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Pricing Your Craft is Easy

You are here: Home / Craft, DIY or Decor Business / Pricing Your Craft is Easy

December 30, 2007 By Rose Fine Crafts 3 Comments

Most artisans / people who are just starting a home-based business from their handmade crafts find pricing their wares hard to calculate. I wrote this article helping them and you to make it easy.

home-based business

The trick is all in working the Craft Pricing formula:

labor + materials + overhead = wholesale; 2 x wholesale = retail price

This formula is your starting point. Start working out the details. Then, when you have a ‘starting point’ price, go ‘shopping’. Shopping? Yes, that’s right. It’s time to go out and find out what competitors who make the same kind of things as you do charge for their products.

Changes are that you will have to tweak your variables in your formula to be in line with competition.

Your market is looking for what you uniquely have to offer, so your pricing does not have to be exactly the same as your competition. They should also reflect relative quality of your craft products, your packaging and your uniqueness.

How to Tweak Your Variables In The Craft Pricing Formula

Labor
Are there ways to things faster? Can you use different components that require less labor? What are the options? What rate per hour is a reasonable ‘salary’ for you? Is there someone in your neighborhood who could help you with time consuming tasks who would be willing to work for a lesser ‘salary’? Are you willing to work for less?

Materials
What is the difference in cost if you switch materials? Can you buy in bulk, and is that cheaper?

Overhead
Rather than renting studio space, can this really be a home-based business whereby you work from your living room with your storage boxes in your garage? Is this realistic? is there a spare room that otherwise is not used? Remember, there’s a cost in everything. Once you start selling your art, you can deduct the cost of the room you are working in on your tax return, provided you use it only for your handmade crafts.

Don’t forget to include other overhead, such as craft equipment purchase or rental, stationary for your craft business, insurance, your phone, website hosting, and other things like this. To work out the portion of the overhead that should be allocated to each product, you must make a tentative forecast of how much you will sell in any given year. You can then divide your total overhead over the number of products you will sell. Last but not least, you may wish to include a loading for the labor related to the selling of the product.

Putting it all Together

I find it easiest to use a spreadsheet program such as Excel for this task. I can easily see the impact of tiny changes in my formula. The more complex the components in your formula, the more you will need the software. Keeping all these numbers in your head is too hard and inefficient. It also lays the ground work for developing your business records, which you will need at year-end.


:: photo by Rob Owen Wahl ::

I find this tweaking to be a re-iterative process. Things will change over time, as you learn more about your craft business and as you come across new ideas for doing things from other craft makers & sellers.

Once you have tweaked all your components of the craft pricing formula, you can determine your best pricing for your product, given your choices & situation.

Learn More

Learn how to grow your Craft Business

how-to-price-your-crafts


Filed Under: Craft, DIY or Decor Business Tagged With: craft fairs, home-based business



Reader Interactions

Comments

  1. Darlene Harris says

    January 14, 2011 at 11:08 am

    I love this post on pricing …I have seen the formula before on Etsy, but the following post was most beneficial. I have a hard time figuing out my hourly when I spend so much time listing, Taking pics, downlaoding researching , tagging etc. I am sure I will get faster as time goes on and I have more experience. Thanks for the great post, glad I found you.

  2. Michelle says

    January 16, 2011 at 5:19 pm

    Great article! I think I’ve so far managed to keep to the formula you’ve posted above but sometimes I do wonder about whether they are under-priced and I’m ‘spoiling the market’!

  3. Fine Craft Guild says

    January 17, 2011 at 12:32 am

    Hi Michelle,
    Well, test your pricing. For a short time, make something ‘a bit different’ so that it’s special and mark it up. See what happens.
    Also a good way to re-price your work and to understand buyer elasticity is by bundling it with a related product/service which has a higher margin. Again, the buyer feels they are getting something that is a better deal/more tailored to their needs. Let me know the outcome of your experiences!
    Rose

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