sales, product, salary, resale, sellI have a startup to where I sell fishing weights and lures. I make good profit on weights and can compete, but lures I can make a profit but can’t compete well if I account into the price my labor. I don’t pay myself for labor. For pricing my products out I priced them out as if I was paying myself so in the future I don’t need to “raise” my prices. I can buy lures from Wholesalers cheeper than what I can make them if I count my labor time into it. If I don’t count my labor into the price I am way under other wholesalers.
My question is do I buy from wholesalers or should I make the product. Which would be better down the line? Same time right now or save money?
For me there are two key points: scale and opportunity cost.
Scale: If you are personally making the the lures, then the number you can make may result in a limit on how long you can operate like this before you simply run out of time in a day to fulfil your sales requirements.
Opportunity cost: If you spend the time making lures doing something else instead, will you earn more per hour worked? Alternatively, would you prefer to earn a little less money and have the time for leisure and family? If you do purchase the lures wholesale, it will still take you time to manage the supply chain. You will have to spend time working with the wholesaler to ensure the correct quantity are supplied, to a high enough standard, in time to meet your sales requirements.
There are also many other considerations which could be taken into account when forming your decision such as the flexibility. You may find books on supply chains and production useful. ‘The Goal’ by Eli Goldratt is an accessible starting point.
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