For most of us starting a business is scary, especially if you’re self funding. You have a great idea for a product, but bringing it to life is intimidating at best, especially if you have limited capital (say under $20k) and have the goal of expanding it into a real business. Adriana Botti started with even less that that, had no outside investment and succeeded to hit a $1 million in sales #goals year 4 of your business of starting Little Words Project. If you’re not familiar, Little Words Project is that super cute beaded bracelet brand that has positive messages on them. They are beyond uplifting and spread kindness and joy everywhere they are worn. You can also register them and wear and share them with your friends who need a little encouragement and track the journey of your bracelet from wrist to wrist. We sat down with the superstar to talk business, growth, pricing and advice!
- What verticals do you offer and what has been the most lucrative in growing your business?
We do everything from Facebook/Instagram sales to corporate gifting to college campus events and sponsorships for partner events. We have found that the most lucrative of them all is the collegiate ones because not only do they all buy upfront but continue to spread the word making it a really great marketing opportunity for us moving forward!
2.Pricing. Many of us struggle with pricing. Should it be based on a perceived value or based on your Cost of Goods (COG)?
Here’s the thing- you want to do your best to price your product at a price that will serve your needs (make you a profit and keep you open for business) while at the same time matching perceived value- that’s how you know you’ve found the sweet spot price point. Every industry and company is different, but for us, it took a bit of time to finalize our perfect product price. What started off as a simple “I think someone would pay for this” turned into an actual delicate number science. In hindsight, I wish I’d spent more time doing some research and understanding exactly how to price a product at the start! It wasn’t until this past January (year 3.5 of my business) that I finally priced our product properly.
And… how does Wholesale play a role in that, do most retailers want a straight discount of 30-50% or do you set the prices?
This definitely can vary for every industry but from what I’ve seen for accessories in the gift space under $50, most retailers want to more than double their money. A good rule of thumb is to multiply your wholesale cost by 2.2-2.5. That is where wholesalers like to see their margins! To determine your wholesale price it’s always good to look at how much it costs to make your product, then multiply that number by at least 2.5 to give you enough margin to reinvest in the company and continue to grow!
So Cost x (at least) 2.5= Wholesale
Wholesale x 2.2= Retail.
The two most important numbers here are Cost and Retail. The idea is- if your product retails for more than consumers are willing to pay for said product then it won’t sell. So, if your price point is coming in at way too high for that reason, then you definitely need to work on driving down your cost so you can “price to sell!”
- To put an example to it, lets say I make a plastic toy A that costs $3 to make but the market value of this toy is $32. Now lets say I also make plastic toy B at $9 at cost and the market value is $32. Do I price both of these the same, what would their wholesale cost be or am I going about this the wrong way?
I strongly believe that pricing your product to sell is the most important thing you can do. So, your end price point in both of these scenarios should be $32, but your process of pricing should then be worked out backwards (take your end price and divide it by 2.2 for wholesale). The only difference between these two scenarios is how quickly you profit.
There’s no “wrong’ way to go about it, but there’s definitely a good way to try and navigate these situations that involves much more than simple math. As is the case with most things in business, a ton of it is based on the numbers but there is an element of it that has to be based on feel and gut. It’s largely dependent on your end goal. For example, if you want to see yourself grow in business and ultimately see more money in your account more quickly, then the ONLY answer is to price your product at a price that will sell to end consumers while creating said product at a cost that is as lean as it can be. That means doing everything you can to lower how much it costs you to make it! This is your quickest path to growing your bank account and making money as long as the product’s value matches its price point (this will keep customers happy and keep them coming back for more).
BUT, if your goal is to simply sell the product to as many people as possible, and you cannot drive down your costs but you want very badly to keep selling it at a “price to sell”- then you still can be a profitable business, but you may require outside capital quicker and it may take you slightly longer to see a large cash wall in your account.
No matter how you slice it though, if you want to sell your product and see success, then how its perceived value matches its actual value provided is of utmost importance.
- Marketing and getting your brand out there, what has been the most successful?
Again, this really depends on the type of product you have/ your ultimate goal behind it. If your goal is to build loyal customers who will keep coming back for more of your jewelry, then the best marketing would be to find a good balance between social media and email marketing!
When first starting the brand, I really wanted to create a community more than anything else. I chose Instagram as my main platform as it had just started gaining popularity and I knew there was a community of people built right into it already, all I had to do was provide them with a product they’d like and content to match. We have been steadily growing our social account over the past 5 years and we did so as we did our business, at a solid pace that developed our followers into loyal customers. Once they became loyal customers, we’ve been able to reach them via email to remind them how much they love the brand.
- What advice would you give yourself now that you’ve been through the past 5 years when you were starting out?
I wish I’d done a bit more research and had as many tools available to me as I do now to learn how to actually start a business properly. I spent a lot of time making mistakes and it would have been amazing to avoid some of them if I’d simply known a bit more about the process. That said, I am so grateful for my journey as it’s truly made me an expert in certain arenas at such a young age. Of course- there’s always room for improvement but I definitely wouldn’t want to have changed my process for anything and neither should anyone!
- Can you take me through the timeline of your brand?
We went from my parent’s basement in year one with no wholesale representation and a pretty high cost product, to my studio apartment in year 2 still without wholesalers but starting to build a following, to my two bedroom apartment and ultimately my Hoboken office.
- Social media, email marketing, press or sales person? Which is the most important to hire or area you throw your efforts into?
I think at the very start it’s social media. As you continue to grow you’ll probably want to put your effort into someone who can sell the brand for you!
- What role does positivity pay in your brand? And also giving back?
Positivity is everything for my brand! There are some super hard days as a business owner so if you don’t stay positive, it can be awful hard to do all the work necessary to get you to the next step. It’s so important to remember that and always do your best to believe in yourself.
Check out Little Words Project at https://littlewordsproject.com