If you hang around for very long with a group of creative business owners, the topic of pricing goods is bound to come up. That’s because it’s something that we all struggle with… often.
There are several things to consider when deciding how to price a product. Here are the four factors I consider to be the most important.
1. Time
When you’re making things by hand, the time needed to complete a finished product is bound to be substantial. Even if your family doesn’t depend on your income to pay the bills, you should still be charging the same as if you did need to survive on your income. Why? Two reasons: someday you may need that income, and, by underselling fellow artisans, you may be driving down the price of goods produced by those who do need to survive on their handmade business.
2. Materials/Expenses
Many creative business owners spend a large amount of time hunting down materials needed for their finished goods. Do you only source high quality goods or unique and hard-to-find materials? Also note that the cost of your materials should include the cost of storing, shipping, and/or sourcing your materials, not just the cost of buying them. And don’t forget packaging! Include all of the materials needed to package your items for sale.
3. Operation Costs
These costs for a creative business might include everything from your monthly bank fees to a lease or rental on a studio space or warehouse. Don’t forget web hosting services, credit card processing, and craft fair vendor fees, as well as education and training.
4. Profit
This is a bit of padding for creative business owners. You need to build in a bit of profit in order to sustain your business. Consider business growth and future setbacks. The padding from the profit will help you keep going in leaner times
A little extra help…
The Etsy Blog offers A Simple Formula for Pricing Your Work for those who might need more of a mathematical approach.
Make also offers a great How-To: Price Your Handcrafted Goods that will help you sort out what you should charge for your products.
Hopefully, all of this information will help you gain a better understanding of what you need to consider when setting prices for handmade goods. After all, you finally found a line of work that you enjoy – why not do what you can to ensure that you can keep doing this work for as long as possible?
How do you determine the prices of your items? Let us know, and then check out my blog!
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