Crafting is an enjoyable past-time for many people. Some people like to make items for themselves or their loved ones. However, there are those who decide to sell their items. To sell items successfully, it is helpful to know how to price an item so that they can make an income from their craft. Items should not be priced too high or people will not purchase them. If they are priced too low, there will not be in income from the item.
The first thing to do when preparing to price an item for sale is to compare the item to other like items that people are selling. There are places on-line, like Etsy, or Ravelry, that have people selling craft items. These are good places to check out to get an idea of how much to ask.
Then assess the object that is to be sold. Ask about the quality of the item and then compare it to like items that are for sale in the marketplace. If the quality of the item exceeds those that are found, it might be a good idea to charge a bit more for the item.
The next thing is to keep track of how much money is spent to create the item. If a person purchases $50.00 on materials, but only uses $30.00, the $30.00 needs to be set aside as a variable cost, not the $50.00.
It is also important to keep track of any other materials used to make each craft item, including any shipping and advertisement costs that may have been paid. This should be included under supplies in variable costs.
An area that many crafters undervalue is labor. This is the amount of time that it takes to make an item. To figure this, the crafter needs to figure how many items they can make in an hour, or how much of an item is made during this time. Next they need to decide how much they would like to be paid per hour. The price that is desired to be paid per hour is then divided by the number of items that were made in an hour. If one-half of an item is made in an hour, multiply the per hour rate by two, since it will take two hours to finish the item.
If the crafter has others help in the creation of an item, they need to include the amount paid to the employee in the fixed cost. This is usually decided on before work begins and is usually, the person is paid per item made, so this cost can be determined before the item is delivered.
When pricing an item, realize that people are purchasing the story behind the item. Otherwise they would be able to buy a similar item at a chain store. They like the idea that the item is made from natural materials, or that the wool that is used in a sweater comes from organically-fed sheep. If the price is a little higher than others that are selling at a store, realize that the item has a better story.
Another item to include in the pricing of a craft item is shipping. If a person decides to sell their item online, they will have to pay shipping. This needs to be included in the cost of the item for sale.
After each of these items is totaled, a price can be placed on the item. Many crafters take this figure and then double it. So if an item cost $50.00 to make they would then charge $100.00. This allows for any unforeseen expenses and can be used to invest in the crafter's business.
After all of this work, the crafter will have the satisfaction that they have placed a fair price on the item and once word-of-mouth escalates, the crafter will discover if any adjustments need to be made.