Barrier To Entry – What it is and Why You Want One

One thing than can make it difficult to sell your handmade items is having a massive number of competitors due to a low barrier to entry. Simply stated, barrier to entry is how much it will take to do the same thing that you do. If someone sees that you are selling a lot of your items and they decide to do exactly the same thing, what would they have to do? Would they have to invest thousands into specialized equipment or just take their scissors out of the drawer? Would they need years of practice to make what you make or could they have their items made in an afternoon without any prior experience? Will they need elaborate marketing channels and advanced websites or can they sell their first item today by selling in an online marketplace?

If you are in an over saturated market and the prices of the items are way too low overall, it could be due to a low barrier to entry. A low barrier to entry brings a lot of competitors into the market. This puts so many similar items into the market that your product becomes a commodity. The only way to compete will be with price. It is common to see prices so low that there is no profit to be made. Some people may even be losing money after expenses and fees.

Another thing it does is makes potential buyers ask the question: why do I need to buy this item when I can just make it myself?

The key to making and selling handmade items is to start off with something simple, but continue learning and developing more unique items. As you develop your skills you will be able to create things that the average person cannot. As you sell your items you can afford to invest in more equipment that will allow you to work in different materials and processes that will make your items stand apart even more. As you become more and more specialized and unique you will have fewer direct competitors and you will be able to ask prices that make it worth your time to make your items.

It is something to think about

Richard

Tags: barrier, barrier to entry, competition, competitors, saturated market