How to: Pricing Your Handmade Goods & Products

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?

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.

About

My name is Alexis. I have a craft addiction. This is my story. also check out: www.smarmyclothes.com (my clothes) www.whatthecraft.com (my tutorials)

Posted in Selling Handmade Tagged with: , , ,
170 comments on “How to: Pricing Your Handmade Goods & Products
  1. Tresia Mitchell says:

    Thank you , thank you !!!!

    • Mindy king says:

      How much can I sell a homemade god eye. Cause I have been making them for 3 years and I just wanted a good pricing range.

      • Brooke says:

        Like she said, figure out your cost (materials + labor=cost)x2 is a good starting point. Your labor is how long it took to make times a minimum hourly wage of $10 per hour. With other calculations it will say the above calculation is wholesale and multiplying that by 2 is retail. For most of us that would make our product prices way too high. Make sure to keep you receipts or at least put the cost of items on your supplies (put a sticker on your bead jar that says “cost .02/bead”) that way you know your supply cost. Guessing will probably make you shoot too low and you will loose money.
        Hope that helps clear things up.

  2. Antionette says:

    Thank you for the honest truth without the bullshit!

  3. Violeta says:

    loved it! so much! specially the multiple choice part 🙂

  4. Holly says:

    Thank you for the info. Feel better about my pricing, even though it’s not even close to retail price and am already a Walmart hater lol!

  5. erlinda says:

    Thank you for the information….

  6. Jesse says:

    Helpful! Thanks so much for this perspective. Also, scumfuck = my new favorite word.

  7. Marie Forbus says:

    This is my Very First time to ever sell some of my own homemade this gs, and I am EXTREMELY NERVOUS !! Ecause of several circumstances I am just now getting to the point where I belie e I have enough items to put out without making E ERYTHING G I have and not selling any !! I mean I had Hall braclets, but was in the Hospital so did t get to sell them . MO ey Lost. I’m on the erge of sing money on CRIMSON TIDE & other SEC Football braclets if I do t sell NOW !! A man at a near y store offered to sell for me, for $1%.00 ( him 5.00 ) Me 10.00. I’ve got Christmas braclets, crocheted heed items and several other things out my eyeballs. I’ve thought of a Home E en but I’m just Scared. WHAT SHOD I DO…PLEASE.JUST A WORD OF ADVICE !! Thank You , Marie

  8. I ran a spreadsheet with all costs and it wasn’t until I actually charted the data that I saw where my “holes” where. These holes represented my errors in pricing that made my profit less than my costs (my costs include my labor.) In my concept–you should make AT LEAST as much PROFIT as you are investing in the costs of selling the item. What does this mean? If your materials (priced up to retail cost, as all of us try to purchase materials below retail, right?) and all transactions fees for selling cost you $30, your profit should also be AS CLOSE TO $30 as possible, so your price should be no less than $60. You should CLEAR $30.

    What I find as I start out is that if I roll labor costs into my material costs I’m better off. I work with a pricey fiber and price it by the foot for projects. I can easily roll in a few pennies per foot to add in my labor. And this is easy to measure out, too. Think about this. How often are you asked “How long did it take to make this?” Do you really have ANY idea? And how many times are you actually making a prototype, which will take you HOURS longer than it will to make future items of the same design? Or maybe you make it & decide to sell it to see if it will sell? Product development takes hours and hours, sometimes days on end, and it’s the “fun” part of our craft, isn’t it? (Or maybe you make one and decide you never want to make THAT one ever again.)

    • Lex says:

      Great points, Charlotte. The only reason I encourage people to start out small when considering profit is because most people I talk to are resistant to the idea of even asking for a fair wage for their labor. I’ve literally had fellow sellers tell me that they think it is IMMORAL to charge anything more than materials + labor.

      I’m not sure why so many makers (and I include myself in this group, to some degree) are so opposed to running a business the way everyone else runs a business. :/

  9. Very good information. Thank you. I have no problem with the profit side of pricing. I have a problem with the psychological side.

    I sat under Lite Dome Canopies for forty years. Every 5 years or so I think I price wrong. My price for a painting with a good profit will come to $80. Should I make this $80, $79 , $78.50 $85, $82 and on and on. Some tell me that art work and paintings should be to the even dollar like $80, and crafts should be at $79. After all these years I still ponder this question.

    Any comment you have would be greatly appreciated

    • Lex says:

      There are plenty of resources out there on pricing psychology, but it’s hard to know whether or not they apply to people like us because they are generally geared towards (and based on studies that focused on) mass produced products. For example: a study may suggest that people will buy the DVD priced at $79.99 from Store A over the one priced at $80 from Store B. Less often are they saying that someone will decided to buy or NOT buy based on that penny, which is what we would want to know.

