How To Set A Price On Your Handmade Goods

The hardest part of having a handmade goods business is not the actual making of the goods, say many business crafters, but setting a price for those goods. Many crafters tend to underprice, often because they don't know how to set a fair price and perhaps lack the confidence to go for it. Knowing what's involved in pricing products and coming up with a concrete figure will not only let you know what to sell an item for, it will help you have confidence in setting that price. The way many beginners start off setting prices is simply by comparing what others in their market are doing. This might seem a good way to go, but it's really not accurate. For example if someone else users an inferior quality of material to yours, or they only have a 2 step process and yours is a 10 step process, then your price should reflect that and not be the same as the other crafter. Start by keeping track of the time it takes you to make the object. Now what are you worth per hour? Not everyone can do what you do, so pay yourself for your talent and time. Next make note of what you spend on materials. That card stock, those calligraphy pens, and the packaging all need to be factored in. How about your other costs of doing business? Account for any rental space fees, online fees, etc. Here's one that trips people up - profit. This is the amount you add to your product that's above expenses, materials, and your time. You definitely deserve a profit! What you end up with here is your wholesale price. It doesn't matter if you're not selling your products wholesale right now, you may in the future and you don't want to get caught having to set a wholesale price after-the-fact that digs into your profits, or worse, causes you to lose money. To get your retail price, that figure you're going to charge the public, double your wholesale figure. Yes, double it. That's what you charge. Now, if it seems way out of whack, you have some options. Set up systems, templates, molds, etc. that cut down on your labor. Revisit your steps and determine if some can be done away with, without affecting your finished item, or find less expensive options for your expenses. Additional tips: • Revisit your pricing periodically. Your costs may have gone down (or up) significantly or you might have priced your things too low to begin with. Perhaps your demand is so high, you can't keep up with it all - raising your rates is a way to curb the orders while still making profit. • It's okay to have sales, just don't do it non-stop or your regular customers will come to expect them and won't ever pay full price again. Pricing your handmade goods shouldn't be by guessing, it should follow a formula that accounts for your labor, business expenses, material and profit. Do this and you can confidently price your products what they're worth.


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