Okay, remember when we talked about Elastic Waistbands, Stretch Jeans, and the Lies We Tell Ourselves? Particularly this part:
Beware of budgeting tools that emphasize income over expenditure and pat us on the back for how much we make…when what we really need is a clear picture of how much we have left after the bills are paid and our debt is accounted for.
We can kiss the checks as they come in, but we really need to watch that bottom line. Every. Single. Day.
Well, a perfect real-world example found me on Twitter today, thanks to @blondechicken. Here we go—
In this genuinely “super interesting thread”, ShadeJewelry did not believe the lie his earnings were telling him. Yay, ShadeJ!
He totaled up $100,000 of income on Etsy in 12 months AND ALSO tallied his expenses for that period…all to find he spent over 3/4 of his earnings on (and in) his business. Good to know, yeh?
As a jeweler with online sales, his expenses included things like materials, shipping, and transaction fees from PayPal and Etsy, etc. …nothing surprising—
| Cost | Description | |
| $ 2,000 | PayPal Fees | |
| 15,000 | Etsy Fees | |
| 3,000 | Shipping & postage | |
| 5,000 | Professional Services | |
| 33,000 | Materials (precious gemstones, so it’ll be high) | |
| 9,000 | Equipment/Supplies | |
| 9,000 | Insurances: Health, Business, and Car | |
| $76,000 | Expenses Total |
So in the end he walked away with $24,000 as an annual salary. From that he subtracts his rent, utilities, taxes and social security, etc.
Not. Pretty.
And it’s about to get uglier
He typically works 70-80 hours a week. Every week.
I’d bet dollars to doughnuts that you already know how this story ends, but I’m going to lay out the math anyhoo—
75 hours a week × 50 weeks a year = 3,750 hrs/yr
$24,000/yr ÷3,750 hrs/yr =
$6.40/hr
Yup. Here he is, very skilled labor working for less than minimum wage. And no overtime! In my area, kids working at McDonald’s make more than that. The young waitstaff at a local restaurant start at almost twice that (there’s no tipping).
That’s not a judgment on whose work is more valuable. I don’t nibble through my jewelry box when I’m hungry and I wouldn’t wear a french fry as a wedding ring. Each occupation has its place and value and I consider them at least equally valuable…and ShadeJ’s hourly rate doesn’t reflect that. At all.
He’s delighted with his work and working for himself, but he does wish he had more money at the end. Simply, he could choose to spend less, charge more, or both. But what’s simple to say ain’t so simple to do. Etsy is fiercely competitive and it seems he’s already living a little close to the bone.
I don’t know enough to offer a solution. And I struggle with my own finances such that I wouldn’t dare speak to anyone else’s.
What I Can Do, Though…
…is offer his story to you. Do you see yourself in this? Are you working hard, making lots, yet walking away with little?
This still applies if you’re a service professional, by the way—your mind is your material. It gets used up. When you’re running low, you need to restock with workshops and reading and coaching and such. Your mind is your equipment and things are ever-changing…you will need to retool, eventually.
If you tally your income and expenses and divide by your actual—not intended or scheduled—working hours, how much are you really putting in your pocket? And also, how much are you really making per hour?
And no, it’s not all about the hourly wage if you bill by project, earn commission, or whatever…not even hardly. But it’s a good basis for comparison and it’s probably worth 15-20 minutes of your attention.
Like, today. 
p.s. I wouldn’t put you through it if I hadn’t done it myself. It came out okay, and I’ll be keeping an eye on it to make sure it stays that way…
I prefer to look at the bright side. It may be a lousy hourly wage, but he gets to choose his own hours.
He also has a base. That’s important, because it lets him work toward making better money doing something different. Like you, I don’t know beans about jewelry, so I can’t begin to suggest what, but that base gives him something to work from – and that’s a whole lot better than having nothing.
I don’t know his details, so I could be completely wrong, but I’ve seen other people in similar situations and have observed that it really doesn’t matter whether they put in 60 hours or 80 hours: the net result is about the same. In those cases, the path is plain: cut back some of those hours and use what you saved for experiments in other areas. When you find something that makes more money, move to that.
