HOW TO PRICE YOUR HANDMADE ITEMS.
We hear all about charging our worth and making sure we're getting paid well for what we make. But sometimes for Makers and Artists, it's more a matter of numbers and unknowns than emotional struggles that set us back.
So here's a really practical post for you on how we've priced our work and what works for us.
First, you have to (read: HAVE TO) calculate the time you put into your work. This should be the most costly thing on your calculator.
There are a few ways you can accomplish this: by hours or by day. Hourly speaks for itself, but a Day Price is easier for the Makers' sake. If your daily cost is $100, than no matter what you create, should it take you one hour or twelve, you charge a minimum of $100. This can be however value you feel comfortable with, and it can be different for each item you create.
So many Makers miss this or smudge it so it's too hard to keep track of. Invest in a tracking app like FreshBooks and start adding the price of materials to your final cost. If you get into the groove of things and gain a handle on the amount you spend per project, you can just start charging a flat percentage for each item.
MULTIPLY FOR WHOLESALE.
Once you add us time and materials, multiply your cost by 2. This is your wholesale price. This is the price you charge if someone requests a large order. This is NOT (I repeat, NOT) what you charge in your Etsy shop or on your website.
MULTIPLY AGAIN FOR RETAIL.
The previous number you have? Multiply is by 2 again. This is THE minumum that you should be charging for your handmade items.
The math works out like this:
Time + Materials = cost x 2 = wholesale x 2 = retail.
So take a 16x20 painting for example.
Say you spend 5 hours on it and your hourly rate is $25 (which is low, btw) and say you spend $12 on a canvas and add a flat $15 for paints that you know you have to replace monthly. Plugged into the equation, you get this:
$125 + $27 = $152 (cost) x 2 = $304 x 2 = $608
Now, this isn't including shipping or custom work that often takes longer.
If this seems like a lot to you, then you're probably not charging enough. If none of your people are buying at this price, then you may need to adjust your target market or create some lower cost products that better suit your followers.
If you're still hesitant to charge more, take a look at the equation again. What happens when you start cutting back your price? Where does it come from?
It comes from your time. From your kids. From your family. From yourself.
You don't have to settle for that when it comes to your handmade work.
This doesn't mean to stick your pinky in the air and never make a sale. There are plenty of ways to build your business around lower priced items, such as prints, reproductions, minis, and digital products. But that's another post. ;)
When it comes to your handmade work, you MUST charge what it is worth. And it is likely worth a lot more than you think.