Selling at craft shows and determining how much inventory to bring is always a bit of a guessing game. You don’t know if you’ve picked a great event that will help you sell lots of stock until you’re there selling.
And even if the event organizer has done everything right, factors such as the weather or other city events can impact how many people show up.
You can calculate all day long, but you won’t know how much stock you’ll sell until you’ve actually sold it.
But you can use formulas to help you best estimate how much stock to bring, based on several variables.
HOW MUCH INVENTORY TO BRING TO A CRAFT SHOW
The amount of inventory you bring to a craft show should be enough to cover all craft show expenses and leave you with a profit if you were to sell 75% of it. You must use several factors to calculate inventory such as the cost of the event, your profit margins and goals, how much traffic the event typically gets, and how many products you can typically sell per hour.
The reason you want to base inventory on 75% of sales is because it’s unlikely you’re going to sell 100% of your stock. As you sell inventory and your display dwindles, so will your shoppers; they’re not attracted to an empty booth. 75% is a decent average to go by.
If you do sell 100% of your stock, you’ve miscalculated and have missed out on sales opportunities.
SALES NUMBERS YOU MUST KNOW
There are a few different formulas you can use to help you estimate how much inventory to make for a craft show. But first, there are a few numbers you must know when it comes to your products and profits.
YOUR AVERAGE TRANSACTION VALUE
An average transaction value is the amount a customer spends during each transaction or sale. This will be used to roughly estimate how much money comes in from each customer or sale.
The formulas to calculate how much inventory you’ll need for a craft show are based on this Average Transaction Value.
If you only have one item, one price and typically only sell one item per customer, the price of that item will become your Average Transaction Value.
If you sell multiple products at varying price points, choose one of the three calculations below to determine or guesstimate your Average Transaction Value.
1) PAST SALE STATS
If you’ve participated in shows in the past and have tracked transactions, you can add up sales from an event and divide by the total number of transactions.
Example of past sales:
Total sales ($1000) divided by Number of Transactions (20)
= Average Transaction Value ($50)
2) SELLING MULTIPLE ITEMS PER TRANSACTION
If, for example, you sell smaller items such as cards and offer discounts to people purchasing in groups of 5, you might assume most shoppers will be buying 5 items per transaction.
If that’s the case, use the total cost for 5 cards to get your Average Transaction Value.
Example of multiple items per transaction:
Item 1 ($3) + Item 2 ($3) + Item 3 ($3) + Item 4 ($3) + Item 5 ($3)
= Average Transaction Value ($15)
3) SELLING ONE ITEM PER TRANSACTION WITH VARYING PRICE POINTS
If you sell items at varying price points and most customers will purchase one item per transaction, determine the Average Transaction Value by adding those price points together and dividing by the total number of price points.
Example of 1 item per transaction with varying price points:
Item 1 ($50) + Item 2 ($75) + Item 3 ($100)
÷ Number of price points (3)
= Average Transaction Value ($75)
The formula above goes on the assumption you sell an equal number of each item. If you tend to sell more of one item, you can use a weighted average formula.
If, on average, out of 5 sales, 3 of them come from Item #1, one from Item #2 and one from Item #3, your formula would look as follows:
Item 1 (qty 3 x $50) + Item 2 (qty 1 x $75) + Item 3 (qty 1 x $100) = $325
÷ Number of sales (5)
= Average Transaction Value ($65)
AVERAGE PROFIT PER TRANSACTION
An average profit per transaction is the average profit you make from each transaction or sale. In other words, the money left over after you’ve paid for production costs.
This leftover money is what will cover additional overhead costs or go into your pockets.
If you’ve followed the common pricing formula: costs x 2 = wholesale price x 2 = retail price, your average profit per sale can be found by multiplying your Average Transaction Value by 75%.
Average Transaction Value ($50) x 75%
= Average Profit per Transaction ($37.50)
The Average Profit per Transaction is approximately $37.50
75% may seem like high profit margins, and it is, but keep in mind, that’s profit based on production alone.
There are many other costs associated with running a handmade business, outside of the materials and time to make the products. Marketing and selling costs (and your hours to complete marketing and selling tasks) will eat into those profits.
The money and time spent preparing for, setting up, selling at, and packing up for craft shows are some of your business expenses that reduce your profit margins. Find more costs associated with running a handmade business here and use this simple to follow guide to understand your business’s numbers and improve profits: THE SUCCESS PLANNER.
CRAFT SHOW INVENTORY FORMULAS
Now that you have your Average Transaction Value and know your Average Profit Per Transaction, you can use those numbers to help you calculate inventory.
The following are several formulas you can use to help you better estimate.
COVERING EVENT COSTS FORMULA
Anything you need to spend money on in order to sell at the event should be considered an event cost. Including not only table fees but also set up and selling time, travel expenses, childcare, etc.
Add those costs together to get your total Event Cost.
To determine how many transactions you’ll need; divide your Event Cost by your Average Profit per Transaction.
Event Cost ($500) ÷ Average Profit per Transaction ($37.50)
= Number of Transactions Needed (13.3)
The number of transactions needed is approximately 14 to cover the costs of the Event
PROFIT GOAL FORMULA
Profit is what you’re left with once you subtract all expenses and wages from your revenue or total sales.
How much profit would you like to make?
Although you may have $1000 in cash from your sales, after you subtract the cost of your table, material, and labor, travel, etc. your profits may be closer to $500.
