Olive Cloche by Delightworthyn, $120Those of us who sell online often have problems figuring out how much to charge for the things we make. If we look around at what others are charging, we might find a huge disparity in price for similar items. There are several factors that come into play in deciding price point:
- Motivation. Is this just a hobby? Do you sit in front of the TV at night and knit like a maniac, decompressing from the day's acivities? Do you end up with too many scarves, mittens, hats and sweaters? Too many to give away at Christmas? Why not sell them and at least pay for the yarn? Or, is this a business? You are your own cottage industry and you want to make a living by working at home, keeping your own hours, owner of your time and your life.
- Cost of Supplies. Fabric, for example, can come cheaply by repurposing, thrift stores or sales. Or, you might pay $10 a yard for designer fabric. Silk and other specialty fabrics can cost $60 a yard or more. If you are producing an item as a business, you include the cost in your price point so that you can buy more supplies.
- Time. How long does it take you to make something? Has some arthiritis slowed you down? Are you learning as you go? Or, are you whipping out several pieces a day? Can you keep up with having new and fresh inventory in stock?
- Uniqueness of Product. You love beads and are stringing them into nice necklaces. Have you taken a look lately at what the competition is for jewelry? Yes, these necklaces may be nice, but how many millions of other people are doing the same thing, buying from similar suppliers, and making your window of opportunity more competitive?
- Branding. You've been around for awhile now. You've worked hard for many years and finally people are buying from you because they want a piece of YOU. Your name has worth and adds value because there is market demand for the reputation you have created.
Felted Wool Hat with Roll Brim by Wool Mountain Studio, $30I was recently accepted as a seller in 1,000 Markets, a new online juried marketplace for artists and crafters who sell quality products. I make hats and am a part of "just hats", a group of fellow vendors on 1,000 Markets who also make hats. The photos in this post are hats made by the members of this group. I thought it would help illustrate the discussion of price by showing different price points, materials and styles chosen by our members. All of these hats are available for sale at the writing of this post. You can visit the listing by clicking on the link in the photo description.
Mixed Rasta Tam by Truly Unique by Elise, $35So, we all sell hats and we may have different reasons for why we price as we do. Some people try to figure out an hourly wage for themselves. I try to estimate time and hope to make around $15 an hour plus supplies. Can you knit or crochet a hat in under two hours? If so, maybe you can keep your prices at around $30 or $40 a hat. But, some people may not need the money and if they are just selling for fun, as a hobby, they might make something similar to your hat and charge only $15, creating a problem in the market, unintentionally, for those who really depend on their sales to pay their bills.
Painting with Yarn Hat by Wool Mountain Studio, $37The sari hat below is one of my hats. This one was part of a production run where I made 10 similar hats in about three or four days. The materials were all free except for thread and the vintage sari borders. You can save time by sewing in a production mode where you do all the cutting at once, make stacks of the pieces and sew them in order, work on the finishing steps at the end. Almost everything I make, sells. Eventually. I made this hat two years ago. So, this is another thing to consider: Stock.
Vintage Sari Border Hat by Rayela Art, $40If you are selling the things you make as a business, you have to have enough stock in hand to give customers choices in what they may want to purchase. Hats also have seasonal looks. A faux-fur hat probably will not sell in the summer to an American audience. Well, someone taking a trip to the North Pole might want it, but a business savvy entrepreneur will want to market their wares to the largest available public within their niche.
Purple Beauty Casual Hat by Marge Rohrer, $75Figuring Price Out by the Hour
So, we've determined that $15 an hour might be an OK wage for making cool hats. How many hats do you have to make a living? Figure out what income you need to make in a month. Budget it all out. Include your living expenses, food, gas, car repairs, health insurance payments, rent, mortgage, etc. How about your business expenses? Marketing, fees, shipping supplies, and so on. Let's say you do that and figure that you need about $3,000 a month to pay for everything and have a little left over for fun stuff. $3K a month is the goal that I have set for myself, but I have cheap rent, so this might be really low for someone living in a more expensive area. I also don't have kids to support. I need to double my sales to reach my goal, but it is achievable. Remember, this is the worst economy since the Great Depression, so we all have to hang in there and hope that things will get better in time.
