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Comment by fridaysoff | Hacker News Reader

Thanks for your insight. You're not too far off, but my margins are much higher - thank goodness. I've been at this for 5 years and also have an employee who helps with all the cutting, packaging and shipping. I offer a flat rate shipping fee for small price orders anything under $45. Sales above $45 ship with a Canada Post calculated shipping rate. Good luck with your business :)

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Thanks - how are your margins higher even with an employee? I'm guessing your markup is way higher?

I'm in the UK - I don't think our market can support higher margins (cost to import fabrics is relatively high), so just curious.

You're in an overserved marked in the UK, whereas OP is in an underserved market in Canada.

Can I quickly thank you both for honesty - it's always good to get behind the scenes insights into businesses I know little about but see in passing. Thank you

I'd be very interested to know how customer sales typically break down between design categories: solid colours, geometrics, florals etc. Do you have any insight you can share there?

Context: trying to understand the design market.

We stock a lot of florals and dressmaking fabrics, I don't think the data is large enough to derive any insight on market trends though.

Firstly accounting. Almost anything can be included in your margin (as long you are consistent). I think you atter talking more in terms of net- profit margin (all costs included) whereas fridaysoff seems to be talking about gross-profit (sales minus cost of the goods that you sold). As an online retailer I would suggest that you understand your gross-margin (how much you make on the product) separately from the costs of warehousing and shipping and separately from the overheads of accountancy, banking etc.

The reason for this is that by just summing your costs you louse sight of how various areas are performing, and you also lose the ability to compare. If you become a better buyer your gross margin improves, but by employing a picker it stays the same, however type warehousing costs do increase.

So in essence when most people say 'margin' they mean a simple sales-minus-cost-of-goods-sold.

Disclosure: I'm in finance at a retailer/wholesaler who is doing around 5x what the article is doing on ecommerce, it's smallest channel (about 1/20th of the company, but growing)

Just out of curiosity, have you tried building the price of shipping into the product, and marketing with free shipping? From my own experience in eCommerce, it really boosts conversions.

I have a similar-ish product. For non-discrete items sold at a single price per unit, and where people buy a wide range of volumes, baking the shipping costs into the product leads to strange prices outside whatever sweet spot you choose, because shipping prices don't scale linearly with your product.

The flat rate shipping under $45 in this example is probably because it costs nearly the same to ship half a yard or five yards; shipping 20 will cost a good deal more, but not be anything like 20 times the cost of shipping one yard. So there's no way to bake in a price that doesn't end up generating absurd results either for you, your customer, or both.

Can't you just give a lower price at 10 yards and again at 50 yards for example? Then you solve your baked in price issue and get to offer discounts on high amounts, incentivizing buying more.

Depends on your range of purchase sizes and industry expectations. My product will sell regularly in quantities from 1 to 10,000, and my shipping costs on those vary from about $5 to $50, so I'd have to have a lot of price tiers. That's kind of absurdly broad, though. I'd think fabric and other categories should have a few orders of magnitude less, but I might be surprised.

But, you can do that if it doesn't fly too much in the face of customer expectation. In some industries, like printing, it's common. In fabric I think there's a strong expectation of a single price per length unit, though I suppose you could challenge it.

I don't think lots of price tiers is a good customer experience, so I decided against it as a long-term customer satisfaction strategy. I do wonder if it's costing me sales. Maybe I should set up an alternate brand that does tiered pricing and free shipping.

There's a study of pricing psychology to separate the base and shipping.

[source] https://www.nickkolenda.com/psychological-pricing-strategies...

This is good advice. We do free shipping once your order is over $x. Interestingly when we email offers that are above x and will attract free-shipping the response is significantly better.

Used to run pretty active online shop from Toronto - I would advise you to look into CA to US shipping services. In our case (US centric customer) it was cheaper and more transparent to ship items via 3rd party forwarder and USPS, even back to Canada. Go figure.

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