Mentor advice: how much should you spend on packaging?
A lot of the entrepreneurs we fund dream of seeing their product draped on the shelves of department stores, supermarkets and shops the world over.
For that to happen your product needs to be priced at a level that you can make a profit from and so can the shop that’s selling it. This means in the creation process, every penny needs to be accounted for. Founders of Boo, Charlotte Cramer and Davide Russo produced high-end beautiful packaging for their bedtime story-book and glow in the dark duvet cover, but after ignoring their mentor time and again, ended up having to cut their production costs to please the retailers, the result? Way more sales. This is their story.
Charlotte and Davide received a £11,300 Virgin StartUp loan to launch their business, Boo.
You’ve got a great team, a killer idea, bucket-loads of passion, and a bunch of people lined-up who are willing to part with cash in exchange for your product/service. Right?
So why do you need someone to come in, who has never worked in your sector before, and give you advice on how to do something you’ve already thought through?
For the sake of being helpful to you I’m going to put my hands up and admit something. When we just started we totally underestimated the importance of having an outsider tear down your idea to bits and analyze every detail of the business.
We thought we had it all sorted: we were set on beautiful packaging, solely on-line distribution, and a high quality 100% top thread-count cotton product. In hindsight, we realized that we were designing a product for ourselves, not our target market.
But hey, if nothing else, setting up your business is the most amazing learning-process and now we can share with you one of the most important things we’ve learnt: ‘your mentor knows more than you can imagine’.
By our very nature as human-beings we hold consistent beliefs (sometimes even when we’re proven wrong by science). Although sometimes a powerful force for change, this human factor can be problematic in entrepreneurialism. We have an idea and we go about executing it whilst collecting evidence that reinforces our belief. We are very good at avoiding any information to the contrary. A mentor doesn’t have this disability to evaluate the opposition.
Here’s an example of something that illustrates my point: having a design-background we were incredibly excited about creating packaging akin to Apple’s. Flawless closures, clean lines, and worthy of sale in its own right. We read up on the psychological importance of packaging to deliver a premium product and asked our friends who all agreed that opening a new product in a nice box was a great feeling that filled you with confidence in its contents.
Our mentor advised us that the packaging wasn’t important and spending in excess of £1/item on packaging would not make business-sense. That capital could be better invested.
We kept searching for more evidence to prove our intuition. We felt that if we wanted people to believe in the efficacy of our product then it was vital we had our glorious gift-box. And we found our evidence. The best thing about the internet is you can ‘prove’ pretty much anything. This also means you can fool yourself of pretty much anything. And we sure did fool ourselves.
We found a factory in China that manufactured us a sample of the most beautiful magnetic closing, soft-touch, keepsake box I had ever held. I don’t even think a Chanel bag comes in a box like this (not that I would know). We were obsessed.
To cut a long story short, we had 500 of these boxes sitting in my mum’s kitchen ready to sell. Fortunately (a few) people were buying them and the feedback was great. But then we get this awesome wholesale agent on board. This guy is talking about >20,000 unit sales to huge retailers and suddenly we’re listening. And you know what he says?
“You’ve gotta’ knock your costs down by 50% if you want to sell to retailers”
At this point we are still wondering if people would buy it without the box, so we decided to test this out. We scrap the box and cut the price for a ‘lite version’ to test the market. I’m sure you can see where this is going. The product flies like never before. Interestingly, it’s also driving sales of our premium version (another conversation for another time) but lesson learnt, our mentor was right after all and now we look back and realise how we could have better spent our money.
As much as we thought we had put ourselves in our customer’s shoes, it’s become clearer over the months that originally we had designed a user-experience for ourselves, rather than our target market. We wanted a cool, parallax website. We wanted a minimalist aesthetic. We wanted a short, smart end-line. And we got it. But then we also realised that more than any of that, what we really wanted was for people to love, and buy, our product. That should’ve been our guiding vision over and above all else.