10 Common Terms You Should Know for Your Creative Side Hustle

Have you ever come across the term "cogs" (is it clogs without the 'L')?

Or wondered what the difference is between revenue and profit?  I sure didn't understand all of these terms when I started my maker biz.  In this blog I'm going to break down and introduce you to 10 common terms you'll want to know in the creative/maker industry.  You'll be speaking fluent maker talk by the time you get to the end of this post!

COGS

What on earth is COGS?  Well, is stands for cost of goods sold.  Which means the total cost of all of the materials you used to make each product.  You want to know how much you are spending on materials to make your products.  

Why is this so important?  I'm glad you asked!  You'll want to know your COGS to accurately price your items for profit (another term we'll go over later in this post) and you'll most likely want this number at tax time each year (depending on your accounting method).  Having this number calculated will tell you how much material inventory you've gone through and how much you're sitting on.

Labor

Labor is the time you put into making each product and your hourly rate.  So, say you pay yourself $25/hour when making items and you have a total of 30 minutes into one product.  Then your labor rate would be $12.50 to build into the final sale price of that item.

Revenue

Revenue is the total of ALL the incoming sales/money.  So any money that's coming in from selling your products is called revenue.

Profits/Profit Margins

Profit Margin:

Revenue ($ coming in/sales) - labor & COGS = your profit margins.

i.e.

Item Sale Price $20 - Labor $10 & COGS $5 = $5 profit margin

This is a very important number because you may often hear vendors saying "I made 'X' amount of money at this market".  They were most likely talking about revenue (the amount they sold).  I want you to be cautious here when you hear that bright and shiny number.  If someone sold $1,000 at a market but their profits/profit margin was only $200 then it's not so bright and shiny right?  Their labor cost could break down to a non-livable wage and that small of a profit margin leaves no room for your vendor fee or traveling expenses.

Juried Event

A juried event means you need to apply and be accepted into the show.  You don't automatically get in because you signed up first.  Now some events loosley use this term so be cautious and do your event research ahead of time.  Most juried events that use this term properly accept only a small number of makers in each category (i.e. candles, jewelry, knit hats, home decor, etc.) to keep their market diverse.  If it's a really good juried event they also never place 2 like categories next to each other to create and optimal experience for the vendors and shoppers.

Waitlist

If you have been waitlisted for an event it means the event is currently full.  It's not always a bad thing though!  It usually means they do like you but either:

A: you applied too late for that year

B: your categories are currently full

C: the entire event is currently full

D: there are already long standing vendors/makers in your category at that event and they basically get "first dibs" - which is why it's so important you bring your "A" game.

E: they ran out of vendor space

I've been waitlisted for ALL of my top markets.  My number one market I was waitlisted (which everyone gets waitlisted to that one, it's crazy hard to get into) but was able to get in that same year because a long-standing vendor dropped out last minute and I was on the top of their waitlist.  My number two market I was again waitlisted but they added more vendor space so I was able to get in that route.  And my number three market I applied too late the first year, but was accepted right away the next year.  So like I said being waitlisted is not a bad thing and can mean it's a really good event.  So don't give up.  Keep applying and keep developing your product line, and keep improving your booth design and setup and doing smaller events in the meantime!

Vendor

This is YOU!  Any maker, artist, creative, side hustler, small biz owner, entrepreneur holding a booth spot at an event is the vendor.

Wholesale

This is when you sell your goods outright at a steep discount (usually 50% of your market prices).  You may get asked by store and boutique owners at your market if you do wholesale.  If you want to go this route this is why it's important to have profit margins.  You don't want to be wholesaling your items for less than what it took you to make them.

Consignment

This is when your goods go to be displayed in a store to be sold.  Consignment comes with fees that typically range from 20%-40% depending on the store.  So, the store takes a portion of the sale.  Some consignment shops also require more from you such as a monthly fee and working a shift.

Retail Pricing

This is the price your goods are to be sold at, the sale price if your item.  This is the price you sell your products for at markets, in stores, and online.

Alright!  Now that you can fluently speak maker talk are you ready to get to making and selling at markets?  Head on over to Insta and follow me @makeyourmarklabs to keep our maker chats going!