There’s also another way to look at a low hourly wage. If it’s enough to live on, and you are doing what you love, you really aren’t working – you are getting paid for living your dreams. That’s far better than struggling for years at something you don’t love, trying to make enough money to get the life you really want.
Tony Lawrence´s last blog ..Integrity – do we really have anything else?
Hey Tony! Great comment. I hope you don’t think I was bashing the fellow? He’s happy with his work, and I’m happy he’s happy. It surely does make a difference to do work that you love, no matter the pay (if any!).
But he isn’t entirely satisfied with what he was making, so I felt safe talking about that part of his business. I agree that it’s fab to get paid to live your dreams, but I also feel that, ideally, it would pay enough to leave some wiggle room in his bank balance. I mean, what if he hurts a hand playing football or something?
And really, the post wasn’t about his small income as much as his wisdom in tracking it with care. Who knows where he’s going to go from here, but—unlike many folks—he knows where he is right now!
That’s an interesting breakdown – and it’s an important point; it doesn’t matter how much we’re making if our expenses overwhelm our income. (That’s a lesson I learned painfully a few years ago.) I think – but I will not use this as my pulpit – that Etsy is actually really bad for sellers in that respect, because of the issue you mentioned. The problem with the long tail is that it’s crowded, and in a crowded market it’s too hard to differentiate on anything other than price.
I’d be interested to know if ShadeJ has thought about setting up his own website and selling jewelry that way, perhaps at higher prices (since he’d avoid the Etsy cut-me-own-throats). In fact, what I’d really like to see is a side-by-side comparison of performance, Etsy vs. his own site; I have a suspicion that he’d make more from an independent site.
Howdy Chris! I learned the make-much-spend-mucher lesson too
I was excited to have made a couple of thousand on a project, but eventually found that I spent a few hundred more than that. Bummer.
Dan said the same thing yesterday about the big chunk that Etsy got. And if ShadeJ could have kept that for himself, his income would go up by 62% without raising his prices.
But there’s a lot going on at Etsy, long tail or no. Lots (masses!) of traffic, very effective search. They have a fab, simple, inventory system with notifications. Also, I don’t know how easily folks would find him if he moved? It’s not like he can do a redirect from etsy’s site to his new domain? And he would get lost out “in the wild” if he was dependent on SEO to get found.
All that said, I would also LOVE to see a comparison. I believe it’s doable, but I want to see someone who’s done it, ya know?
Oh, no, I didn’t feel you were bashing him.
And yes, knowing your real expenses is vital. If you don’t know, you really don’t have a business – it’s just a profitable (or unprofitable!) hobby.
Tony Lawrence´s last blog ..Integrity – do we really have anything else?
Nothing wrong with doing both. Stay on Etsy, but build a direct site also.
The problem is, as Crystal notes, getting traffic. Spending much on advertising might not be an option, so organic search results is what you want. How do you get Google to come to you? You won’t unless your site is much more than a sales site. But if he blogs about jewelry, gives advice about making it, buying it, selling it, cleaning it, appraising, counterfeits, whatever, he just might be able to.
Tony Lawrence´s last blog ..Integrity – do we really have anything else?
As Tony says, I don’t see any reason why he couldn’t do both. Especially since I could swear I’ve seen Etsy pages that link to the seller’s own pages for higher-end stuff: “Don’t forget to check my site for more one-of-a-kind items!” And especially if, also as Tony says, he uses the link to form a community around his site. If he finds his Right People, the traffic will come.
Well, i just have to said that i like my job but the wage is not big deal because is minimun wage but anyway there is another benefits like party time and another things like that
Hey Crystal,
Man, that Etsy take is painful! But at the same time, Etsy is what’s built his business and exposure (as you and others noted).
He’s spending a ton of hours each week on his work. If it were me, I might reallocate a percentage of that time to explore alternative forms of marketing:
-his own site (to supplement the Etsy site, as your commenters said)
-traditional marketing opportunities (bridal shows? if affordable. small bulletins at local churches. PR with the local newspaper to see if he can get a write up on his work, etc)
-social marketing opportunities: more twitter outreach, some contests, perhaps a referral or affiliate program. But most of all, building a stronger following/community.
