Saturday, December 31, 2022

Is that cottage industry overcharging you? Doubtful.

I've been giving this a lot of thought lately because my sister is finally forced to raise her prices for the first time in at least 10 years.  Even so, she has agonized over it to the point that it  resembles a self-inflicted wound because she should have done it years ago.  We have enough friends with micro and nano businesses to know that this is not unusual.  Most of us aren't actually in this to get rich.  We love what we do, and as long as we can make a go of it, we continue.

Some handy definitions...

Cottage Industry:  a business or manufacturing activity carried on in a person's home. In most cases, there is a partner providing substantial support. 

Pin Money: a small sum of money for spending on inessentials. Historically,  an allowance to a woman from her husband for clothing and other personal expenses.  What many women are still thought to be working for.

Micro-business:  a business that operates on a very small scale.  Most are sole proprietorships with 1 to 10  employees.

Nano-business:  Earn under $75K/yr (hahaha yeah, right), usually conducted as part-time side gig in addition to full-time employment. Similar to Cottage business without the outside support.

Small Business:  The US Census defines small business by firm revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees). For example, according to the SBA definition, a roofing contractor is defined as a small business if it has annual revenues of $16.5 million or less

Of the above business types, guess which one was most likely to get any sort of relief from COVID PPE loans?  In the meantime, every single raw material, all packaging, and each cost, has doubled or tripled.  All of the big corporations have doubled their prices and shrunken their containers.  Tiny businesses have very rarely raised their prices at all, instead offering incentives and gifts to encourage business! 

2023 will unfortunately be the year this will need to change for many tiny businesses.  Let me preface this to say that the magazine is NOT going up.  We were able to pivot to digital and save ourselves in the nick of time.  

My main purpose in writing this is to try to explain how all the people who have been making the small luxuries and delights in our lives have been hanging on by the skin of their teeth for a few years.  If we want them to be there next year, we have to allow them to raise their prices so they can survive.

Let me give you the example of an eco-dyed silk scarf. 
We spend time setting up the dye pots, scouring the silk, pre-treating, and hanging to dry between stages. Then we set out to find the plants we want to use, wandering around the fields for an hour or two.  Bundling the scarves might take a full afternoon for 4 or 6 scarves.
Just for the actual labor, 2 of us at minimum wage comes to at least $120.  Add to that materials, education, electricity, rent, etc, scarves that need a second go-round, and we are (happily) working for well under minimum wage.  This is the absolute reality for nearly everyone I know who works in a cottage, nano, or micro business.  

Hand-made items that you love are worth every penny.  That's the bottom line.  It is art, created by people who love what they are doing.  If you question it's worth, give it a little thought because I guarantee you that you will realize it is a bargain every time.


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