      The reason this is hard to apply to your products is because your paintings are unique to you. They can’t go one booth over and buy the same painting for a penny less. They may be able to buy a different painting, but then isn’t it likely that they’ll choose the painting they simply like more (assuming the prices are similar and within their budget)?

      I have heard the suggestion that the $79.99 style pricing suggests “cheapness” and that makers should avoid this. But I have a hard time believing it will turn enough people off to make a difference, though I choose to stick to whole dollar amounts myself. I see less difference between $79 and $80, but I do think it may have a place at the hundred dollar marks, i.e. it can be beneficial to price $99 instead of $100, $199 instead of $200, and so forth. But again, this is all personal preference.

  10. Jen says:

    Thank you!! Super helpful!!!

  11. Paige says:

    I’m confused. You say $43 would be the wholesale price, and doubling it could (perhaps) be the retail price, then the tank top would come out as $86?

  12. Noelle says:

    Oh Wow!!! Thank you so much for this advice, this article was the nail in the coffin for me. I was struggling with pricing my products thinking I was overcharging, but you are so right. My labor plus what I’ve spent on materials should be absolutely be a factor. From now on I am 100% advocating for my products, and for those that have an issue, well see ya later and on to the next potential customer. Thanks again, this was awesome!!!

  13. Nadira says:

    Lol I too had my prices low thinking that the goods I made were expensive… but this had great detail on pricing handmade goods. This is a fantastic guide and has helped me a lot. Thank you sooo much!

  14. Just came across your advice, wish I had seen it years ago. Although I do know that pricing too low can taint your stuff, but needs must.
    Thank you for your rich words, I can now be proud of my work.

  15. Deniece Constant says:

    Thank you. I now realize why I have not sold much of my handwork. I will now try your method and I’ll bet I’ll do better. Thanks again.

  16. Apoorva Dhar says:

    Just wonderful read !! Makes me feel so proud to be an artist !! Thanks for sharing your views !!
    You’re right If I don’t value my creations,no one else would do it !!

  17. Janice B says:

    One of the simplest rules-of-thumb for pricing handmade items is 3 x the cost of the supplies. It’s a really simple formula, and comes out not too far (about $3.-) off what you have come up with. It is just tons easier to carry in my head.

  18. Katherine says:

    Thanks really helpful.

  19. Denise Gallant says:

    Hi. great article. I find that if I make a lot of smaller, easily made items (for example: hand painted Christmas balls) it draws people to my table or booth and they can buy something even if they can’t afford the other stuff. This makes them feel less guilty about looking at everything (yes, some have shoppers guilt 🙂 As you say, you have to find what works for you. Unfortunately, many great artisans cannot survive on their work alone. As for Wal-Mart, I have to buy a lot of my craft supplies there as I live in a rural area of Maine. They do take advantage of their employees and their customers, but I have no choice. I blame the open trade agreement we have with China and other countries rather than Wal-Mart. Not trying to get political, just saying what I know. Thanks again!

  20. Shirley Hughes says:

    Im,in ohhhhh!!!!
    How You Speak
    With Authority,
    On How To Do Your
    Thang With Out
    Any Shame Pricing
    Your Work…
    ThankYou 🙂 🙂 🙂
    I Don’t need to
    Look Any Further…
    Thank You For Your
    Words Encourgment
    Boldness,Confident
    Bluntness
    You Would Be A
    Hell Of Spokeswoman

    For people’s
    With Low Self esteem

    I,Have To
    Say,Thankyou,You
    Just Light Up MyLife 🙂 🙂 🙂 God BLESS
    Shirley Hughes

  21. Kelly says:

    This is a brilliant article. Multiple choice was lovely! I began my Etsy shop as a hobby, made sales and continue to make sales between the shop and my FB page. I wouldn’t consider myself a busy shop in terms of what I produce, but FOR ME, I am elated that people buy my stuff. Over the years I have fret over the pricing of my goods. I know my pieces are underpriced…and slowly in the last year as I have been tracking all of my numbers and realized exactly what I was spending, where and how much (or little) I was actually keeping for my time, creativity and skill!

    My boyfriend made a suggestion to me that took a lot of weight off my shoulders. He said, “If you just want to do this for fun and in your own time take use this equation.”

    (Cost x 3)+ HourlyPay – that means I cover my material, I have money to buy more material, I have a little bit to tuck into the biz and I get to pay myself to have fun.

    NOW I am no longer stressed about whether I can or can’t afford a trip to JoAnns! BUT it also got me thinking about expanding my product line, charging more, reassessing my pricing on custom orders. I VALUE MY TIME NOW. I AM BEGINNING TO VALUE MY CREATIVITY. AND I AM BEGINNING TO VALUE MY BANK ACCOUNT.