He’s got a product that may be a bit tough to build a consistent, loyal following around, so I might examine if it’s possible to break out of his niche a tad and offer non-bridal-type jewelry.
I might also look into the possibility of strategic partnerships with other eco-friendly companies–perhaps a yoga mat company, for example. Offer giveaways in conjunction with the company in exchange for the marketing/exposure.
None of this needs to be done all at once. But if 10% of his hours each week were refocused to exploring other means of exposure and marketing, he could, *over time* move some business away from so much dependency on Etsy as a feeder
One thing that’s missing with most Etsy sellers is they don’t use Etsy as a front end to build a customer list. If he *asked buyers* to sign up for a newsletter (or just a promotions e-mail) he could then direct them to a Web site where his only fees would be hosting, autoresponder for sending e-mails (aweber, icontact, etc)), and Paypal. Dell and countless other big companies do this, why don’t the little guys? Once he has a list of customers the possibilities are vast. For example, in addition to his own jewelry, he could sell DVDs/videos about how to create the jewelry he sells or how to start an Etsy store.
Karol Gajda´s last blog ..How A 19 Year Old Made $5,000 In 30 days While Simultaneously Breaking Every Copyright Law In The Books, Getting Kicked Off Of eBay, and Going To College Full Time
A long time ago, a friend and I sat down and calculated her wages and expenses. She was low-level retail management and the company she worked for had transferred her about 30 minutes away. She had one child in day care. When we added daycare expenses, gas, the cost of lunch, coffee, snacks, etc that she averaged every day, plus the cost of drycleaning and maintaining her wardrobe, she made about $10 a week in bring home pay. After going over the figures with her hub, she quit her job. So this doesn’t surprise me.
But I’m going to agree with Karol Gajda –Etsy is too expensive a proposition for this business. He needs to set up a website of his own. Hey…isn’t that what YOU do?
sherry gray´s last blog ..sherisaid: RT @bigbrightbulb Don’t Believe Your Lying Eyes: http://bit.ly/dE0ks See how easily $100K made on Etsy whittles down to minimum wage
Hi,
Etsy seems to be going bad as the cause you mentioned!
I would suggest having more traditional and social marketing stuff so to it well.
There’s a big, glaring problem with this article right off the bat — that being that it’s assuming ShadeJewelry is being HONEST with his hours and finances.
80 hours a week? Please. He’s sitting on the forums for hours and hours and hours. Is that part of his “work” time? Self-promotion for his shop via threads like “Win a date with me!”?
Also, check his feedback, recent and otherwise. Working hard, or hardly working? He’s definitely showing a pattern of schnookering customers, lying outright about when things are made and shipped, refusing to speak with customers who have paid, and not giving refunds. We’re talking thousands of dollars. Even the so-called positive feedback often has tells like “worth the wait” or “took longer than he said”, so is it really positive?
If you’re going to write about an Etsy seller, could you do some research next time and choose one with a little integrity and honesty to base your conclusions on? ‘Cause ShadeJewelry ain’t one. At best, you’re making journalistic conclusions based on erroneous facts; at worst, you’re giving press to a shady seller.
PSCOTE, I’ll be blunt: so what?
Of the great gifts of the internet, anonymity is the white elephant. You have no real way of knowing if “Chris Anthony” is my real name (it is, by the way), but I use it anyway because it’s a mark of trust. By using my name, I give myself responsibility for my actions. I can be held accountable for my posts and comments, and the moderators of the sites I visit can be assured that I’m not just a sock puppet on another poster’s hand.
You’ve chosen “PutSomeClothesOnThatEmperor” to identify yourself. The internet (through Crystal, the moderator) allows you to do that. But you’ve lost your credibility doing so, because you’ve failed to allow yourself to be accountable for your words and because your anonymity could easily hide a connection to the circumstances at hand.
To put that a little more simply, we have no way of knowing if you’re a competitor who’s just using this as a forum to slag the Etsy merchant in question with plausible deniability. Especially since your argument boils down to “he takes too long”.
