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Tips for Pricing your Handmade Crafts



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There are several ways to calculate how to price your hand made craft items. As a jewelry designer, I have had to deal with this issue when selling both retail and wholesale, as I do both.

1. Your cost for materials. With something like jewelry I purchase my materials at wholesale prices, however I when I calculate my cost I add in retail price for each item. So let's say I purchased five briolette cut orange sapphires on ebay for $6, but the retail price on these items would be $20 a stone. I charge the $20 a stone when calculating my retail price; however, with wholesale I use my actual cost for times.

2. Your time spent producing the end product. If you are a crafter like most of us, you don't punch in on a time clock, so the exact amount of time you spend creating a piece from conception to end result could be a total of 15 hours, off and on for days. Maybe you only spent 15 minutes here and 15 minutes there making your item, but your time does matter. So make an estimate of the amount of time spent each day on that one product. When I make an intricate necklace, it might take me four days to finish the necklace. My actual time spent making each component took me 4 hours a day, for a total of 12 hours on that one piece. That makes this piece special. For jewelry making, it is not unheard of to pay yourself as much as $20 an hour. Therefore, the total labor for the example necklace would be $240 + $100 for materials, total retail cost for this item would be $340.

Now this might change if I were making something like earrings. It might take me 20 minutes to make a pair of earrings, so how much should I charge for labor? $20 divided by 60 = .33 a minute. $0.33 x 20 = $6.60 + $20(materials) round up = $27 for a pair of earrings. These are retail prices.

If you were selling items wholesale, I reduce my labor charge by half and charge actual cost for materials. You can still make a profit on wholesale, but there is one other advantage, consistent repeat business. You can also offer discounts for retail customers who are ordering large quantities of your product, say a %30 discount off retail. This is good if you sell products that can be used for weddings, or office party gifts.

3. Overhead and advertising. If you run your own website, any type of advertising, even your cost of electric, phone, and internet can be figured into the end cost of your product. Let's say for example that you have a website where you sell your products online. The cost for this website is $20 a month. Your electricity a month for your house is $100, but the portion to run workshop is $15. Your phone and internet cost $150 a month, if you don't use your phone for orders or any business conduct do not include it and take half of the amount for your internet use as your business expense. Advertising costs you $35 per month to advertise on a few other websites or inclusion in a search engine, like Google (this is only an example). So, $20+15+75=35= $145 a month for your business overhead. You make 50 items per month for sale on your website, so you would add $2.90 per item to cover your overhead costs. Also you can add in your business and tax licenses for the yearly costs, and any taxes that need to be paid, (check the state you live in for details on this.)

So when you are pricing your items don't forget all that goes into making the product you make. Don't short sell yourself or your product short. You are not trying to compete with discount store prices, since they are mass-produced. You are making something that is unique and special, so price as such. If you price too low it won't bring the customers to you, in fact pricing to low makes your work seem shoddy, or low quality. You can't price to high either, because overpricing is usually obvious to most customers. Finding just the right price is the key to the business of selling your hand made items, and hopefully this guide has helped you on your way to pricing the right way.

 

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