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Wednesday, 16 November 2011

Pricing Handmade Goods

It seems to be a tricky subject, with people disagreeing about the method you should use to achieve the final price for the little piece of you you've just spent minutes to hours making. There are lots of
formulas all over the internet, that other sellers have come up with, and what business-extraordinaires
have concocted. In this post I will tell you how I price my products, and what you really need to
keep in mind when pricing your own work. And my opinions on the common pricing strategies.


   I don't get many ideas for products to make. I get a new idea once in a blue moon, but when I do get one, I love it. I relish it; I plan, I test, I make, I tantrum, I try again, and I smile. There may be more tantrums from time to time, and perhaps less smiles and more triumphant cries, but I get there in the end more often than not. The next difficult task is photographing it - this is often accompanied by fits of rage and the afore mentioned triumphant crie, but, as before, I get there in the end. Now, time to list it on Etsy, and let the whole world see it so I can bask in my brilliance.
   But wait - what about the price?
   I sit there for a while, a pencil in my hand, jiggling between my fingers as I stare at a piece of paper with a mass of words and numbers upon it that, by this point, mean little to my addled mind. Cost of base supplies, hourly wage, multiplications that I can't do in my head, it goes on.
   I get distracted, correcting little bits of the earrings or twiddling the chain of a necklace about, and in the end, the paper is brushed aside, the pencil is deeply embedded in the wall beside me, and my fingers find the keyboard. A number is typed into the price box. A beautiful whole number, with pretty digits of pinks and whites - it is perfect. The best reflection of the product, my time, and myself in it all at once.
   But how did I get to this point? I will tell you:

   All across the internet, you will find different ideas of how to price your handmade items. I did a little search for "pricing handmade goods" in google, and I looked at the first link. There was nothing really on the page but a link to another website, so I followed that. They have told you to calculate and add the following together:

Cost of Goods:
includes materials, production time, tools, equiptment and
any other costs related to actually making your item.
Overhead Expense:
actual expenses (listing fees, photography fees etc)
 Profit:
Adding an extra percentage of the above.

   The Second link in the search is a little more agreeable. It makes more sense, and seems to have been made by someone who actually makes and sells items, as opposed to the business boffin above.

Cost of Materials
Labour
Upkeep Expense
(domain name, website hosting, or shop rental etc)

   Then add it all together. The outcome is different to the above. You likely took the photos of the products yourself (not a difficult job, just grab a really big white sheet of fabric and go somewhere that's naturally well-lit, and the white sheet will act as a reflector for the light and will help to further illuminate your pictures naturally), and, if you're using something like Etsy, you only have a 13p/20c listing fee. It's a little easier to follow this formula, as it's aimed more at the individual crafter who is perhaps still finding their feet, or doesn't get that much business anyway. You may also notice, if you were following the formulas by testing them out while reading, that the outcome here may be cheaper, because it's looking at the base facts: materials, wage, and the necessary fees to get the product out there.

   Now the third link (which turned out to be a little link hub, so onto the first link of the list). Actually quite a helpful little site, Handmadeology, and they also have some ideas (though these are directed at jewellery sellers) that are commonly used:

"• 3 x the material cost
• 3.5 x the material cost
• $20/hour • labor plus 1x materials plus 50% (or whatever you want your hourly wage to be)
• Eyeballing i.e. guessing at what it should be worth (not recommended, but common)
• $35/hour • labor plus 1x materials
• $26/hour • labor plus 1x materials plus 50%
• $20/hr.labor + mat. + 5%overhead + 20%profit"

   I will say outright that I do (for once) agree with the first two on this new website's list. They've not gone out to say "wage", it's based purely on the materials. Time put in is important, and I'll move onto that now:

   I have little to no problem with the second and final links, but Imust go back to the first: 1. Materials. Good. 2. Production time. Ok. 3. Tools. What? You mean you want your buyers to pay for those pliers that you bought a year ago and have made 70 necklaces and are still completely fine, every single time you sell a piece? I can understand a fraction of the cost, but the whole thing? 5 - does this include the boxes that I keep all my supplies in? I'm a little fuzzy in what this means, and given the third and 4th on the list, I'd expect it did indeed include that.
   I can understand the overhead expenses. Some people just cannot take photographs, I get that, so they hire someone else - friend or professional - then there's also listing fees, which vary depending on where you sell (13p on Etsy, or £1.35 on ebay, AND that's on a "free listing day" - that £1.35 comes from the necessary extras you need to actually sell the item, so imagine the cost on an average day!), and it might also be a good time to take into mind the fact that the host is also going to take a percentage of the price once it sells.
   But now you want us to add a profit to that as well?

