Business Math and Why I am Awesome.

usps-logo

Pretty sure they said shipping costs would only go up ONCE.

If you had not noticed, starting on Jan. 22, 2012, the United States Postal Service had increased it’s rates. “The overall price change for all Shipping Services is 4.6 percent, with Priority Mail prices increasing an average 3.1 percent and Express Mail prices increasing an average 3.4 percent… First-Class Package Service (formerly known as First-Class Mail commercial parcels and now a Shipping Services product) will see an overall price increase of 3.7 percent.” –Usps.com

Luxury Lane Soap uses the United States Postal Service exclusively for shipping products around the globe. I choose to use this service because, honestly, I really like it. Living in a small town, there are few jobs available and keeping my business local, keeps jobs local and in turn, this community grows. It is as simple as that.

Yes. Free, eco friendly, shipping supplies.

So, about those shipping increases. Luxury Lane Soap has committed itself to NOT raising shipping prices. (I never have, and never will, profit off of shipping.) We have been testing what this costs us over the last few months, while sales are on the slower end, and we have found that there is a $.05 to $2.00 loss per item. To make up this difference we have switched to using free shipping materials supplied via the United States Postal Service plus taking a personal 5% pay cut beginning in July, 2012.

Wait. What?

Yes. Firstly, I don’t feel like manually going through my entire inventory and bumping up product and shipping prices. Secondly, I simply do not agree with the “profit increase” practice. 

See, when it costs me more to ship to you, I increase my sales volume to make up for the loss. Very simple math. Increase in sales = Increase in profit = Steady costs for customers. However, typical business training has us funneling lower quality/cost products into inventory as filling. (A good comparison: Adding pink slime to real meat to bulk it up and increase profit.) I refuse to purchase lower quality supplies for a lower quality version of my product, so I have to sell more to increase profit. Which leads into my supply cost…

While I may be super awesome and see increasing sales as a way to keep business steady, the majority of my supply companies have raised their shipping prices, which means it is costing me more to produce. That is where my 5 percent pay-cut comes in.

It is interesting being your own boss. You want your company to thrive. The more you bring in monetarily, the more you can put back into your company, creating a growing cycle of greatness. However, as an employee, if the boss is bringing in more, should you not receive more? So what do you do? Pay into your growing company or pay yourself?

I have the space to grow, now is the time to use it. When you purchase from Luxury Lane Soap this is where your money goes:

Math

No. I hate it.

%50 stays in the company to cover supply costs, turning back into product growth and travel for conventions. %50 is paid to me, personally, every other week. Of that 50% ‘take home’, 20% goes to paying off my credit cards, 10% goes into my DeLorean Lust Fund (which yes, I am currently asking for your help.) and the remaining %70 pays my bills and buys my groceries.

I do not believe in the “standard” ways of running a business. I do seek growth, but I refuse to allow my company to become a manufacturing plant. When I say, “Every single product is crafted by hand with no industrialized production methods to insure the highest quality possible.” I fucking mean it. I do not seek to become a suit behind a desk, I like getting my hands “dirty” way too much. (and clothes and walls and everything…)

While my methods cause constant debate within my small business circle, it simply comes down to the fact that this feels right. Simplicity at it’s best. I like what I do, so I keep doing it. If it sucks, I don’t do it. And yes, I am fully aware that increasing my sales while keeping my percent high makes more sense mathematically.

With July around the corner and with the need to increase sales that means, while you get steady prices, you have to deal with heavier promotions. Woo! Commercials! Twitter handle @LuxuryLaneSoap AND @KyleeLane will both be churning product tweets and updates everyday, along with Luxury Lane Soap on facebook. While my personal account invites off topic conversation, the business account is used just for keeping you updated with company exclusive information.

I want to thank ALL of you for your orders and for sharing Luxury Lane Soap over the last few years. I haven’t said it in a while, but I am able to do what I love because of YOU. Really. Thank you. If you ever have any question or suggestions on how you would like to see Luxury Lane Soap evolve, I am always happy to hear them.

Stay safe this weekend and behave, mostly.

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One Response to Business Math and Why I am Awesome.

  1. Pingback: Weekly Recap – 6/24/12 to 6/30/12 |

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