If 3K is the goal, how many $30 hats do you have to sell in a month? Well, that would be about 100 hats, or 3 hats a day. This means you also have to make at least 21 hats a week to keep your stock up. And, if you want to give your customers a selection, you need to have that surplus stock, so maybe you should think about making 30 hats a week. Can you do that? Is this a realistic production goal for you?
So, we've determined that $15 an hour might be an OK wage for making cool hats. How many hats do you have to make a living? Figure out what income you need to make in a month. Budget it all out. Include your living expenses, food, gas, car repairs, health insurance payments, rent, mortgage, etc. How about your business expenses? Marketing, fees, shipping supplies, and so on. Let's say you do that and figure that you need about $3,000 a month to pay for everything and have a little left over for fun stuff. $3K a month is the goal that I have set for myself, but I have cheap rent, so this might be really low for someone living in a more expensive area. I also don't have kids to support. I need to double my sales to reach my goal, but it is achievable. Remember, this is the worst economy since the Great Depression, so we all have to hang in there and hope that things will get better in time.
If 3K is the goal, how many $30 hats do you have to sell in a month? Well, that would be about 100 hats, or 3 hats a day. This means you also have to make at least 21 hats a week to keep your stock up. And, if you want to give your customers a selection, you need to have that surplus stock, so maybe you should think about making 30 hats a week. Can you do that? Is this a realistic production goal for you?
Prairie Point Crown by Rayela Art, $90Figuring Price Out by Monthly Goals
I could make the 21 hats a week if I set my mind to it. I worked this out a couple of years ago for myself and looked at what kind of production I would need to commit to if I wanted my primary income to come from the things I made. My problem is that I get bored with production. I can make a run of ten similar things, but then I want to do something else. There are so many ideas in my head that I don't have time to explore. So, in my business, I have chosen to focus on building the stock for my imported textiles and supplies and have that be my main source of income. My goal is to reach the point where I am replenishing rather than building stock, which will hopefully leave me time to have fun with my sewing. I will still want to sell it, but if I am not under production pressure, I can keep my work fresh for both myself and the customer.
But, for those who are living solely off the the things they make, my suggestion, especially if new to the business, is to have several price points. If you can stomach being in production mode, have a large inventory of products under $50. These are easier to sell, especially to impulse buyers. Then, start building a collection of more interesting work. Explore how you can make a name for yourself, find a niche that feels comfortable for you. Perhaps those hats that are priced over $100 will take longer to sell, but when they do, they will make up for the days with no sales. In the end, you need to find the right balance of products that can bring in the $100 a day that you need to meet your monthly goal.
Eggs in a Basket
You know the saying, "Don't keep all of your eggs in one basket." If you trip, fall, the basket crashes and you end up with broken eggs. I sell on Etsy, eBay and 1,000 Markets. I have a booth at Just English's Antiques in downtown Paducah. I also have some things on consignment at HeART of Healing Gallery. I've tried many different online venues over the years and if I had more product, I would be in more places. But, each location also involves a time commitment and record keeping.
Lillith Cloche by Tissage, $170Hidden Costs
That $15 an hour you are charging to make a product is also covering all the time it takes to photograph the finished product, list it, ship it, and keep track of records. Each venue you sell in most likely has a community that wants some of your time. Then you blog, twitter, network on facebook and so on. These are your hidden costs for marketing those hats you are making. Is $15 an hour really covering your materials, ideas, marketing and running the business? Think about it....
Amelia by DreamWoven, $325The Final Price
The reality for most of us is that we cannot reach those financial goals we set for ourselves. Most of us need to take on part-time jobs in the "real" world to subsidize our dreams of becoming self-employed. The lucky ones have spouses or other income that support their work so that they are not sales driven. But, whatever the scenario, take a look at what you are making and give yourself an evaluation. Are you charging enough for what you make? Those who underprice their products do a disservice to the rest of us in the art business community. Yes, we all want to sell, but not charging a fair price makes it harder for any of us to succeed. Why? Because those who underprice create the same market for cheap products, side-by-side with sweatshop factories and subsidized imports from China. How we each price our products makes a statement on who we are collectively, as a people. By respecting our own work and the materials that went into them, we extend that respect to the community at large.
