Pricing your handcrafted items

I could just say YES and move on, but I don't think that's fair to you, because you obviously stumbled upon this page for a reason. You want to price your crafts, and you have NO idea what is fair, ethical, or how high you can go and still make a sale. I have done a lot of looking into this hot topic, and I've found several very interesting pricing methods used. I've read articles, some that were informative, most that were ridiculous, interviewed other crafters at shows and online, and even wrote to crafting magazines on this subject. The good news about pricing is that there IS NO RIGHT OR WRONG ANSWER! Say it with me: "There is no right or wrong way to price a handmade item." Doesn't that feel comforting to know? I know it calmed my nerves a little! Anyhow, I think that's enough of an intro, let's get to it!

First thing's first: You need to know who your potential customer is.Maybe she's like you, another crafter who likes to support other artists, or maybe she's a busy suburban soccer mom with 3 kids and a rich husband. To know your customer, examine your product line. Whatever you do, do NOT try and make "something for everyone," because unless what you make only takes mere minutes, then you will end up spending entirely too much time trying to please everyone. You know what you like to make, and you know what people have seen of yours that they really liked and responded to. Start here as your theme, or baseline. Expand upon it later, but right now, sit back and close your eyes (after you've finished reading this paragraph, of course!) and envision your customers. Who are they, where do they live, do they have kids, do they have money? Where do they work, what do they do, what are their hobbies, what can they afford? All of this is important when deciding on your pricing method. So, grab a pen and paper, sit back, and seriously think this through. Who does your product line appeal to? I'm not talking about who you may have already sold so, but who you will be selling to in the future. When you've done that, come back and read more... I promise, you'll be surprised at what you learn about your customers just by looking at your crafts.

Now you want to determine your personal pricing method. I've listed some of the more common ways in my poll above, and I'll delve into each one, pros and cons, and the best part is you get to decide which method works best for you. As I've said before, I'll say it again (because it's really important that you remember this) there is no right or wrong way to price your items.

Also, you need to consider your market. Are you selling to friends and family only, in a flea market, at craft shows, or do you have a website? Different venues will have different price caps. For example, you can't sell an item at a flea market or yard sale for the same price you'd sell it at a high end craft fair with other artists.

This is an easy method. Easy to figure out, easy to calculate, and no stop watch or timer necessary. You simply figure out exactly how much your materials cost, and multiply this by 2, 3, 4, or more to get your final price. However, using this method, you may seriously under value your work, and end up literally selling yourself short. Be careful, if using this method, not to price your items too low. Materials may only cost $4 or $5, but you have put a lot of time and effort into creating a one-of-a-kind item, and selling it for only $20 is not fair to you as an artist. If you're not seeing your craft as art, and you don't consider yourself an artist, this could be your first and biggest mistake.

Okay, this might work. IF you are using a machine to create your product, and if it takes little to no effort or time. Things sold in stores are all machine made, and are generally mass produced. Unless your hands fly faster than a speeding bullet to accomplish your end results, you may want to consider another method of pricing.

This is a little more realistic, seeing as how crafters in shows have usually been in the business of crafting for a while, and know how high their prices can get and still sell. If you are looking to price items to be sold in craft shows in the future, I would highly recommend this method. If you're only looking to sell items to friends and family members, you may find that the prices you see at shows are too high. Think about your own marketing strategy, too. How will you be selling your craft? If you're selling online, craft fair prices may still be too high.

This is my preferred method, mainly because I love mathematical equations, spreadsheets, and precision. That may not get you too excited, but the good news is you can use a downloaded spreadsheet, type in your cost of materials and your time to make the item, and Excell calculates your wholesale AND retail price for you. No work, no thinking, and no calculator! FYI: If you're no good with Excell, and spreadsheets scare you, etsy.com has some downloadable ones where all you need to do is type in your material costs and your time (possibly even an hourly wage) and BOOM! It tells you your wholesale and retail price, and in some cases, it also tells you the etsy and paypal fees, as well.

Okay, so it's obvious that I get a little excited when talking about things that I'm either passionate about or things that make life simpler. With that said, I need to let you know that there are several different formulas I have heard of people using, some more complex than others. You can do a search on google for "pricing your __(name your craft)__" and check out the different formulas, or search "pricing handcrafted items formula".

