Putting a price on your work is one of the most intimidating first steps to selling. Why?
There are a lot of pricing formulas suggested around the web spouting what really works for you and the handmade products you’re selling. For instance, I’ve checked Etsy Forums and here are some pricing formulas I have found:
- Cost + Labor x 2 = Wholesale x 2 = Retail Price
- Materials + Hourly wage + Overhead = Wholesale Price
- Material + Labor + Expenses + Profit = Wholesale x 2 = Retail
- And many more…
So how do you decide on what pricing formula you should use?
Make sure that it’s:
- Simple and complete – you want it to be easy to use.
- Flexible – you want it to have flexibility to be used on one product to the next.
- Unique – you want it to be unique to your business.
- Accurate – it should include your business costs as well for your hourly rate
- Discreet – you never want to boast it to other people or on the Etsy community, rather, get their feedback on what they think should be considered in making a price formula that works.
What you should consider when pricing your handcrafted goods?
- You have to value your own work. or no one else will.
- Don’t lower your prices with the intention to sell more. Cheap prices give the impression that your goods are cheap.
- The quality of handmade goods you’re creating will not only be judged by your prices but also by the quality of materials and businesses you associate with. Choose wisely.
- Be confident with the price you set and if someone asks you, explain to them the quality and materials they are made of. If you do not have confidence stating the price for your items, no one is going to be willing to pay that price.
- As part of your market research you probably looked into what other people are pricing with products similar to you. That’s a great way to get an idea of what people charge in your niche. Take advantage of it. Offer something they are not.Perhaps, freebies and discounts for bulk buying.
- Comparison to what someone else is selling and charging does not factor in YOU – your level of expertise, your costs, your time, the value your customers receive, where you get your supplies etc. etc.
- Don’t be too affected with what others are charging. You do not know their costs of doing business: They might have sisters helping them make their goods for no charge; have to rent a studio space; have to pay for childcare so they can work; etc.
Always remember, don’t struggle to fit your strategy into someone else’s formula. Choose the things that apply to you and ditch the rest
What about pricing for packaging and shipping?
Your customers can buy scented candles at local shopping malls. Your handcrafted candles made from pure organically grown roses and lavenders is a special item for which you’re charging (and they’re paying) a higher price. It deserves special packaging, which is also a variable cost.
If you ship your product to your customer – perhaps you have an ecommerce website – shipping is also a variable cost. Even if you pass the cost of shipping along to the customer you might also want to charge them for insurance in case a shipping issue arises. It’s best to break your shipping costs out as a variable expense.
Take a look at this video as I outline a simple way to accurately price your finished pieces including tax, overheads and hourly rate accurately and quickly.
Check our A-Z Handmade Business Guide for more free tips for your creative biz.
That’s it. I hope my mish mash of pricing tips help. If you think I missed something, questions or you want to add more tips. Please share it with us through the comment box below.
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