Pricing:
This is a hard one for all of us. We spend so much time and energy into all our work, and if you are like me you end up making two of everything because you love the final product soooo much you end up keeping one for yourself! So how do we fairly price the items we sell? Here are some simple steps for deciding a good, fair price for your handmade product.
1) Figure the Cost of Materials: The cost of materials is broken down by how much a thing costs, and how much you can create from that thing. If you purchase a ball of crochet thread for $5 and create 30 boxes from it, your cost of materials is .17 per box (5.00 divided by 30). This needs to be done for every material (not tool) you use.
Remember when figuring out your cost of materials, think of where you purchase your supplies. Are they all bought at wholesale price, do you buy them at the local craft store, or both. I know this has probably happened to everyone where they think they have enough supplies (bought at wholesale price ) and in the middle of a custom order, you run out and have to pick up the finishing supplies at the local craft store for almost double your wholesale cost. So your material costs go way up and that was not figured into the original price.
2) Figure the Cost of Labor: How much are you worth per hour? Decide that, and then multiply or divide your hourly wage by how long it took you to make a single product. If your thread box took 1.5 hours and your hourly wage is $10, the cost of labor would be 15.00 ($10 X 1.5).
3) Figure Your Fees: Average out the fees you pay. Include Paypal fees (1.9% to 2.9% +$0.30 per transaction) and Etsy fees ($0.20 listing and 3.5% of total sale price) Don't include shipping and handling unless you're going to promote your product as having "free shipping".
4) Figure Actual Cost: Using the numbers you've created, add the cost of materials and the cost of labor to figure what your actual cost per product is.
5) Figure Retail Price: Retail price is created by multiplying your actual cost times 2.2 - 2.6. (this is the average % of markup for most “clothing” retailers. I have been in this industry for about 12 years and this is around the average markup.) the .2 - .6 helps cover the cost of tags, packaging materials, business cards included with purchase, free gift with purchase, etc.
NOTE: This is my suggested retail markup but everyone and every item is different, please use a number that you are comfortable with.
6) Figure Etsy Price: The fair Etsy price of your product is figured by adding the retail price and your fees.
Other Helpful Tips:
Don’t price your item too low…your handcrafted items need to be thought of as “PREMIUM” products. Many people feel that a item priced lower then the competition does not have the same QUALITY and your item will look CHEAP. Take a hard look at your items and evaluate whether you think you can position your item as a "PREMIUM" product. Do you use great materials? Is your technique unique? Do you have an interesting story? There are lots of reasons that might justify a premium price.
This leads to RESEARCH. Check out the competition. See what the price range is for similar items. You don’t want to be priced too cheap, but on the other hand you don’t want your item to be priced so high that you are out of reach to clients. If the competitions prices are dramatically different from yours try to figure out why. Do they buy wholesale or pay full price for supplies, are the materials handmade, one of a kind, vintage, what is the quality of their materials. Use this research to your advantage. If everyone else uses store bought materials and yours are handmade, let the shoppers know. Are your materials vintage while others use new materials? Play up the green/up cycled/vintage factor, which buyers will pay more $$$ for.
Hope this helps everyone out!!!
Staysi
LocaLovesPirate.etsy.com
LLPVintage.etsy.com
Resources:
http://www.ehow.com/how_2140603_price-etsy-products.html
http://www.etsy.com/storque/how-to/the-art-of-pricing-price-you-get-what-you-pay-for-482/
5 comments:
great post Staysi, I hope it saves people from making some of the costly mistakes I have made in the past :)
Terrific advise! Thanks, Staysi!
Wow - thanks for the really thorough guide. I've never really broken it down like that and as a result, the prices in my shop are all kind of random and probably confusing to buyers. Thanks for the guide. I'm definitely going to use it!
Also, I think we should put a place in the sidebar where all these guides can be easily accessed. I'll put a page together so the team can easily find and reference these.
This is a very great post! I am new to Etsy, and was struggling with pricing for quite some time. Your post helps reintegrate my decision of not low balling my work.
Thanks Staysi- this was really helpful. Its so hard to break every little thing down but in the end we need to make money. I have to figure out a system for tracking small items down to hot glue. ugh.
Sarah- thanks for creating a side post to reference to. That will be really helpful!
Post a Comment