Why do some mom made items cost so much? By Heather Ledeboer

If you are like me you are a bargain shopper. You love to find good deals and save money.  But if you are like me you also prefer to support the little guy (or in my case mom) rather than the big box stores whenever possible.  This concept can be great in theory, but at times it seems that the two don't always work well together.  Do you ever wonder why mom made items sometimes seem to cost so much?  Based on the survey that many of you filled out for the weekly giveaway just a little while ago, I know you do.  Here is my crash course on mommy business 101 that will attempt to answer this question.

Starting a business:
Ok so a mom has a great idea and decides to start doing something about it.  Depending on the idea she may need to start securing a patent which requires lawyer fees, research, patience and a lot of time.  Or perhaps the idea is something simpler such as cute onesies that don't need a patent, just materials and a design.  Either way, the cost of materials now comes into play.

Cost of material and time:
Most moms are not ready to take on huge amounts of inventory such as blank onesies or bolts and bolts of fabric in order to secure the lowest costs on these items, so they have to start with small amounts at first and this causes the price on these items to be much higher than if she could buy in bulk.  Of course there are typically varying levels of quality available in materials so the mom has to decide if she is going to go for the best and pay more or the lowest quality and save more or go somewhere in the middle.  She has to decide how important quality is and hope that if she chooses high quality over low her customers will not only be able to recognize the difference, but be willing to pay extra for it.  Most of the time this mom is making the products herself (at least in the beginning) so she has to start calculating out what the cost of her materials are plus the value of her time invested to make each item.  I don't know about you, but time away from your family as a mom is valuable.  Putting a price tag on this is hard though and most moms probably don't even allow themselves minimum wage at this stage of the game. 

Protecting the business:
Depending on what type of product she is making she may also need to invest in liability insurance in order to cover her family from being sued should something go wrong (God forbid) with something that she makes and sells.  Applying for a registered trademark is also a possible fee if she wishes to protect her business/product name or logo.  This can involve more lawyer fees and the cost to apply for the trademark.  Of course most of these costs are typically up front before she has even made a sale. 

Growing and promoting the business:
As her business grows she will likely need to hire employees.  Then she gets to pay the costs involved with this in addition to (perhaps) paying for payroll services, insurance coverage and benefits.  There are also the costs of getting a business license and depending on the business likely she will want to get business cards and brochures and perhaps a domain name and website.  This of course means she will need to find and pay someone to photograph her product in a way that shows it well (good photos sell a lot more products than poor ones do), design the website for her as well as her logo and layout for her business cards and brochures (and perhaps later, catalogs).  These brochures and business cards have to be printed as well so she pays for the costs involved in this and once again, unless she is willing to buy quantities in the thousands, she will be paying a higher price to have a lower quantity.  She also has to figure out how she will package her item and what type of instructions, labels, tags or directions may need to be included.  This may be something simple like a hang tag with her business name and the size of the item or more elaborate such as an instructional DVD that has its own collection of production costs involved.  Next she needs to find a way to get the word out about her product, so there are the costs of trade shows, advertising or PR.  If she runs an ad in a magazine she will need a graphic designer to create the ad, if she attends a trade show there are travel expenses, the cost of the booth as well as the costs of her backdrop/background layout.  She may also have the costs of a toll free phone number service or purchasing items such as a fax machine, extra computer, digital camera, second phone line, faster Internet service etc. 

Selling through a retailer:
If she decides to sell though a retailer such as Mom 4 Life, she will often have to have her information assembled in such a way that she can present her product to the retailer.  This is usually done with PDF files or "line sheets" that show the products prices and sizing options.  Unless she is also a graphic designer she will have to pay to have these made.  She may also pay for "press kits" to be made that will allow her to send her info to reporters or editors in the hopes that she can get some press coverage for her product or invention.  She will have to figure out what her total production costs are and what her profit needs to be in order for it to be worth her time.  This becomes her wholesale price.  This is the cost that the retailer pays her for the product.  The retailer of course has their own set of costs that are often very similar to that of the mom inventor (website, insurance, employees, advertising, supplies, inventory, rent for storage, etc.) and to make a profit this wholesale price has to be marked up to the retail cost which is the end cost that the consumer sees when buying.  Mom 4 Life offers free shipping.  So in our case the cost of shipping each order cuts into what would normally be profit making the profit margin smaller than for other retailers that do charge shipping or mark up their retail costs to make up for their "free shipping".  However, it is my feeling that customers see a lot of value in free shipping and fair prices and will return to a place they can trust so I feel that in the long run the cut on profit will pay off in happy returning customers.

This breakdown is quite honestly, fairly simplistic, but it hopefully gives an overview of some of the costs and factors involved in the process of determining pricing.  We also have to remember that in most cases these products are not being made overseas but are being hand made by moms.  We have gotten used to the lower prices that we get with outsourcing our goods to other countries and the lower prices we find at big box stores because they are able to purchase in such huge quantities to get the large discounts.  it is frustrating but these seem to be the rules of the game.  There are pros and cons no matter who you buy from.  I really salute the moms that are making an effort to do something to help their families with the talents they have been given however, and I thank you for the support that you given when you purchase from them.

