or propose) a client, it will automatically generate your percentage so you know without a doubt what you are making on each and every project.

If you want to snag yours today, hop on over and download it for just $29 and start knowing your profit percentage today!

I hope this profit percentage calculator helps you get a hold on your profit margins and helps grow your business like a boss!

Heather