One of the most frequent questions I hear from crafty sellers new AND old is “How much should I be charging for this?”
A lot of beginners make some common mistakes and misjudgments, so here are some things to consider when pricing your goods, as well as a formula to figure it all out.
Here’s a big beginning mistake I see all too often: Pricing your item way below “competitors” (which I prefer to think of less as competition and more as similar shops, but that’s for another time). The reality is that pricing too low can actually discourage sales because people assume it’s of poor quality.
Another mistake is thinking of yourself as the target customer. If you base your pricing on what YOU can afford, you’re probably under pricing. Guess what? I can’t afford my own stuff. I’m what you call a “starving artist”. I can’t afford to buy designer clothing. Other people can, they just aren’t me.
Silver coin ring by silvercoinrings
Handmade goods mean attention to detail, quality craftsmanship, and a significant amount of TIME and SKILL, all of which mean HIGHER PRICE. When you’re pricing your items, I want you to repeat to yourself that YOU ARE NOT WAL-MART.
The bottom line is to remember that you’re doing this for a profit. If you spent $10 on materials, then you better be charging more than $10 for your pieces, or you won’t be able to do this for much longer!
I should also note, there isn’t necessarily a Right or Wrong way to price your stuff. You will find what works for you.
Brutus the Zombie Pig piggybank by CodyOlsen
At the very least, there are two things you need to account for when you’re pricing: Materials and Labor.
For our example, let’s say you just made a cute tank top. The materials cost as such:
Materials
main fabric – $8 a yard
lace – $2 a yard
elastic – $1 a yard
For this top, you used:
1 a yard of the main fabric ($8.00)
2 yards of lace ($4.00)
1 yard of elastic ($1.00)
Your total for materials is $13.00
Let’s see about labor. You’ll need to decide on your hourly wage. We’ll use $10, which I think is the absolute minimum you should be paying yourself.
(Let me say right here that if you’re an experienced craftsperson, you really should be paying yourself upwards of $20 an hour. You are SKILLED LABOR. Anyone can scoop ice cream, that’s why they pay high school kids $7 an hour to do it. Not everyone can do what you do, and you’ve spent years honing your skill, so pay yourself accordingly. And by the way, if you think $20 an hour is a lot of money, keep in mind that a full time, 40 hour a week job at that wage is about $40,000 a year BEFORE TAXES. That’s lower middle class in most parts of the US.)
Okay, back to the equation.
Labor
$10/hour
For this top, you spent 2 hours working on it:
($10 x 2 hours)
Your total labor cost is $20.00
Add together the cost of Materials and Labor ($13 + $20) and you get $33.
One Hundred Dollar Bill Cuff by GetPersonalArt
Now hold on a minute… don’t go running off pricing your top yet, because $33 is NOT the price you should use.
Why?
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Well, first of all, this is an extremely rough estimate as far as the cost of an item. There are a lot of “hidden” costs you’re not taking into consideration. For example- the cost of your sewing machine, the cost of your camera and your computer, the electricity used, the time it takes to photograph and list and item for sale, paypal fees, and on and on…. These costs are called “overhead”.
But also, $33 does not account for PROFIT.
I know, I know, you got $20 for your labor, right? Well, look at it this way. If you were an employee making this top, your employer wouldn’t make anything if they sold the top for Labor and Materials. Even wholesalers add on a bit of profit.
Photograph – Mindy dreams of pearls and the envy of all the girls at Kappa Nu by johnpurlia
Most standard pricing models will tell you to take your “at cost” price ($33) and double it for wholesale ($66). Then you’re supposed to double it again for retail ($132).
My guess is that very few handmade artisans use that method to price their items. In fact, I would guess that most people (myself, included) wind up pricing their items somewhere between the “at cost” price and the wholesale price. That doesn’t mean you shouldn’t use this model, but since most of us WILDLY under price, asking you to try to get full retail price is going to sound like pure madness.
So at the very least, add on a small amount to account for overhead and profit. For this top, let’s say, $10. Even if you’re doing this just as a hobby, this will keep you in the black, so you can continue making cool stuff- even if it’s just for fun.
When you’re first starting out, it makes sense to keep your profit low (which in turn, keeps the prices low). But when you’ve got a decent customer base, don’t be afraid to increase your profit margin… and your hourly wage, for that matter.