But don’t take my word for it:
To ensure that the info I provided here was as accurate as possible I emailed several of the mom inventors that I worked with to get their feedback.  Here are some of their replies:

"Wow Heather that was a good report of what a home business has to pay for. . .Yes, and one cannot put a price on the time spent away from the family.  This is my major heartbreak sometimes.  I find myself feeling guilty often.  And sometimes the feeling is so intense I just cry because I have no help.  I mean my husband helps me a lot.  But, when he goes to work from 8 am to 7 pm I am on my own taking care of my kids and managing my business (handling business calls, responding to emails, wholesale accounts, fulfilling orders, shipping them, brainstorming ideas for marketing and new collections, and problems that occur) not to mention my personal life (which I don't have one!). 

So, when I account for my product pricing (for me it is harder because the cost of silver and gold has gone up substantially) I factor in everything you pointed out as.  And honestly, each item that I handcraft (the jingle bells jewelry is a little bit different because I receive it from my supplier (who have recently raised prices) and have to modify each item to ensure safety add custom jewelry tag and stuff) leaves my hands with lots of love.  Behind each jewelry piece is an untold story of a tired mommy working her butt off while taking care of her family wondering at times if this is all worth the tears, frustration, isolation and fear that goes in running a home business. 

Okay, that is my story!  :)  Wow, I feel a lot better now.  That was very therapeutic for me!!!"  Debbie from Baby Emi Jewelry found here, here and here on Mom 4 Life


"Wow Heather....You really hit the reality on the mark here. You got it all! SOooOOoo true and factual. You know whatcha talking about sister. Yes you did a wonderful job in presenting the facts. It is so nice to work with and know someone who cares and is so fair and understanding. Thank you Heather for expressing the realities of what we do and how we price our precious items."  Dayna from Baby Jakes found here on Mom 4 Life.

"Sounds good.  I am one of those that is on the verge of needing to hire help but don't want to have the added costs or invasion of my home.  Running my own business is so much fun but also expensive and time consuming." Kim from Lillian Grace found on Mom 4 Life.

"Bravo Heather!  Great letter. I struggle so hard with these very things and it's so hard to compete with China! The more who can recognize this the better and healthier for our own economy.
There is so much talent and labor right here in our own country without giving it away.  Thanks for this."  Patricia from Cozy Cocoon found here on Mom 4 Life.

Comments

[Pamela Kramer]

Heather,
You have just described my first year in business. Thank you so much for writing this article. It's great to know how many WAHMS are going through the same things.

[Heather from Mom 4 Life]

I am so glad you commented, thanks Pamela!

[M]

I so agree with everything you said.

It's not as easy as it sounds to work at home, especially with kids.

I get a lot of people that ask me for advice and are interested in working at home. After I tell them what's involved they usually decide not to or decide to wait until the kids grow up.

We are now expecting our 4th baby and I have come to a fork in the road and I can no longer take care of kids and business.
I have to decide whether I want to hang in a little longer, sell or get a business partner.

[Heather from Mom 4 Life]

Thank you Molly for your feedback. You are right, as I looked over all the work involved I thought “how does anyone do this!!! Let alone busy moms!” I think starting out you do one thing at a time not realizing how much you will have covered in a years’ time looking back. Good luck in making your decision of what to do next!

[Kim Hinkle - To the Nines Maternity]

Wow Heather, you hit the nail on the head! I read your entire post nodding my head in agreement. After a year and a half in business I can relate to every point you made. It makes me feel better to know that others are going through the same thing.

I think you're absolutely right that you keep taking on small project after small project and then you look back in amazement at what you've accomplished.

When it comes to pricing, I currently have a pretty small margin because I know after trial and error how to price my items appropriately. Eventually when my manufacturing costs go down I'll finally be able to compensate myself for all the pain, sweat and tears that go into running a business! At this point it's all about getting the products that I care so much about into the hands of expecting moms all over the country.

[Heather Allard]

Heather,
This was a wonderful post--you really nailed it. I can speak from great experience, having two products (Swaddleaze & Blankeaze by 2 Virtues) manufactured in both the US and China.
We mom entrepreneurs invest SO MUCH time & money into our products and the prices we charge have to reflect that if we ever hope to become profitable or compete with big retailers.
Keep up the great work!
Heather Allard
2 Virtues Inc.
The Mogul Mom

[Nancy Cadjan]

Heather, you are so right. Costs are high for a mom-created products and we need to give up a lot. But, we do get a lot in being able to help other moms and work from our homes so for now, it is worth it. But we don't make the margins of other companies. Too bad!

[Carla Schneider]

Heather, I could not have said it any better. It is alot of work and sacrafice. Thank you for being so honest. I always feel there are never enough hours in the day or days in the week !