Money may not be able to buy love, it’s true, but it certainly can help a young business grow. When first selling your wares, it maybe be hard to strike the right balance of making your products affordable and paying yourself enough to keep going as an entrepreneur. Factor in cost of materials and market competition and it becomes even more difficult.
It’s hard to put a price on your life’s work, but it’s possible — see how 14 of our Top 50 Etsy Parents set prices for their handmade goods.
nggallery template=’carousel’ id=’131156′
Charge what you’re worth 1 of 14You have to remember: most people are supporting a family or themselves on this income. It's not a hobby. These things pay mortgages, send kids to school, and put food on the table besides. More of a customer's money is going directly to the maker or designer than would be if they bought it through a big-box store, so it's a better deal in that sense. But people have gotten used to mass-market prices of things made in sweatshops or high-polluting factories. So there's some reconciling to be done there.
—Katie and William, Oh Dier
Risk making mistakes 2 of 14I didn't know how to set a price in the beginning. I started my pricing low. Then when I began making mobiles wholesale for local shops, I realized that they were selling them at a much higher price and I raised my pricing to match theirs.
Strike a balance 3 of 14I always struggle with this! It is a balance between not undervaluing you, your time and your product, while not pricing out your customer.
—Lisa, Kiki and Polly
Scout out the competition 4 of 14Determining the right price point is hard, especially when your products are not mass produced overseas. Scouting out the competition at local markets, boutiques, and shops is a good start. But keep in mind to pay yourself for the work you put in to your craft.
—Michelle and Steve, Twig Creative
Remember to factor in material price 5 of 14I set my prices based on the materials used, and the time taken to make it. I also take in to account the fact that some products naturally have a much higher profit margin, allowing me to still make products that are big sellers but that don't have as high a margin. I look at my margin across all of my products as well as individually.
—Manda, Treefall Design
Do the math 6 of 14This is the formula I use: materials times 2, plus time multipled by hourly wage, plus profit. Some notes about this:
- Factor in the cost of materials twice because it takes you time and effort to source out and get them to you.
- Hourly wage should reflect many things. What you would you like to make per hour? What is your craft generally worth per hour if you would hire someone to do it? Is your craft/art something no one else can do?
- Profit is over and above your hourly wage and getting your materials covered. So often I see hand crafters undercutting themselves and I think: they are working so hard to really earn nothing beyond the cost of materials. Profit is money your business can expand on; profit enables you to invest in better, faster tools. Profit is so important for a lasting business model — otherwise you might as well get a job outside of the home.
—Jo, 42 Things
Create spreadsheets 7 of 14I have a very detailed spreadsheet that I use when considering and pricing new products. I take everything into account, from product labels to PayPal fees, and then multiply my costs to help set a price. It's important to cut this number in half to determine if you can make a profit at a wholesale price (even if you don't sell wholesale yet!). This will help you to establish a reasonable profit margin from the start as well.
—Erin, Knot and Bow
Don’t just break even 8 of 14It's very difficult to put a price tag on creativity. Generally, though, to set a price we use an equation that accounts for the raw costs and the time that goes into making each product.
—Mara and Anna, Dutch Door Press
Charge enough to keep going 9 of 14Putting a price on one's creative design is an issue I believe most artists struggle with. I've heard that there is a science behind it all, but I don't think I operate from that side of the brain, so to speak. Here is my unscientific formula: I cover the cost of my supplies and I try to determine the length of time the item takes me from start to finish.
Like most artists, the fun for us is in the designing and creating new items. Be sure to pay yourself fairly so the fun will also be in the re-creating. The best piece of advice I ever received was from a dear friend: she told me never price an item by what I would pay for it; more often than not we undercut our own value, and that's when failure often begins.
—Rebecca, Hopewell Creek
Set Your price point 10 of 14I look at the current market but I also ask myself if I can produce "X" amount of quantity in order to sell at a lower price. It is hard when you are a small business and are not ordering materials in the thousands. I wish more people understood this because it greatly affects pricing.
—Tara, INK + WIT
Factor in the marketplace 11 of 14I look at each and every cost that goes into making the product down to thread, notions, time, everything and then give myself an hourly wage to decide on my prices. I also look at the marketplace — how much are similar items selling for? Will my price fit comfortably in that range and still make me a profit? Setting prices is important, because when you change them people notice! You want to get it right the first time.
—Anna, Anna Joyce
Try to be objective 12 of 14It's hard to be objective when you are so personally invested in your goods. We took an analytical approach: cost of materials, plus labor, plus overhead , equals price. I keep track of everything, punch in the numbers, and there is my price. Emotions need to stay out of the books!
—David and Adrienne, Manzanita Kids
Consider cost vs. time 13 of 14That is a hard one to answer. You have to consider your costs as well as time. Being affordable can't be your first priority because what is affordable for you might not be for someone else and vice versa. You really set the value when you set your price and knowing your value is key. Sometimes though we overestimate the value of our time and if you're not selling it might be a good time to take another look at your prices.
—Jennifer, A Merry Mishap
Feel confident in your work 14 of 14I am confident in my product, it's quality and the joy it brings others. I enjoy the time I spend making it and want to continue making for as long as possible therefore I charge enough to pay my bills and be competitive in the market.
—Araya, Wind and Willow Home
Want more from Babble’s Work/Shop series? Check out our past features below: