I’ve been selling hand-made things since I was a little girl. Believe me, that is a LONG time. It’s sometimes difficult to come up with a fair price to charge. (Fair for both the buyer AND the maker.) I’ve learned a few important things along the way.
Here is a simple formula for coming up with a price for hand-made items:
your hourly wage
x how many hours it takes to make the item
+ materials cost
+ your hourly wage (for materials shopping time)
Depending on what you’re making, this formula can be tweaked a bit.
But, My Price is Too High!
Remember, you are not competing with “Target”‘s prices. There is a monetary difference between “custom-made” and something bought off the shelf from some store.
If people want cheap prices, they will shop at Target and buy something that was mass produced in some low-wage country. Unless you are ok with working for those foreign-country low-pay wages, you should charge the income that you are actually willing to get out of bed, get dressed, and go to work for. A good question to ask yourself is: “If I suddenly got 10 orders for this item today, what price would be incentive enough for me to want to make ten more?”
Or another thing to think about: If a company called you up and offered you $3 per hour to come work for them making these items, would you accept that offer? Um, no. Why? Because you don’t work for $3 per hour, that’s why!! So don’t undersell yourself.
But, My Price is STILL too high, and I Really Want to Sell Things!
You can get your price down by making several of one item at once. For example: At $15.00 an hour, I can make one completed embroidered bag in 1.5 hours for $22.50 for one bag. But I can make 5 of them in 3 hours which is $45 divided by 5, and that comes to $9 per bag. Quite a difference! This is the reason streamlining your production time is very important. If it takes you three hours to cut out the fabric for your item, you need to change something! Either have a caffeinated drink so you cut faster, or invest in better tools, or otherwise figure out what is making you so slow and fix it. Time is money.
The Psychology of It All
We humans are funny creatures. We automatically equate the cost of something with it’s value. If there is a bag for $5, and another bag for $50, people will assume the higher priced bag is high-end, better made merchandise, and therefore worth the money. That’s just a fact. Your pricing sends a message to the world about the quality of your item.
So What Will Happen If I Agree to Work for Low Wages?
You will get a lot of orders. No, that’s not necessarily a good thing. Because, you will begin to dread making the items, and your craft will no longer be fun, it will be a chore. Don’t think that will happen? Trust me, it will happen. You will suddenly realize if you had charged a higher price, you would have had fewer orders, yes, but would have made the same amount of money.
Moral of This Story
Don’t undersell yourself.