Hmmm…..so what are the economics of selling handmade journals?
Tl;dr Not great, especially if you’re making them in the US!
Let’s use a simple leather handmade journal as an example. Something like this. There is a large variety that you can find on Etsy.
Let’s first think about the retail price. A scan through Etsy suggests that these typically tend to retail for $25 / $30 to $80 / $90 (we’ll talk about the small minority that go above $100 in a bit).
If you think about the cost of making a handmade journal, there are five buckets of costs:
- Material cost
- Labor cost
- Packaging cost
- Shipping cost
- Marketplace cost / fee
As far as material costs go, the main per unit costs are typically for:
- End pages
- Lump sum cost of other material used such as thread, glue, headbands
Assuming we don’t attribute any of the fixed costs (eg: any bookbinding tools), the above can come down to anywhere between $5 – $10 per journal. Leather and paper tend to be the main items that cost money. Now – the assumption I’m making is that you’re a small business owner, who is acquiring these prices at retail prices, not wholesale prices. For eg: I get scrap leather from this shop on Etsy, and I buy Strathmore paper for my journals. If you’re a large enough business, perhaps you can negotiate these prices further down.
I’m going to ignore labor cost for this calculation (you’ll find out why). But let’s note that a single handmade journal can take anywhere between 2-3 hours to complete, maybe a bit more. I’m not an expert yet, it takes me longer. Note that not all activities can be done in one go. For eg: After gluing the spine of a signature, you have to wait for it dry before proceeding to the next step. 2-3 hours is compressing all activities and taking out the waiting time.
Packaging is not cheap! As a small business owner, you want your journal to reach safe and sound, ideally in delightful packaging. Maybe it even has a hand-written note inside. For our purposes, let’s assume the box that you ship your journal in as the main cost driver. If you use something like this, that’s ~$0.88/box. You might add some confetti inside, some wrapping paper. Let’s round this off to $1 per journal for packaging.
Amazon Prime has made all of us so used to free shipping! But shipping costs money, oh yes. The cheapest option, assuming its within the US and speed is not a requirement, is $6.25.
No matter what marketplace you choose to sell your journals in, you’ll likely have to pay a transaction fees. Etsy charges 6.5%. If you decide to create your own store at a place like Gumroad or Shopify, there’s a fee there too. Gumroad charges 9% at the beginning, which goes down to 3% after you’ve sold $100K worth of goods. Shopify charges between 2.4% – 2.9% per transaction, although their plans are more expensive.
If you decide to skip the online route altogether, and decide to go with a physical store, typically they’ll give you two options:
- Consignment terms: The store doesn’t pay you anything upfront. You set the journal price. On each sale, you get a percentage and the store keeps the rest. Typically, the split is 50 – 50, ie, if you’re selling your journal for $100, you get $50 and the store keeps $50. The best terms I’ve seen are 60 – 40, ie, you get 60%.
- Wholesale terms: The store buys your journals at a wholesale price. You get paid upfront. The store then applies a markup and sells the journals at whatever price they think is right. Typically, the wholesale price seems to be half of the retail price (have you seen other flavors?).
So with all of this context in place, how does the economics play out?
Let’s say you’re relatively new, and don’t really have a brand. Let’s assume the best case , that is, you’re somehow able to charge $60 for each of your journals. Note – this is a bit on the higher side compared to the market; a quick scan through Etsy gives you a good idea of the prices. Your cost of delivering the journal are ($5 for material cost + $1 for packaging + $6 for shipping + 5% (avgerage) fees or $12 = $24). That leaves you with $60 – $24, or $36. If you charge for shipping over and above the $60, chances of your selling the journal will likely go down.
But wait, there’s also labor cost. The remaining $36 is what you have to attribute to the 3 hours you spent making the journal. You’re essentially making $12/hour. It’s starting to look bleak huh? 🙂
Which is not to say that handmade journals can’t be a viable business. From what I can gather so far, there are only two ways for book making to be a viable business:
- You have a strong brand, and can retail your journals at VERY high prices. For example: McCallCompany seems to sell a journal for $500 and above. Peg & Awl seems to sell their journals for $300 – $500. Now, looking at the size and work on these journals, my guess is that their costs are higher too but they still have good margins.
- You’re making your journals in a low cost country, where labor and material is cheaper than the US.
I’ve heard there are bookbinders who are able to make a living doing a lot of restoration work for old volumes. I’m not familiar with this space, but then, this isn’t really the creation and selling of new, handmade journals, but more the application of your bookbinding skills to fixing old books.
All of this to say – bookbinding is awesome, and can offer a beautiful creative outlet. But if you’re thinking of pursuing it as more than a hobby, think through the economics and how you’ll manage it. It’s definitely possible, but there are probably easier ways to make money 🙂
Categories: Book binding, Hard work, Make stuff
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