To start, set your goal. Let’s say you want to make $1000 profit. Divide that total by your Average Profit per Transaction so you know how many transactions are needed to make enough profit. In the next step, you’ll add the transactions you need to cover the event costs, with the transactions you need to reach your profit goal.
Profit Goal ($1000) ÷ Average Profit per Transaction ($37.50)
= Number of Transactions Needed (26.7)
The number of transactions needed to reach the profit goal is approximately 27
TOTAL REVENUE REQUIRED FORMULA
Total revenue required will ensure you’re covering the costs and wages of the event and reaching your profit goal.
Add the number of sales needed to cover the cost of the event with the number of sales needed to reach your profit goal.
Transactions to Cover Event Costs (14) + Transaction to Reach Profit Goal (27)
= Total Number of Transactions Needed (41)
Number of transactions needed is approximately 41 to cover costs and meet your goal of $1000 profit.
Now that you know how many items you need to sell to meet your goals, you have your minimum stock to make. The following formulas will help check that estimated traffic and the length of the craft fair, align with your goals.
ESTIMATED TRAFFIC FORMULA
In the case of a new event, organizers may not be able to provide an accurate number of shoppers. If it is an annual or bi-annual event, past attendance will give an idea of what’s expected for traffic this year.
Let’s say last year the event had around 1500 shoppers and this year they’re projecting 2000 shoppers.
It’s important to remember not every shopper equals a sale. Conventional wisdom suggests that 2% is a good estimate of the number of shoppers who might buy from you. This number could vary depending on your product, pricing, selling skills, and competition.
But based on 2%, we can do the following calculation:
Estimated Traffic (2000) x 2%
= Estimated Sales (40)
Estimated number of transactions is approximately 40
LENGTH OF EVENT FORMULA
This formula is useful if you have an estimate of the number of products you sell per hour. Let’s say on average you sell around 6 items per hour at craft fairs and this event is 2 days, 4 hours each day:
Number of Products Sold per Hour (6) x Total Event Hours (8)
= Total Number of Products Needed (48)
48 is the approximate number of products needed to keep up with Sales per Hour
AVERAGE NUMBER OF PRODUCTS FORMULA
Now that you’ve calculated a variety of numbers, you can find your average. Take the totals from the formulas you used, add them together, and then divide that total by the number of formulas.
Total Revenue Required (41) + Estimated Traffic Formula Total (40) + Length of Event Formula Total (48)
= Total (129) ÷ 3
= Average Number of Products (43)
43 is the Average Number of Products needed
You should make more stock than you hope to sell. The chances of you bringing 43 items and selling that exact amount are slim. As your stock goes down, so do your shoppers.
You need to maintain choices and a pleasing display to continue to attract shoppers and encourage sales.
You may want to multiply your average number of products by 25% – 100%, depending on the event and what you sell.
Average Number of Products (43) x 25% = 10.75
43 + 10.75 = 53.75
You may want to bring 54 products to reach your goals and maintain a good selection.
AMOUNT OF PREP TIME FORMULA
The last step is to ensure you have enough time to make the amount of stock needed. Calculate the number of days before the show and how many hours you have each day to create.
If you work full time and use evenings and weekends for production, you may have 12 hours a week to create. Don’t be overzealous here; consider you’re going to get tired, life will get in the way, you need breaks and you don’t want your completion date to be just hours before the show.
Now determine how long it takes to make each item start to finish, including packaging and tagging.
Days before show = 30 (approx. 4 weeks)
Work hours per week = 14
Total work hours before show = 56 hours (4 weeks x 14 hours/week)
Minus 8 hours to use for finishing details = 48 hours (56 hours – 8 hours)
Time to produce one item = 0.5 hours
Total work hours (48) ÷ Time to produce one item (0.5)
= Number of Products Produced (96)
There is enough time to make approximately 96 items before the show. I may not need to make that much inventory, but this calculation helps verify I have enough time to make the inventory I’d like to, and still have time to fit other business tasks in.
ADDITIONAL CRAFT SHOW INVENTORY FACTORS
There are a few other aspects to keep in mind when deciding to join an event.
AMOUNT OF SPACE
Consider the table or booth size. If you will have a 4-foot table to work with, tape that space on your dining table so you can see how much stock will fit. Will you have room for more stock under the table? If you have a 10’ X 10’ space, consider how much or how little stock you need to fill the space. It’s always good to do a dry run at home so you can figure out your display, determine whether it’s too crowded or too sparse, and make setup a breeze on opening day.
If you’re participating in an event in your city, consider how much stock you can fit in your vehicle and how many trips it might take. If you’re traveling for a large craft fair or even a trade show, consider any added costs of renting a truck or paying to have your stock shipped to the venue.
Consider seasons and gift-giving times. If you’ve participated in a spring event and have signed up for a November show, plan to sell more. Christmas is obviously the busiest season for shopping so it’s better to pad your numbers.
Look into what else is going on in the city at the same time as the craft fair. If there are several events, sales may decrease as crowds disperse among the different shows. On a long weekend, people may be heading out of town.
Use the calculations to determine if an event is a fit for you and if it will give you a return on investment. If it’s a 4-hour show that costs $100 and your average profit per product is $5, you’ll need to sell 20 items to cover the cost of your table. If that sounds unlikely for the amount of traffic the event is expecting, it may not be a fit.
I hope this article has helped you calculate how much inventory you need to bring to a craft show.
If you need more helpful tips on preparing for craft shows and increasing your profits, check out MAKE MORE MONEY AT CRAFT FAIRS.