Saturday, 25 January 2014

The pricing dilemma...

I think everyone who makes and sells handmade goods has asked and probably struggled with the same question: pricing! This is especially difficult for those of us who make very time intensive crafts. I'd like to pay myself a sensible hourly wage as I do consider what I do to be a skill I've practised and improved upon for years. However if I actually did I worry my prices would either be laughed out the room, or even if people thought they were reasonable would just price too many normal folk out of the market, which would not be my intention at all.

I came across a pricing formula specifically meant for time-intensive crafts over at handmadeology which I found very interesting and led to some good debate.

[(time x $per hour) + 2(cost of materials)] x 1.1 = wholesale price

wholesale price x 2 = retail price

The author of the piece imagined the $ per hour to be at least $10 but acknowledged for more skilled artisans it surely ought to be more. I must admit to rarely thinking about how much time something took me and mainly focusing on the cost of materials. But if I were to follow this formula, I would have to drastically hike up my prices. I would have to at least double them if not more! I'm not sure I'm quite ready for that.

Luckily for me the income from my crafting is not 100% vital to our financial survival (although it certainly helps!) but then I worry that if I price too cheaply I could be hurting full-time crafters for whom it is their business and main source of income, which I would never want to do. It's all gotten a bit political!

As crafters or consumers of handmade products, what's your view on this? Would you use this formula? If you already do, does it work for you? And as a consumer, are you happy to pay more knowing it is handmade?

2 comments:

  1. I often struggle with pricing, and I have been working in retail since i was 16. The way i price my items is by what i feel that they are worth in the miniature market. I do look at my time but like you said if i always included my time exactly my products would be extremely high.

    The way i compensate for this is by making more on some items and not as much on others. there's always items that are faster to make and offer a better margin than others.

    I do a lot of looking around at what comparative products are selling for. I think this is a way to keep it fair in the market. I like to keep my items available to most consumers and not price my items so high that the normal collector cant afford them.

    I think your ratio is good if your unsure about pricing, I think more than pricing for us in Canada it's Shipping Pricing that we are losing on. The price is getting very high for us.

    I think the best thing to do is look at what similar items are selling for, your time and cost and then price according to what you need to make from the item.

    As for you question about am i willing to pay more for handmade, Yes!

    Jenn

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    Replies
    1. Hi Jenn,

      I have the same issue as you when it comes to post as I am based in the UK so the majority of my miniatures ship internationally to the US. A couple of years ago the royal mail put its prices up in one go by about 30% and I wondered what to do. But in the end I figured, if it's the shipping putting customers off an otherwise fairly priced, one of a kind item, they can't want it that much. I put up my shipping prices to reflect the increase from the royal mail, and it appears not to have made any difference to my sales.

      I figure as long as it is made clear to my customers why the shipping is higher (because it's international), then most people happily accept that on smaller, less bulky purchases. It does put me off ever selling larger items though. The shipping costs would just be huge!

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