The first formula to decide how much stock you should take to your next live event, craft fair or market is what I call the “breaking even” formula. The reason it’s called like this is that you want to have at least enough products that if you were to sell out, you’d at least cover your costs. To figure that number out simply add up all of the different costs that you have for going to this event. It could be anything like:
Once you know what your event cost is, you want to take that number and divide it by your average profit per product (or download the free calculator to do it for you).
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Formula number two is based on what I like to call your money goal. It can be a revenue goal (how much revenue do you want to make from this particular event) or a profit goal (how much profit do you want to make from this event), which I tend to like even more because that’s the money you actually keep for yourself.
The question, in any case, is: how much money do you want to make at this event? Then you need to make sure that you have enough stock to reach that goal. So let’s look at those two examples.
First, if you’re using a revenue goal, you want to take your revenue goal, let’s say $1,500, and add to that the cost that you have for participating in this event. If we keep the $500 example that we’ve used, that’s a total of $2000. Then you need to divide that up by your average price point. Let’s say it’s $34. That means that you need 59 product sales to reach that revenue goal.
On the other hand, if you’re using a profit goal, then you want to use that profit goal, add your event cost as well and divide that by the average profit – not price, the average profit per product. That will give me the number of sales that I need to make to reach that profit goal. So if my profit goal is $1000, my cost for going to the event is $400 then I want to divide $1,400 by the average profit. Let’s say it’s $21. This gives us 67 products you need to sell to reach your product.
Formula number three is based on foot traffic or attendance to the event. It’s a little bit harder to use because not all event organizers are going to be able to give you foot traffic or attendance number, but bigger events and events that have been running for a while know how many people they expect to come. Once you know that number you need to understand that of course, not everyone at the market will buy from you – that would be fantastic! Normally just a percentage will buy (it’s called your conversion rate). An okay conversion rate would be 1%, a good conversion rate would be 3% and a great conversion rate would be 5%, meaning that if 5% of all the people that are coming to the event are buying from you, you’re doing pretty well. Based on that, the formula would be foot traffic or attendance number (how many people are coming) times that conversion rate. That will give you an estimated number of sales. I’d recommend you to have a number for all of these different conversion rates. Again, you can count that yourself or use the free calculator.
For example, if there is an expected amount of thousand people coming to the event, then:
That gives you an idea of the amount of stock that you should bring to the event.
The estimations that you’re going to get from using those formulas and the calculator are a minimum. That means that to get to those goals you need to sell out of every single product, which is not super likely. My recommendation is to a least double the numbers that you’re going to get from the calculator so that you can accommodate for a variety of price points and colors and just really a variety in your stock. The second reason is so that your booth doesn’t look empty because there’s nothing worse than an empty-looking stand-up or table.
My next tip would be to make sure that you offer different price points. It should always be the case anyway within your product collections, but it’s even more important at a market. You want to be able to have big pieces that attract people to your booth because they are visible from a distance and get them to your table, but those pieces may be out of their budget. So that just helps you to get them in, but what they want is more of a medium to lower price range because it’s a bit of an instant purchase. They didn’t necessarily come here with a budget for what you are selling (unless it’s around Christmas, then maybe they do have a budget). You want to get them at “I can’t afford this necklace, but I may as well get this pair of earrings there”.
Next tip is to make sure you grow your email list. I know you’re at a live event and it seems a little bit weird to think about online marketing, but use that foot traffic so that even people who aren’t purchasing from you on that day can find you back online and you can keep in touch with them. You can just have a sheet of paper where people can write down their email to get updates or discounts from you. You can also have a giveaway on your table set up – or anything you’d like to make sure that people write down their email somewhere so that you can keep in touch with them.
Next tip is, if you have a lot of stock, make sure it’s not all crowded in your booth and that you keep a part of it below your table in boxes or whatever set up you want to use. You’re better off refilling your table during the day than overcrowding it.
Lastly, remember that the calculators and formulas will give you estimations and they are also based on averages. There is no real rule. Use it as guidelines but then use your experience moving forward when you start to do more events. That’s it for today. I hope this was helpful. Don’t forget your free calculator, and if you’re selling on Etsy, other online marketplace or in your own handmade shop, check out my article on how much stock should you have then!
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Hi Deb,
Great article!
But I think you can’t calculate your conversion rate on the total public attending the event. I have donne quite a few fairs and local markets, and one thing is the total attendance that goes through the entrance, and another one is the people that arrives to your booth, and that depends on may factors (the place in the fair, the booth layout, the attitude, the number of people in the booth, etc)
So maybe you can talk about two conversion rates, the % of people that actually pass by your booth of the total attendance (and spend at least a couple of minutes) and the % of these people that actually buys something.
What do you think?
Best regards!
Iván MaGo.
That’s a great point Ivan, thanks for sharing. You’re right, these are 2 different things and calculating it based on foot traffic at your booth (vs generally at the event) would be much more accurate. Both are quite difficult to calculate though (getting the data to start with), and that’s why I like to recommend the 2 other formulas in priority 🙂