The Math On Physical Products

If you make $20 profit every time you sell a hat, and you need $1000 a week. You need to sell 50 hats a week. That’s 50 different people you need coming to your brand every week, 2600 a year. Yeah, selling physical products can provide some pretty daunting metrics.

But with a $300 product that has a profit of $100 in it you only need 10 sales a week. Keeping these numbers in mind is crucial when deciding what your going to sell.

Despite being one of the harder ways to make a living, physical products seem to be one of the first money making modes budding entrepreneurs gravitate towards, I’m not sure why that is but i suspect it has something to do with humans desire to “Make something wonderful and put it out there - Steve Jobs”. When i really got into business half the drive came from my personal desire to have better freestyle scooter products for me and my friends. When making physical products, you should love the product so much that simply creating it is rewarding enough to keep you going.

When done right, for long enough, physical product businesses built around a strong brand can scale massively. The more customers there are wearing/using your product the more potential new customers are exposed to it. As more stores start to stock your product more other stores want to stock your product. Every year you’ve been around the stronger your brand gets within the market. The barrier to entry is high, not everyone is able to invent, design, prototype and produce physical things and those who can garner a lot of respect and admiration for doing so.

But to take it back to the math… physical product companies notoriously have some of the lowest profit margins. So get very clear on that ‘profit x number of sales’ right from the start so you know exactly what your signing up for.


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