    Thank you for this post. I am going to put a big sign in my sewing room that says, “YOU ARE NOT WALMART!”

  22. Julie says:

    Most of us crafters file a schedule c for our income on our tax return, as opposed to setting up a corp. This makes our income taxes at a higher rate. We need to take this into account when paying ourselves an hourly rate. Self employed have to pay the soc. Sec. That an employer would have to pay, as well as the amounts that would usually come out of our paycheck. All of this has to be paid at the time one files their taxes. I am a tax prepare and tell my clients to calculate this, as well as the benefits that an employer would normally pay. If you pay yourself $10/hr, you are probably lucky to actually be making the feed min wage.

    Thank you for this post! it is very helpful and a good reminder that we usually provide a unique and high quality item and need to be compensated for our labor, as well add our creativity????

  23. George says:

    If my daughter does one of a kind pencil and charcoal sketches and a well know Jewerly maker wants to purchase some of the piece and use them and make them part of their collection . What price would you put on them ? I have been offered 4,000 a piece should we be asking more or are we being greedy ?

    • Lex says:

      Hi George-
      I really have no experience with art pricing or licensing. I’d suggest googling “licensing my art”, as I’m sure there are artists out there with some guidelines and tips.

  24. Marilyn Barry says:

    I loved it, I have been so afraid of trying to sale because I did not know how to price my items, but now whether anyone buys or not, I know my stuff is “GREAT” stuff. Thanks.

  25. AG says:

    I thank you so much because I heard something along the lines of this from Lindsay “thefrugalcrafter” on her YouTube channel and I think I needed to hear/read it again! You just made me realized that I have been pricing so low because I want to sell and maybe that is why I have not had any success so far! You are absolutely right about the reasons people say negative comments when they see handmade products and some of them can be very hurtful if you don’t see things the way you explained it her! So thanks again, I think I needed to hear this!

  26. rose e. says:

    Hey, am I late to the party? This was written with such a-peel. SHEEESH what ares ya crickets?
    no, seriously.
    Superb information.
    Unfortunately, some of us learn a little late.
    I (AHEM) have basically been giving mine away for years, apparently.
    Thankful for my technology and your site.
    Keep up the good fight against greedy corps.

    • Tammy says:

      WOW! all I can say is thank you so much for this way to calculate what I should charge. It seems like such a large amount, but you are so right! A one of a kind item, handmade, quality craft, should be paid accordingly! Thanks Again! you made my YEAR!! Tammy

  27. Seba says:

    One question… well first i want to say i’m a beginner i really just started in crafts world, but i had the wish long ago only now i can try to do, well also i want say i just loved this article you made i’ts exactly how i(beginner) was thinking 🙂 hehe so in fact it’s true we feel “afraid” to put price… but my question is, why we arent allowed to sell some projects we see on some nice websites where they post step-by-step but also say its only for our personal use, not for selling purposes? How to identify the projects that we can’t reproduce, same or similar to sell?

    • Lex says:

      I used to have a disclaimer like that here on WhatTheCraft. It’s hard to say why… I suppose part of me felt like I was putting this information out there for free, and so it seemed wrong for someone else to take “my ideas” and use them to make money. I think another part of me, being a handmade seller, felt like I might be “helping the competition” if I showed them how I did things.

      I have since removed the disclaimer. People are welcome to sell what they make using my tutorials and even my sewing patterns. Again it’s for a variety of reasons. From the practical side, there’s absolutely no way for me to enforce that kind of rule. Even if I did want to troll through other people’s shops, there would be almost no way to prove they’d used one of my tutorials to make something. And even if I was sure (for example, if I knew they’d bought one of my patterns), the best I could do would be to ask them to stop. It’s a waste of time and unnecessary negative energy. I’d rather be making cool stuff than worrying that someone might be trying to “steal” my ideas.

      The second reason is that I try not to look at other handmade sellers as “competition,” no matter how similar our items might be. I prefer to see them as part of the same community I belong to. I wouldn’t know half of what I do today if it weren’t for all the amazing people in this community who were willing to share, so I figure I’m paying it forward by sharing alike.

      So the way I’d look at it is this: maybe you use a tutorial to get the general idea of how to make something. If it’s your first time making something, you probably wouldn’t sell it anyway, right? It’s a rough draft. The next time you make it, you’re probably putting a little of your own spin on it. Making it your own. In that case, I don’t see that as using someone’s tutorial anymore. It would be silly for me, as an example, to try to tell people they can’t learn to make a circle skirt from my tutorial and then sell them. I didn’t invent the circle skirt. It’s not proprietary information. If they didn’t learn it from me, they would have learned it somewhere else.

      If I was going to attach any kind of disclaimer to any of my stuff now it would be this: I’m sharing this with you, and all that I ask is that someday you share something you’ve learned.

