Saturday, 13 July 2013

How to price your handmade items - an often forgotten bit!

One of the most common questions that come up on craft forums and discussions from new crafters is, "How do I decide how much to charge for the things that I make?".  A lot of simple formulas exist for how to find the appropriate price to ask from customers who buy your items, like this one from Etsy.

Personally though, I think many of the formulas leave out an important part of the equation, and an obvious one: the market.

Common things to take note of when pricing items are:
1. Cost of materials
2. Time it takes to produce (i.e. give yourself a wage
3. Other expenses: the money you spend on advertising, packaging, and fees etc.

Looking at these things, you are told that you can find an appropriate price to set for your items.  However, none of these articles I've read on the subject brings up the subject of what other similar items are *successfully* being sold for - and I stress successfully!

It's always good to research what others are charging, and other ways they are organizing their business, to be aware of competition and also expectations the customer may have of your items.  And if this market is flooded with items much cheaper or more expensive than these formulas would set a price at, it is not going to help you much.

I've seen a lot of discussion by self-employed crafters on craft discussion forums mostly, upset about how other people underprice their handmade items and how this means that their much more expensive items don't get any sales.  They feel it's the fault of the cheaper sellers - but is that fair?  I mean, a market already exists and your items are just a small part of that.  If you want them to be involved, its your items that must be acceptable in that market, you can't just say that the market is what is wrong.  The rhetoric often carries with it how a self employed crafter deserves to live off of their craft, and people must pay enough for their lovely pieces of work so that they can have a viable business.  While this is desirable, it's in no way a guarantee, nor should anyone expect it to be!

So I want to add something very important to the formula on how to price you items - a comparison to what others are charging for a similar item.  If there is no one selling a similar item, that is GREAT because it means you can try to set that price yourself.  If they are, add up how much time and materials etc. go in to your item, add a profit margin you would see as comfortable, and then adjust the price so that it fits well within the existing market.

Otherwise, those sales just won't come...

1 comment:

  1. I enjoyed this "pricing" blog. I build unique tables/benches out of spalted oak, so I can relate to this challenge. Thanks, Randy