How to Price your Handmade Items | The Basics
Recently I've been scrolling through my older posts, and revising them as I thought was needed. In between renewing graphics to rewriting my patterns, I've been a busy bee. I can't wait until I finish it all!!!!
But today I wanted to visit the topic of pricing handmade items. In my last post, I felt like I was't clear enough. Personally, I can't stand putting a price on items. But with this easy process I never have to worry about if the number is too high or too low...
I had to learn how to properly price my items when I signed up for a small craft fair at my old elementary school. I made a few hats, cowls, and headbands and slapped a price on them. Back then my theory was; the cheaper I sell it for, the more sales I'll make. However after I sat there for 3 or 4 hours straight and running around town taking care of custom orders I realized it wasn't that easy. I sold myself too short.
But throughout taking custom orders and attending my second fair I've found a simple little formula that takes care of my needs. It's common sense really, but it really makes putting on a price tag a breeze.
If it's already not obvious enough, part of the price must cover all of the supplies used. Until these materials are paid off, no profit is being made. Anything money that was spent on creating the item; tools, notions, yarn, fabric, embellishments. In order to make money you have to spend money but make sure that you have all pieces of the puzzle. If you use 2 skeins of yarn, add up the total cost of to skeins. If you use fabric to line a bag, find out the per unit price for each yard.
This is something that I always overlooked. I seemed to forget, somehow, that I had poured hours of attention and love into to making the product. After working so hard on something for a customer you deserve compensation!!! These days quality handmade items are something real special, and so are the people who take the time to learn the craft.
While I was reading articles last year I constantly tripped over this term 'overhead'. It's basically your indirect expense. Anything but the supplies, time, and your labor are included in overhead. Etsy fees, gas money, advertising, shipping, displays, tables or booths, and event fees are all just a few examples in this type of situation.
I calculate my profit a little differently than other formulas... as someone who's goal isn't to make a living. Once all the production cost is added up I consider the item and add a reasonable profit. Say for example a child's hat. I would add logical amount to be my profit. Again, all pricing formulas are made to fit different situations... so feel free to find a new way to add profit. I myself prefer a simpler method!
Now that you have a basic understanding of all variables in the equation, it's time to put it to use. Here's a FREE, handy-dandy worksheet to help you the next time you're pricing your handmade item! And better yet it's made to be printer-friendly!
I hope you can use this simple formula... or even be inspired to create one to meet your needs. Until next time happy crochet!!