When you decide it’s time to raise your prices and make more profit, I suggest you do so by raising your hourly wage. That way, you will be raising the price proportionally for all of your items. So if you decide you’re going to increase your wage by $2 an hour, add another $2 an hour on top of that to account for profit.
Anyway, for this example, we’ll tack on $15 for profit to make the total $43.
For my pricing model, this is what I would consider the wholesale price.
If you’re selling your goods to a store so that they can resell them, this is the price you use. The store will then mark the price up, usually at least doubling it. If you’re consigning, remember to compensate for the consignment fee (which is usually anywhere from 20-50% of the selling price).
If you’re selling your stuff directly to the public, it wouldn’t be out of line for your to double the wholesale price. In fact, that’s extremely reasonable.
A lot of sellers say they feel guilty for charging anything more than a few dollars more than materials and labor. Well, consider this:
The United States of Wal-Mart by howardeyosha
Wal-mart buys material in HUGE quantities and has obscenely cheap labor. To make a similar tank top to yours, it costs them LESS THAN A DOLLAR. But they’ll probably sell it for $20. That’s a mark-up of over 2000%! Artists and crafters are the LAST people that should feel guilty for marking their pieces at a reasonable price.
Be forewarned that you will probably hear people make snarky comments like, “I could make that for $5″ or “I could get that at Wal-mart for less.”
Ignore them. Why?
Multiple Choice Question!
These people:
A. have no experience selling a handmade item, therefore they have no idea how much time/materials/effort/skill goes into it.
B. have no respect for quality. All they care about is getting the cheapest piece of crap they can find.
C. resent that your awesome piece of work is out of their price range.
D. are jealous that you have your own business making rad things.
Correct Answer? Probably all, or at least more than one of the above.
Dollar Origami – Two Dollar Jet Fighter F-18 by BeanyTink
Whew, that was a lot of info, I know. How about a 10 second recap?
- Prices too low can actually keep you from getting sales.
- Don’t price by what you can afford.
- Don’t forget that delicious word, PROFIT, when calculating your price.
- Remember that Wal-Mart is a greedy scumfuck corporation that’s ruining the global economy.
- Naysayers can suck it!
That’s it! Hopefully I have banished all questions regarding how to price your goods and made you hate Wal-Mart, all in one fell swoop!
Also, check out this article, which has some great points about wholesale vs. retail pricing, selling your hobby crafts, and more.
Thank you, I had a hard time pricing my work until I saw what other artists charged. I realized my work is as good or better than artists who were charging twice as much. Not any more. Sometimes it’s better not making a sale then charging less than it’s worth.
I’m a designer-crafter who wants crafting to be my job. I’ve been making and selling my work for the last a few years.
I used to have low to medium prices when people started buying my work. Nowadays my sales are very-very low because of economical crisis. But in the same time it’s now the time I charge more money for my work because I’ve got more experienced and I believe I deserve more money. But unfortunately I’ve ended up preferring making a sale in low price than no sale. I’m thinking that my prices now are too high for my customers.
I tried before to sell wholesale but it didn’t work because shop owners want to buy cheep products to sell then on double or triple price plus they feel security buying mass produced products.
I believe that people prefer to buy things in the big shops because they not only can buy cheaper but also they can be sure those products are of good quality made by a well organized factory. Handmade doesn’t mean necessarily good quality because the crafter doesn’t have the experience and machinery to produce the same products. Plus the big brands test the quality of the products; they’ve made the same products many times, and so on, so they can offer good products in affordable price. So I think that a handmade product even if it is unique (but sometimes a copy) and hopefully one of a kind it’s not necessarily better than the mass produced to deserve being sold high.
I love You !!! Thanks
Hi.
I really like your theory on pricing. I say theory because like you said it can be bought cheaper at Walmart and smart shoppers will always search for a bargain that is not to say your product is not worth the prices you charge but I went to a craft sale and having used a similar system. I went home that day with one sale of $1. All I overheard was she is sooo expensive blah blah blah. So there went a wasted day. So be careful with your advice on pricing you could very well out price yourself or encourage others to do so.
Thanks for listening,
Susan Darter
I sell a line of handmade jewelry wholesale in addition to coaching others. This is hands down the best article I have read on this topic.
