Pricing Crafts

"How do I price my crafts?" is the most asked question I get. You need a pricing strategy that recovers all your expenses, including your time. Below is a very simple and effective formula.

But before you address how to price your crafts, you have to be able to answer the question, "How much is the customer willing to pay?"

Your first step in determining a pricing policy should be to do a survey of what craftwork similar to yours is selling for in each market like the one you are selling in.

For example, what does jewelry like yours sell for at craft fairs? in stores? in galleries? in mail order catalogs?

Once you know what prices the market will bear, look at all your expenses and see whether you can profitably produce and sell the piece.

The following formula tells you how many dollars you have to get back for a given piece.

COST OF MATERIALS
(Add up all the little and large materials that go into each piece. Estimate costs for paint, fabric and other items you only use small amounts of.)
+
COST OF LABOR
(Pay yourself a decent hourly wage. Example: $10 hour. Determine how much time goes into producing each piece and include the dollar value in your pricing.)
+
INDIRECT COSTS
(Overhead expenses like rent, utilities, insurance, phone, etc.. Since most of us work from home, you may have no overhead costs.)
+
PROFIT (optional)
(Amount you expect to earn
beyond the cost of your labor.)
=
MINIMUM PRICE
(Amount you must recover from
your time and expenses)

Once you learn the minimum price / dollar amount you must recover from each piece and what the market will bear for work similar to yours, you know how to price your craft products.

Setting a price for crafts is important because otherwise, you may lose money. You can always increase the perceived value of a craft item through packaging and promotional material, which allows you to confidently ask and receive higher prices.

If you sell wholesale to stores....

It will help you to shop stores you plan to sell to and make notes of the prices on items similar to yours. Most stores will probably double your wholesale price.

Store owners know their customers. If they suggest you raise your prices, it's because they know customers will pay more.

Be sure to use the pricing formula above to determine if it will be profitable to sell your crafts items to stores at wholesale prices.

About the Author
James Dillehay, author of seven books, is a nationally recognized expert on starting a craft business. Artist, entrepreneur, and educator, his articles have helped over 15,000,000 readers of Family Circle, The Crafts Report, Better Homes & Gardens, Sunshine Artist, Ceramics Monthly, and more. James has appeared as a featured guest on HGTV's popular The Carol Duvall Show. He is a member of the advisory boards to The National Craft Association and ArtisanStreet.com. This article is copyrighted and excerpted from James Dillehay's The Basic Guide to Pricing Your Crafts

"An excellent resource . . . a well organized book is nothing without solid information and the book delivers here." ~ The Crafts Report

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