Monday, January 21, 2013

How to price your handmade items

Happy Monday!!

Today we're going to talk about pricing your handmade items. Whether you knit, crochet, make jewelry, etc. you have to know how and what to do in order to make money out of your creativity.

Many times as designers we question our own talent and are afraid of charging what our work is really worth because we're afraid that others might think it's too high or not worth that much. Well, I'm here to tell you that I've been where you are and it took me some time to FINALLY realize that what I make is just as good as anyone else's product.
When I first started crocheting I did it just for fun and to release stress. It took some convincing from family and friends to actually get me to start selling my items.  I didn't think what I made was worth charging for and with SO many talented people out there, I didn't think I'd stand a chance at making money. But, there's room for everyone in this and other markets. There's thousands of people that knit and crochet and make jewelry but you can't let that stop you from doing what you LOVE to do and earn money at the same time.

First impression
You don't get a second chance to make a first impression. Your client will know if you believe in your product or not by your confidence in it. Believe in your talent. If you don't believe your product is good enough neither will your clients.  Remember not everyone is a client either and don't get discouraged if you don't sell something. It just means that person doesn't know the true value of handmade items.

How does it work?
The main thing you have to do is figure out how much it costs YOU and what your earnings will be once you've got an order. I found a blog that will tell you how to price your items accordingly without losing money =0)

Don't give up!!!
No matter how long it takes you to start selling, don't give up!! The first sale is always the hardest. Once you get that first sale out of the way, the rest follow easily. Two years ago I wouldn't have thought of selling anything and now I can say I'm well accomplished in selling my items. I'm no longer afraid of charging what my talent and time are worth. Two years ago wouldn't have dreamed of making patterns and today I have 25 patterns of my own that had I let doubt win, I wouldn't be sharing with you. If I can do it, so can YOU!!
Have fun doing what you love and remember that it's all about believing in YOU and the rest is easy!

Check out this detailed blog on how to price your items and make money doing so.

A Simple Formula for Pricing Your Work handmade and vintage goods
Imagine this: a beautiful jewelry studio, a soldering station, an anvil on a nice old worn wooden stump, a handmade jewelry bench, and on top of all this lie piles of finished pieces. Behind the bench sits a jeweler who has yet to sell a single one of her creations. What’s holding this talented artisan back? From my years of listening to your stories, putting a price on your work is one of the most intimidating first steps to selling, and delays many from opening their shop. I’m here to share my favorite pricing formula with you, and to break it down so you have the confidence to get out there and sell!

Know the Formula

Here’s my favorite formula:
Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail
I picked this up from the amazing Megan Auman. What I love about this formula is that your profit is properly accounted for!
Now let’s go through every part of this formula and break it down.
Make sure to cover all your material fees. Often forgotten: the little things like the cost of thread, and the bigger things like the cost of packaging. If you’re going to “guesstimate,” err on the higher side!
If someone wanted to hire you and they offered you $7 an hour, what would you think of that deal? Be a good boss to yourself and do a bit of research. How much does a seamstress make in San Francisco? Find out! (Also remember, you’re probably more than a seamstress – you are the designer, the marketing department, the accountant, the janitor, and the administrative assistant, too.)
Bubble wrap, that ebook  purchased at 3 a.m., studio rent, bus passes required to make it to the studio every day, a new scale for your shipping station. How the heck can you fit all these things into the price of a single item?
Here’s a  way to do that:
  1. Jot down every expense you can think of — for example, include your Etsy fees, office supplies, rent or utilities.
  2. Next, come up with the number of items you’d like to sell a month. Divide that number into the total expenses.
Tip: Start doing two things to help you come up with an even more exact price:
  1. Track your expenses carefully so you can come back to this as you learn more about selling! I suggest trying outOutright – a free online accounting tool.
  2. Start figuring out the big investments. How many items can you get out of that sewing machine? How long will that postage printer last before it needs to be replaced?
Think hard: where do you want this business to go? Do you want to quit your day job? Do you want to pay off a student loan? Accounting for profit now will help you get there. This number really depends on what you are selling, and will make up for someone like a printmaker, whose material costs are low, labor hours might be low, but should be paid for their unique talent and point of view! I leave this up to you. I’m trusting you here — don’t disappoint me with a low ball number!

Bringing It All Together

All right, this gets us to our wholesale price. Some of you might wonder if you can use the wholesale price in your Etsy shop. Wouldn’t this be a a great way to offer your work at an affordable price? No, no, no. Here’s why I’m going to beg you to double your wholesale price and sell your work at a true retail price:
  1. Selling your work at a wholesale rate undervalues those who price their work at the proper retail price. When the majority of sellers in a category price their work thoughtfully, the entire category benefits.
  2. Customers will wonder, “Why?” Why is your work so much lower than everyone else? Is it because it’s not handmade? Is it because you’re using cheaper materials? Your price tells a story: make that story a good one!
  3. You’re putting yourself at a disadvantage. Let’s say a big catalog reaches out to you and says, “We’d like to buy 100 of these items! Please let us know what your wholesale prices are.” This is a big opportunity; an opportunity you can’t afford to take.
Did you just come up with a price that you are sure the market won’t respond to? Here’s the trick: if the item is priced too high for the market, it’s not the price you need to alter, it’s the design or the way you produce your work. Get creative and see how you can adjust the item to reduce your costs. Can you buy your materials discounted in bulk? Can you produce the work in multiples, reducing the labor? Don’t take the easy way out by slashing your prices.
Remember, the right prices will allow you to reach your small business goals.

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1 comment:

  1. Ok so just worked out how much my farm blanket should be worth using this formula. I worked out I spend $60 NZD on materials and it took me 50 hours to make. I didn't work out the expenses or profit. I put my labor at $10 an hour. It came out to $1,120 :/ thats a lot of money.