How To Lower Production Costs to Increase Profits

If your profit margins are lower than you’d like, or if your production costs are causing you to raise prices higher than you’d like, then you may want to find ways to lower production costs. 

>> First, make sure you’re setting prices right: The Right Way to Price a Handmade Product (Step-by-Step Formula)

Here are ways to save time and money when creating your products:

1) Change where you shop for materials

You may need to rethink where you shop if you’re trying to lower your prices as the place you once frequented out of convenience may not cut it anymore. Once you have a business license, you can find places that sell at wholesale prices to business owners. This likely means you’ll need to buy more materials at once, but it will help you save in the long run.

2) Change how you shop for materials

Watch for sales and try to make big purchases during those times. See if you can barter a bit and get a discount for taking last year’s stock off their hands or for buying in bulk. Companies will often reward loyal customers and you’d be surprised at what can happen if you just ask.

3) Change your materials

Look for materials that are slightly lower quality. You don’t want to compromise on quality too much but you may be spending extra money on materials that your target market doesn’t really care about. For example, if I’m selling handmade candles, my target market may not care about the type of wax I use; they just want something that makes their home smell good.

4) Change your design

A little alteration to the design of your products can make a big difference. For example, when making handbags, replacing zippers with snaps, reducing the number of pockets, or altering the size or shape could cut down on the time it takes to make each item, its cost and ultimately, the price.

5) Create in bulk

Making one item at a time will increase how long it takes you to make each item. You don’t have to pull out all your materials and tools multiple times. It may only save you a little time on each item, but it adds up when you’re making dozens of them.

6) Create an assembly line

Assembly lines are efficient. Although you may be a one-person show, working on one step in the production process at a time can speed that task up. For example, when making bags, I will spend an hour cutting pattern pieces. Then I’ll move to the sewing machine and sew straps for dozens of bags. Then I’ll turn all those straps right side out before heading back to the sewing machine and top-stitching all of the straps. I can focus on one task (e.g. cutting material, or sewing a straight line), which makes me more efficient at it and decreases how much time it takes me. 

7) Create templates

Creating reusable templates to measure or complete steps of your production process can help speed things up. For example, instead of using tissue paper pattern pieces (which are flimsy, harder to keep in place, and don’t allow me to cut as accurately, which then leads to other mistakes), I use cardboard for pattern pieces. When a pattern uses a piece of elastic, instead of measuring each piece, I create a piece of cardboard that is the length I need. Then I can wrap a long piece of elastic around it multiple times, cut at the top and bottom and have several elastic pieces that are the right length.  

8) Invest in the proper tools

Look into the cost of upgrading your equipment or using different tools to see if it will eventually help you lower costs. I was sewing with a basic, beginner sewing machine when I started my business. Investing in a better machine allowed me to sew much faster. I also invested in fabric weights and rotary cutters so I didn’t have to pin pattern pieces to the fabric to cut them out with scissors. I could simply place my pattern pieces down, use the weights to keep them in place, then trace around them with a rotary cutter.

9) Set time goals

You don’t want to take all the enjoyment out of creating your pieces by constantly racing to meet deadlines. However, setting a time goal (e.g. get all cutting done in one hour) can keep you focused and even help you find creative ways to speed up your process.

10) Take breaks

It is important to step away from your work throughout the day. Being stressed or fatigued won’t allow you to work efficiently and will make mistakes more likely, which will end up adding more time to your production. Set a timer for every hour or two to remind you to get up, stretch, get outside, get a snack or water, etc. 

EXAMPLE

Here’s an example of how I improved my production time and lowered costs during the Christmas season, when I was making flannel pajamas. Perhaps it will spark some ideas for cutting down on time and costs in your own production:

• discounts – watched for 50% off and “buy 2 meters get one free” sales and stocked up on fabric, regardless of the time of year.
• eliminated the drawstring – it didn’t cost anything extra in fabric as I would cut it from the scraps but it was another piece to cut out, sew, turn right side out, sew buttonholes on the pj’s and then thread the drawstring through. This step alone probably cut off 10 minutes per pair! Customers didn’t miss it as there was still an elastic waistband and I added cute little buttons to the front which were much quicker to sew on.
• ironed my hems first – once my pajama legs were together, I was finding it difficult to get my hems even, pin them and then sew them. I found if I ironed the hems up before I put them together, they were always even and I could just fold and hold them in place while I sewed.
• created a template for the hems – I took that one step further and cut a hem guide out of heavy paper so I could just fold the bottom of the fabric over the guide and iron to create a crease. This saved me a lot of time as I didn’t have to stop every few inches to measure and make sure everything was consistent.
• created new pattern pieces – I cut them out of heavy paper so there was less fiddling around to get them to sit flat, they didn’t shift around when I was cutting and they lasted a lot longer than thin tissue paper.
• bought new tools – rotary knives were so much quicker for cutting than scissors. I also purchased some sewing weights so I didn’t have to pin my pattern in place, I placed a weight at each corner and cut.
• broke down each and every step – I would make anywhere from 20 – 50 pajamas at a time so I divided everything into separate tasks.
  • Cutting – I would carefully layer my fabric so I could cut as many pieces as my rotary knife would allow.
  • Sewing – I would line each pair up, sew the leg seam then the crotch seam. Once I cut the threads in the next step I would go back and do all the hems and waistbands.
  • Snipping – I would cut all my threads at once. This seems small but stopping each time to grab the scissors, find the thread, cut it then go back to my sewing machine, adds up.
  • Details – I would then go back and thread elastics through each of the waistbands and then sew all of the buttons on the front.

I went from it taking me a good hour from start to finish to make one set (when I was only making one at a time) to around 15 minutes per pair when I was making them in bulk and using my assembly line method. 

Share any other time/money-saving production tips in the comment section!

Finally understand why your hard work isn't resulting in more sales

Join over 18,000 others and sign up for the
Made Urban newsletter

Success! Please check your email to confirm your subscription.

There was an error submitting your subscription. Please try again.

Email Address

Subscribe Powered by ConvertKit

Erin (Creator of Made Urban)

Hey, I’m Erin 🙂 I write about small business and craft show techniques I’ve learned from being a small business owner for almost 2 decades, selling at dozens of craft shows, and earning a diploma in Visual Communication Design. I hope you find my advice helpful!