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Craft Business Video 7 (appears below the text version here) answers the frequently asked question: "How do I price my crafts?" (Tip: Increase your sales at craft fairs with mobile credit card processing for craft artists).
How to Price Your Crafts
One of the most frequently asked questions is "How do I price my craft?" Let's look at a basic formula to use for pricing crafts.
The first step in pricing crafts is to calculate the cost of your materials. Cost of materials should include every little thing that goes into a finished piece, even if you have to estimate for things like paint or glitter or yarn.
Let's say you make Christmas ornaments and it costs you exactly $2.75 in materials to make one ornament.
The next step is figuring the cost of your labor. How much is your time worth? $10/hour, $15/hour, $20/hour or more? Whatever you choose for the value of your labor, multiply that hourly rate by the hours it takes to make the item. Don't fudge. You need to know this amount in order to learn how to price your craft.
For example, if it takes 1/2 hour to make a Christmas ornament and your hourly rate is $15, then your cost of labor is $7.50.
For our ornament example, add cost of materials ($2.75) to the cost of labor ($7.50). We now have a cost of goods of $10.25. Should the asking price of the ornament then be $10.25?
Maybe yes, maybe no. What is certain is that $10.25 is the minimal amount of money you must earn back when pricing crafts like in this example.
We've looked at how to price your craft. But the question you should be asking is...
"How much are people willing to pay for my crafts?"
We used a very basic formula for determining the least amount you must earn back when pricing crafts. But that's just a starting point. It guarantees you don't lose money.
Answering the question, "How do I price my craft?" means learning the maximum amount that people are willing to pay for your item.
If you are selling at craft fairs, pricing crafts will be different than it would be for selling to stores or on eBay.
To learn the maximize how to price your craft, you need to do some digging.
If you are selling to stores, check out stores that carry craft items like yours and note the retail prices.
If you are selling on eBay, do the exercise in Video 1 and make a list of items like yours and what their closing bids were.
Always research prices for items like yours in the market you sell in.
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If the average market price is lower than your cost of goods, you will lose money. Either find other items to make or find a way to lower your costs.
Most craft artists undercharge because they imagine they will sell more by lowering their prices.
But what happens is that customers see the low price on the craft and think the item is cheaply made. In many cases, I and others have found that raising prices actually stimulated sales,
This is Video 7 of 20 in the Craft Business Series: "The 10 Most Asked Questions About Selling Crafts and the 10 Questions You Should Be Asking" Sign Up Here to Get the Entire Video Series on Selling Crafts
Craft Business Video 8 answers the question you should be asking: "How much are customers willing to pay for my crafts?" Video 8 of 20 in the Series:
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