      • Seba says:

        Very informative for me or anyone who is searching/learning too, i really was confused about that disclaimer in some projects i have seen, now i got an idea of how things goes… in this world, what you said is true that the final art will never be the same as the initial idea, at least when i see something nice i want copy i can’t deny, but i always have in mind to make some changes… this way i don’t know if it would be also considered plagiary too. Thanks for clarification.

  28. Rachel says:

    Thanks so much. Love this article, especially the humor added in. Pricing is anxiety-producing, and comparing the jewelry and accessories I’m wanting to start selling to items on Etsy is depressing. I know how long it takes to sew a bag, and I’ve been sewing 27 years . . . are people seriously okay with making $5 an hour? I am a single mom and have a son to support – in NYC, no less. It’s scary to charge more when others are undercharging. But the right mentality is so important, and to remember your value. The bit about Walmart was so apt – because the real cost of cheap goods is abuse of human rights with ridiculous labor practices. I have thought about that, but not your point at how much markup they are making. It’s rather disgusting considering how little the actual human beings are making. As artisans, we are adding balance to the world!

    One more quick anecdote – my social psych professor in college liked to tell stories, and he mentioned a jewelry shop owner who had a peculiar turquoise necklace in the window that nobody seemed to want, despite reducing the price. She called into the store from vacation and her employee reported it still hadn’t sold. “Knock a zero off and get rid of it!” she said. Somehow the employee heard wrong and added a zero – and the necklace sold in 24 hours. Perceived value, what a strange thing!

  29. Donna says:

    Thank you! Awesome information.

  30. Larry Hutchinson says:

    I have read your article. I enjoyed and agreed with you on pricing. I am an electrician, I get calls all the time to change a receptacle or switch or look at something. Then they tell me that they will pay me $20 for fixing the small problem. I tell them it is $65 for a service call and $45 per man hour afterwards regardless what is wrong. Most of them hang up of course.
    Second being a musician, Club owners want me to pack up, unload, setup, play fro 4 hours, tear down, pack up, and drive home to do a 1 night gig for $250. Not going to happen.
    Third: If I pay $30 for a silver coin that I turn into a beautiful ring it’s going to go for at Least $90. Not I’ll give you $40 for it.

  31. Peter says:

    Nice article, but, in my opinion, the formula seems a little flawed because you add you hourly rate at the beginning, which means you’re doubling your labor rate at wholesale, and doubling it again at retail. You labor rate shouldn’t be multiplied in this fashion because you established that you wanted to earn $10/hr of production. You should tack it on at the end. Example: Cost of item is $13. $46 wholesale ($13*2=$26+$20=$46). $72 retail ($26*2=$52+20=$72).

    These numbers give you a more accurate pricing model upon which you can then round up per item to gain a business profit about your previously established labor cost.

  32. Celeste de Anleu says:

    Thanks a lot, I Think you hit the ball by artists and hand crafters usually underestimating their marvelous fine pieces. We shouldn’t be afraid. Just keep an eye on the market prices and go for it. Appreciate your wise article.

  33. Dana says:

    BEST formula I have found in the past 8 years of “the pricing battle” between my heart and my head! LOVE IT! THANK YOU!!

  34. Jenn says:

    In my experience. Im,a professional in a certain industry that gets a bad rap for the cost of services. People do not take into account the training, efu ation and materials. In this certain industry the way we priced things at my facility was double cost plus 30%. That’s all it wasn’t a massive profit. I price the same for my store and it’s crafts. I’m doing very sporadic sales and I fo,t even pay myself labor. 🙁 if I did I’d never make a sale.

  35. Megan says:

    I have a question…a friend and I are going to sell pillows at a local craft fair. She gets discounted fabric and picks it out and I do all the labor and time on the pillows. How should we split the profit?

    • Lex says:

      If you’ve gone into this whole thing as “partners,” I would split the profit 50/50. I bolded profit because profit is different than “selling price.”
      You should be pricing the pillows so that you can cover all of these things:
      1. Her fabric costs and time spent shopping and sourcing.
      2. Your design and sewing time.
      3. Any extra would be the so-called “profit” that you split.

      An example: You agree on an hourly wage of $15 for each of you.
      She spends an hour ($15) sourcing fabrics for ten pillows and spends $40 on the supplies. Her total for wages and supplies is $55 for this batch.
      You spend three hours sewing ten pillows. Your total for wages is $45 for this batch.

      The total manufacturing cost for the ten pillows is $100. That’s $10 per pillow. You add $5 to the price of each pillow for your profit. For each pillow sold, you should each get $2.50 from the profit.

      Obviously this is an example, and all of your numbers will probably be wildly different. But I just wanted to illustrate that you should each be compensated for your work and costs first and THEN split the remaining profit.

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