Pricing Your Crafts
How to appropriately price your crafts and take the guesswork out of it.
There are many people who do their craft, their art, and then, when they go to sell it, the item is priced too low. I understand. I did too, for many years. I just wanted to take my things and then earn a little money to make more of those things. As a friend said, “I wasn’t looking to get rich.” For some reason, it feels wrong to make some money on something you made. It is almost as if there was a stigma to “homemade” crafts that prevent us from pricing our stuff appropriately and making a profit.
Sometimes we compare the thing we made with what we think are comparable items in the store or online. Take a knitted sweater. The one you picked up at the local big box store was most likely made by a machine in a country with low wages and bulk bought. The markup on clothing is currently at 55-62 percent. That knit sweater you made? You cannot price it as if you were the Big Box store who sells clothing, home appliances, groceries, stationery and other things. Let me show you why.
The average sweater requires 800 to 1500 yards of medium weight yarn. With an average of about 220 yards per skein that is approx 4 skeins for a small sweater. At an average of $3 a skein for acrylic yarn, the yarn cost you $12 dollars. The average time needed to knit a simple sweater is 9-14 hours. Let say you do not value your time and think you are only worth minimum wage. In the United States, the minimum wage is currently $7.25 an hour. Your labor is worth $65.25 – 101.25. Your sweater at minimum costs $113.25. See why you can compare? As we say, it is apples and oranges. They are both fruit, but very different in every way.
Not pricing your things correctly does several things. It tells the buyer you do not value your work. Most people understand what handmade means. It means work and craftsmanship. When it is priced low, you wonder a bit about the quality of the work. I was at a Farmers Market not too long ago and there was a woman who was selling cute little crochet blankets. She had them priced at $20 and one at $40. I was a little shocked. I told her she was under-priced. She explained that the yarn was donated and she was selling the blankets to benefit her Church’s Youth Camp scholarship so that children who could not afford it could go camping. All the more reason to price appropriately. Even if the yarn cost nothing, her time did.
Pricing inappropriately also harms others in the market. While her blanket was $20, others, who priced correctly, have blankets for sale for $300 +. If you are walking by the booths, you see $20 dollars and you see $300 for blankets made of yarn, it causes the buyers to question both prices. The person who has priced their items correctly is harmed because they are questioned about the validity of their price and the person who way under-priced, may sell some, but they have set the market too low and their items are viewed as low quality.
How do you price your items?
The formula for pricing is:
Cost of supplies + $ per hour time spent = Price A
Cost of supplies x 3= Price B
Price A + Price B divided by 2 = Price C
Price C + sale tax = Price of item. (sales tax is calculated by multiplying the cost by the sales tax rate)
Lets go back to the knitted sweater. It would look like this.
$12 + 65.25 = $72.25
$12 x 3 = $36
$72.25+ 36/ 2 =$90.25
90.25 + 6.77 = $ 97.02
I personally would drop the 2 cents and make it an even $97.00. If I was to add shipping and handling to that I order to make it free shipping I would it higher. Really depends on the shipping costs and what I am willing to pay. You can also adjust this price for your market. At a craft fair, the items tend to be a little higher, on someone’s social media page, a little lower. Either way, you are making something for your efforts.
I’ll leave you with this. If you are pricing your items so you can just make more then still price correctly. Do not be the Etsy gal who priced her stuff so low there was no way she could replace the materials to make more. I also learned the hard way, that many times, when you are items are priced low, they will not sell. People wonder about the quality and some are looking for handmade. Low prices feel corporate to them. I have learned to up my prices even though everything says to lower them. I sold more that way than when I lowered them. Why? The person who is going to Etsy or the farmers market to shop is looking for new, unique items that are handmade and of quality. They are not really looking for a bargain. Using the above formula will help you show the value of your work. If you value your work others will too.