I'll share my favorite formula with you here, though, as I've found it to be one of the more simple ones to use, and it includes everything you use:

Cost of materials + labor (hourly wage x actual time) + overhead cost (cost of materials + labor x 10%) = wholesale price. **Multiply wholesale price by 2 to get your retail rate.

For example: I crochet personalized diaper bags with a saying or name in the stitching. The material costs are $2.49 a skein, and I use 2 skeins, so round up to $5.00 in materials to make it easier to show you. It takes me about 4.5 hours from planning out the font and designing each bag, to having it fully finished and ready to ship. These are the only 2 numbers you need to work the formula, other than your hourly rate. Check it out, when all the numbers are plugged in:
$5.00 + (4.5 x $10.00) or $45 + ($50 x 10%) or $5 = $55.00
I usually stop here, as I think this is a fair retail price for my web store, but some of you may find yourselves entering high end arts and crafts fairs, and may need to up your price a little.

Feel free to play around with different formulas a little bit and find one that works best for you. This, and other formulas, are not set in stone, and perhaps you feel your hourly wage should be more. Make it more. Maybe you want a shorter and simpler formula, and don't really see where overhead costs are that important to charge a customer. Take that out, then. No big deal. When I was trying to decide on my hourly wage, I used my diaper bag as my example. I knew I wanted to sell it for around $50 or $60. Now that I have decided on $10/hour, I can plug other items into this same formula and have a baseline to work from. This makes your pricing method consistent, takes out all the guess work, and when someone asks you "Why so much?" or the rare "Why so little?" you can show them your formula, and where you arrived at the final price. After seeing your pricing formula, most customers would agree that your prices are more than fair, and be happy to pay the amount you ask for your items.

This may sound a little crazy, but I have heard of people making it work. Say someone approaches you, asking you to make them something. Experienced crafters usually have a general idea of how long it will take them to make something, so you ask your potential customer what they think a fair price to pay for your labor would be. When asking them this very important question, be sure to include words like handmade, handcrafted, or in my case, hand crocheted. Other key words would be customized, one-of-a-kind, personalized, designed, etc.

Your conversation may go something like this:
Potential customer: "Oh, I saw that cute bib you made for Amy. It's great! My sister is about to have a baby in May. How much do you charge for them?"
You (the experienced crafter): "Well, I try to remain pretty flexible with my pricing. I can also personalize them with a monogram, and create a one-of-a-kind look just for you. It takes me about one hour to design and handcraft one. How much do you think 1 hour of labor would be worth?"

The down side to this is that a customer may feel put on the spot, and decline to answer your very direct and very honest question. This method doesn't work for every seller, nor does it work for every customer. If you choose to use this pricing method, have a back-up plan in place for the customer who just can't or won't answer you.

One final pricing method you may wish to use is to comparison shop, then charge just slightly less than others charge for similar items. This is good because it helps you to be competitive in the market, and to always beat the lowest bid, so to speak, but on the flip side, you may get into a pricing war with your competition, and you both lose out when this happens, because you both end up under selling your items. Another downfall to this method is that you may not find anything even remotely close to your item, and find yourself back here, looking at other ways to price your very unique product. Be prepared for either of these things to happen, and come up with a back-up plan or a solution to this problem before you encounter it.

Now that you've been inundated with more information than you probably imagined on pricing your craft, you're ready to get started. Hopefully by now, you may know which method appeals to you, or you may want to play around a little and try several different ones until you find one that fits you and your style best.

Whatever you do, don't get discouraged if your items don't sell. Just adjust and fine tune your prices a little. Tweaking a price by as little as a penny will sometimes make it more attractive to a customer. It's the difference between $20 and $19.99 (LESS than $20)! That's a clever little marketing trick, right there!

If you are finding that your items are selling like hotcakes and you can't produce them fast enough, it may be that you need to raise your price. If you sell a hand sewn baby quilt at $10.00 each, you will have people lined up waiting from Easter to Christmas wanting one, or five, even! Pricing too low, while it may seem like a good strategy to make sales, will leave you burnt out. You won't be able to meet the demands of your customers and their multiples of orders. It's better to sell one item higher to someone who truly values your work and the time you put in it than to sell a bunch of items to many people at a lower price who think of it as disposable, due to its low price tag.

Good luck! And perhaps you have an entirely different pricing guide that I failed to mention, or maybe that I wasn't aware of. If so, please leave it in the comments section below for other readers.