This is part of my ongoing series of Tips for Your Craft Business. As a crafter of countless years and a “professional” crafter for ten years, I have put together a few tips for the business side of crafting. For some, the business of pricing, marketing, selling your crafts is the hardest part of being a crafter. You are obviously already knowledgeable on your art, but these tips may assist you as you learn the business side of crafting.
Today I will give you some advice on the difficult task of how much to charge for your crafts.
Look at other similar items on the market. If you list your items on a site like Etsy.com, it is easy to see that there is a wide range of prices. It is difficult to value an item with an objective eye. Taking emotion out of your pricing scheme is helpful as an artist. There is a tendency to de-value an item because you made it while watching your favorite television show. However, your time is important and should be valued. Plumbers charge by the hour because you are paying them for their knowledge and expertise.
Conversely, there is also the emotional aspect of a piece that may cause you to value it higher than anyone else on earth could ever afford. If you place high emotional value where an item becomes ‘priceless’ in your mind, you may want to keep that item for yourself. No one will ever appreciate it as much as you already do.
As a frugal shopper, I like to think, “What would I pay for this item?” Also, ask friends what they would pay for an item. (Make sure they know it is a rhetorical question and that you are not selling the item to them right now, and they will be more honest.) As an artist, it is hard to think about pricing at the beginning of the process. If a piece is a one-off unique work of art, the valuing will be more nebulous. However, if you are trying to make 50 of the same item for a bazaar or shop, it becomes more important to price correctly. Before you make 50 of the same item, experiment with one or two to see how you can reduce the time, effort and cost of the item’s production.
There are a number of formulas out there to determine how to price your item. Entire college courses cover pricing strategy alone. You just have to find the method that works best for you. As a jewelry designer, I know how long it takes me to make earrings. I can make 4 pairs in an hour. As a rough estimate, I like to think of my hourly ‘rate’ as $45 an hour. That means that I charge $15 for a pair. If I make a necklace and it takes me an hour, the base price is $45; if it contains more expensive stones I then add to that base price.
The bottom is that you have to cover the costs of your materials so you are not in debt over a cute little craft item. If you purchase your materials in bulk or better yet, wholesale, it is hard to judge the material cost. If I am really organized, I have been known to count the number of beads on a strand, and divide out the cost per bead and label the organizer accordingly. This is especially helpful if you are working with expensive materials like gemstones and sterling silver.
Always keep materials and time in your mind as you are pricing. If your materials alone cost $5 and you spend 7 hours on one individual project, it would not be cost-effective to charge only $6 for that item. It may end up that project is not cost-effective enough to sell.
If you have thought out your pricing strategy, it becomes easier to defend your pricing to those who want to negotiate at a craft show. If a pushy customer tries to ‘helpfully’ suggest that you reduce the price of an item, you will know the methodology behind your price and you can justify to them, and yourself, why you priced things accordingly.
Wholesale & Retail Sales
Figuring out your pricing in advance also gives you the necessary information in making wholesale & retail decisions. If a storekeeper asks if you want to sell your items wholesale, you will know what your markup margin is, and if you can afford to sell them wholesale. Sometimes selling 10 items together to a store owner is more cost-effective than selling 1 item every once in a while to your friends.
It is completely up to you if you want to sell your items to a store at a wholesale cost. It is a good idea to know about the shop and store owner. If this seems like a store you would shop in, then by all means sell there. If you don’t like most of the products that store sells, then stay clear. Also, negotiate to have your business name kept on the product or packaging. You don’t want to go in to the store to find your product re-packaged unless this is something you worked out in advance with the store.
When selling your item in a retail store, it is always best to have cash in hand. Do not wait for the store to sell your item before you are given any money. Who knows how many of your own customers you could have sold that item to while the store owner may or may not have it on display.