That leads to the other part of the “so what” – you’ve leapt over the point of Crystal’s post to attack the specific example she’s using. Either you lack the comprehension to understand that ShadeJewelry’s math is the example, not the point – Crystal could just as easily have used an Etsy seller with 100% positive reviews, and the math would very likely have been very similar, simply because that’s how craft economies work – or you’re choosing to ignore the underlying message of the post in order to attack another Etsy seller. Either way, it doesn’t paint a pretty picture of you.
At the very least, you owe Crystal an apology for using Big Bright Bulb as a venue to take a swipe at ShadeJewelry. You probably owe ShadeJewelry an apology too, but I’ll leave that decision to you. And if you decide to offer either apology, the only honorable thing to do is to offer it under your own name.
I agree with Chris Anthony except to note that using an alias isn’t necessarily intended for anonymity. For example, I sometimes identify myself as “pcunix” (on Twitter and Facebook, for example) but if you visit the website I associate with that, you’ll find it trivial to find the real person.
Besides – who guarantees that “Chris Anthony” or “Tony Lawrence” are real people? I could really be “Jane Smith” choosing to use “Tony Lawrence” everywhere I go.
Tony Lawrence´s last blog ..Google Voice
Well, sure, Tony – I’m “etherjammer” a lot of places. But I do my best to make it trivial to attach “etherjammer” to my actual identity.
Colleen Wainwright took an interesting approach to authentic identity by posting a photograph of an old passport – it’s still not absolute proof but it seems like a lot of effort for a false online identity.
The 15% fee charged by Etsy is significantly less than the typical 40-60% commission taken by a gallery. Think of everything Etsy provides for the seller – a site, a shopping cart, inventory control, mountains of advice … if a seller needed to either manage or maintain those things him or herself plus focus on driving quality traffic to their site it would like take at least the equivalent in time/money if not much, much more.
I can also say that as a salaried middle-manager what looks like a good salary on paper is also significantly diminished when divided by the number of hours worked. And if you don’t make that calculation on a regular basis you can easily get sucked into working 12-14 hour days 6 days a week. It’s easy when you’re doing something you love – whether it’s for yourself or for someone else.
Thanks for shedding light on this Crystal – and hopefully bringing it to the attention of the artists themselves. I think they most often undervalue their work because they don’t think like a businessperson and figure out what it’s really costing them to produce their work.
As a fiber artist/art quilter, someone may look at a small piece (say 12″ x 14″) that’s priced at $500-$750 and ask ‘how long it took me to make it’. That question is irrelevant; the years of learning, trial and error, cost of studio space and materials, books and classes, are ‘priceless.’ You can choose to buy or not – your choice. And I can choose to sell for a fair price, or give it away (which is what I’d rather do than undersell myself).
Mary McRae´s last blog ..1964 World’s Fair
I have a huge amount of respect for the small business owners who have the guts to stick it out and do what they want. But there’s always a point where you have to wonder– after marketing, after market research, and after considering your demographic….”is my product really needed?”
You ask the quesiton “Are you working hard, making lots, yet walking away with little?” And if the answer is “Yes” then maybe the follow-up question be “Will it get better?”
If not, then its time to either shape up or shift to a different business….
Mark´s last blog ..Recycling, in a big way
I think is the initial pain of many small business to have an unclear look at expensenses…but I also think many really successful businesses have become what they are thanks to an unclear look at expenses
i have seen that here a lot of long discussions have been done on your post but i am seeing myself unable to discuss you about it because i have got the questions solved from your whole part of the post as well as from the comments!
“net net” is what I always say. Every business decision needs to look at the bottom line. The other thing about keeping an eye one expenditures is that you need to look at the on-going costs to maintain that expenditures. Many times we have to jump into a longer-term commitment so it’s not like you can just walk away next month if you have a change of heart (unless they breached the agreement, of course).
Efusjon´s last blog ..Hi There
I guess there’s only one way to look at it– if you love it, you’ve gotta stick with it!
Patrick´s last blog ..Have it your way—but can it be manufactured?
now what to say about the business requirements !some clever ones have told that when you got to know about everything which is needed then the only way to do by you is to keep mum & just say thank you!so i will say thank you because i got solved everything!
Need to make sure all aspects of spending is accounted for before you will be able to see the real bottom line.