   I have read in a few places that hourly wage and labour costs don't count as a profit. Why not? It does not cost the average person (note I said average - if you have a physical disability it's a different matter, which I will address later) to move their arms. Neither does it cost them to sit there and do it. Not only that, but if you craft for a living (especially if you've given up your day job to do it) you really ought to enjoy it. It shouldn't be a chore.

   Now I rather abruptly move onto my own method, and things I think everyone really needs to keep in mind (this sudden change is probably why I never did that well with my English essays - I'm not that good at rounding up :P).

1. Consider the cost of the materials. I quote the second link: "If you spent $10 on materials, then you better be charging more than $10 for your pieces, or you won't be able to do this for much longer!" It's that simple. Write down the cost for materials - if you use clay, like me, write down how much each block of clay is, and then times (or divide, inmy case) it by how much of the clay you usually use. If it's £5 for a block of clay, and you use 10% of it on the earrings, then that's 50p. Or £1, if it was 10% per earring. Then consider the glue. If it's something silly like £1 for a small tube of super glue, for which you only use a drop, this is really your choice. Either £1 or 2p. Whichever you feel better with. Do this for all the products, then add on listing fees and other truly necessary bits and pieces needed for your item to actually sell.

2. How much time did it take you? And, more importantly, did you enjoy yourself for that time? How difficult was the product to make? My dinosaurs were actually surprisingly difficult, as are my antlers, and my latest project is driving me up the wall! All of this does affect my prices, and I suggest it affects yours too.

3. This probably won't affect many of us, but did it harm you in some way to make it? Did you strain your back hunched over something teeny tiny for an hour and then remained in discomfort for the remainder of the day/night? Or, do you have a disability that makes it even more difficult to create things? The last really does matter. Even more time and effort went into it.

   I don't give myself a wage. Instead, I take numbers 2 and 3 into account. I don't have a physical disability, but my back aches like mad when I work because everything's so small. And I definitely get frustrated and there are points when I no longer enjoy it, but I want to add it to my shop so badly that I continue because a) it will sell, b) I want that sort of thing in my shop, c) I won't give up on an idea, d) I want to see the outcome, and e) I want to prove to the voice in my head that I can do it every time it made me think I couldn't and it was beyond my capabilities.

   I'm not telling youyou have to use my method, that's not what I'm saying at all. I'm just trying to give you an idea of what I do, and that you don't have to do as all of these other people tell you to, myself included. I especially suggest you don't follow this next bit unless you're a good judge of people, your own work, and are capable of seeing things from an unbiased view.
   Once I've done all of this, I sit back and look at the product...then throw the paper away. The price is sometimes too steep. I look at the product - the product that I made based on things I like, that I would wear, and would be perfect, ultimately, for me - and know that I wouldn't buy it. Not for that price. Sure someone else might, perhaps, but I wouldn't, and I don't want to dirty myself or my shop with prices that I know deep down I'd never look twice at.
   I do keep in mind the 3 points that I made, but I can't say that I stick solidly to them. The number is often an ugly one. With 5s or 9s - they're ugly numbers. I like soft numbers in nice colours - a pastel pink 6, a crisp white 1, a nice red 2. That does not mean to say that if you run to my shop now you won't see a 5 or a 9 - you will. They're rare though. You're more likely to see fluffy or confident numbers.
   I'm comfortable selling at these prices. I cover the cost of my materials, but when it comes to making it, I love doing it. It's so much fun. Any money I get I turn around and spend it on more supplies, profit and all, because I love it. Only rarely do I use the money on anything else. Lucky needs a new hammock because she occasionally chews through them (and she and sugar loved them so much that when sugar passed we wrapped her in the nicest and buried her in the garden), and I want to be able to go out on my 21st birthday so I need to save a little more.
   So I buy more materials with almost every penny, and perhaps the odd chocolate bar might find its way mysteriously out of my purse, but I do it because I love to make this stuff. It isn't a chore to me. And I figure that if I'm not making any jewellery, what else am I gonna do? Sit on the computer playing solitaire, watch Scrubs, or watch my boyfriend play on the xbox (though admittedly since Skyrim just came out it's definitely a lot more entertaining ♥).


   I'm not saying you should follow this method. The point of this entire post was to just suggest to you all that you don't have to follow these guidelines - that's all they are! They're truly a great place to start, but you don't have to stick to them. Do what you feel is right, with your shop and your products. That's what I'm doing, and I'm happy with it. Just keep that in mind and you might do better - and if you don't, go back to your tried and true method!


Kim out ♥



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