OMG! I can’t believe I found you!! I had been under-pricing for years and I didn’t know any better…I was always on a budget so the assumption was that others were too. My clients told me the prices were to low SO I RAISED THEM according to what the market would bear. Guess what? My business INCREASED! So…the saying “you are worth what YOU think you are worth” is true.
BTW I have been sewing wearable clothing since age 13, taught sewing for 18 years (beginner to tailoring and pattern drafting/alterations) in evening classes without a university degree as the district coordinator was so impressed with the clothing I brought in for her inspection, and now have a lovely studio in my home. I am 54 years of age.
I am EXCELLENT at my craft and now charge time ($25/hr) plus supplies plus consultation plus etc. Rarely do clients ask for a breakdown but I keep an invoice with details for myself so it’s not an issue should they ask. For pattern drafting it’s $40/hr for a basic design, $65 on bristol board, $30 for Spec Sheet. To sew the item they provide all supplies and I supply expertise. If they require guidance at the fabric store that is $25/hr. (The first 30 mins of my initial consultation is free. I find I can weed out those who would waste my time or are looking for someone to chat with.) I will go to their home (time and gas included. Many clients appreciate this.
Since I present myself well-groomed and business-like clients don’t quibble. My appearance is impeccable and I see clients in a small room/office of the house away from my studio. The room has mirrors, is near the bathroom/change room and has no sewing items in it. It is obviously an office (computer, desk, chairs, plants) but no sewing things or photos. I used to have clients in my studio but they became distracted, full of questions about my other projects AND I would have to keep the studio super clean.
After 40+ years sewing I am still learning and improving upon my craft. Clients can wear the clothes inside out and they would look great! My attention to detail is sought after so I charge accordingly. Remember Clairol’s ad line,”Because I’m WORTH it”? Well I am. Thanks for your GREAT site!! Keep up the good work and continue to spread the word that “We are WORTH it!”
I love your article and couldn’t agree with you more. I wish all the women selling on etsy would read this. There are still sellers charging slightly more than their cost of materials and that’s it!
Thank you for this. I grossly underprice my sewing and artwork for fear of the things you listed. My work and I are worth every penny I should be charging, and you helped me stamp that in my head. Thank you!
This is a great article! Even though I’m not an artisan selling my stuff as my sister is (she sells one of a kind jewelry), I have run into this pricing problem in my Interior Design business! I felt guilty about charging so much for my time ($100 per hour) when I was having so stinkin’ much fun doing what I do! My son took me aside and said, “Mom, if you go to a dentist who absolutely loves drilling teeth, do you think he’s going to not charge you full price just because he loves what he does?” I think that’s a good lesson for all of us – obviously we love what we do and love exploring our creativity – but, we need to value our contribution also!
Thanks for a great article!
Good advice but I really do think that you need to price yourself for your area. I sell my handmade crafts in a antique/craft mall…I have a booth….and I am competing with many vendors that sell similar items to mine and I find that you can not truly get “full value” for your time…..I can have hours in a table runner but I cant get the $70-$80 that it would really be worth if I charged $10 an hour for my time…no one in my area would pay that!! I see what I do as a hobby that I make some money at….my business turned a profit last year and I’m good with that.
<3
I follow you on Facebook. I didn’t realize you had a blog too. Great article, thanks. And I love you clothes too.
Thanks for your insight on pricing. I’ll be opening an Etsy shop as soon as possible and your info is really going to help!
Cheers!
This was very insightful and I like that you were honest about how you also defer from the pricing model. When I started selling jewelry, I just wanted sales, however, now that I am more experienced and my designs are more complex, I find myself charing more. True I do not get tons of sales, however, I am a believer that good quality goods will sell eventually.
Thanks for the information and insight.
I have recently started selling my homemade items and received my first commission for an item I’d never made before. So I struggled with how to price it and then found your advice – THANK YOU.
p.s. Agree with your final Walmart statement LOL.
I think most of this should be very obvious. but alas people get scared or don’t do it as a business. When pricing in fashion their is often the 3x rule for marking up, however wholesale doubling is reasonable. I think the other thing to consider is that you need to have substance behind your work or brand, as you will be competing in a diluted market.