The reality for most of us is that we cannot reach those financial goals we set for ourselves. Most of us need to take on part-time jobs in the "real" world to subsidize our dreams of becoming self-employed. The lucky ones have spouses or other income that support their work so that they are not sales driven. But, whatever the scenario, take a look at what you are making and give yourself an evaluation. Are you charging enough for what you make? Those who underprice their products do a disservice to the rest of us in the art business community. Yes, we all want to sell, but not charging a fair price makes it harder for any of us to succeed. Why? Because those who underprice create the same market for cheap products, side-by-side with sweatshop factories and subsidized imports from China. How we each price our products makes a statement on who we are collectively, as a people. By respecting our own work and the materials that went into them, we extend that respect to the community at large.
I would love to hear some comments on this. Do you have a formula you use to price your products? As a consumer, how do you look at pricing when you buy something handmade? This is a tough issue on both sides, so I am sure that there are plenty of insights out there to help us all along.
Interesting post Rachel. One of things I dont see in your list of items that could/should be included in determining a price is 'DESIGN'. (I don't mean "Uniqueness of Product"). Creation of the 'pattern' or 'design' of one of a kind items, there should be a dollar amount attached for that as well.
ReplyDeleteAs far as pricing, I think several things are very important. The first is knowing who your market is and who you are trying to sell to. Secondly is Design, materials and labor. Labor should play a huge role in your determination of price. We all know that in most cases, you may not be able to retrieve all of your labor in $$, but it should be a goodly portion of your pricing consideration.
Good points, DreamWoven! Now, how does that translate in an actual piece? Do you figure out time + cost of supplies and add a % for the design or is it a flat rate that you add on to every hat.
ReplyDeleteSome designs seem pretty universal to me. Like a pill box hat is basically a circle of fabric with a strip for sides. Pretty straightforward. What makes it interesting are the fabric choices and embellishments one can use.
And, labor is different for different people. Some are faster, others slower with similar items. Is there a formula that you have used or suggested to others which might be a good place to start?
I also did not say anything about overpricing and I think that is an important point. I know that I look to my peers and see what they can command and whether they are selling or not. This would be more in thinking about art quilts. There are a couple of people in my fiber art group who are becoming internationally recognized. I look at them as a measure of where I can put myself in terms of artistic maturity. I'm definitely not a novice, but neither am I at a mature stature. I would measure that as having a substantial body of work. I would classify you as a mature artist, where you can command the prices you want for your work. This translates into if you and I both made pillbox hats, yours should cost more, not because of the design, but because you have better branding or maturity than I do. Make sense?
Excellent piece Rachel ... I am all over the place when trying to figure out the right formula for pricing my work. One thing I have to be careful about, everyone does, is to not charge too little. It can be very tempting ... you want the thing to sell, so you charge at the low end, thinking you need to build your business. Trouble is, you'll be building a business that caters to the customer who wants a bargain. And, sure enough, if you price something too low, that will be the item that someone wants to order more of! As a customer, I really look at handmade things with a critical eye. When I see something that is beautifully made, I really appreciate the craftsmanship and skill and artistry involved. And I expect to pay for that. And, usually, it will be more expensive than what I really should be spending. But, invariably, those are the items which I never regret buying ... the price fades and the beautiful piece just keeps on getting better. An important factor, whether I'm buying or making/selling, is the unique factor. Is this something you've seen nowhere else? Does this artist/artisan/craftsman have a voice that is all her/his own? This, to me, is the most important form of branding. So many people are making things that a ton of other people are also making. That's fine, they should do what they want, but those aren't the things that will eventually command the price. It's just like you often mention the plethora of jewelers on Etsy ... but the ones who are succeeding are the ones who are making something that can't be so easily made by the next seller down the line.
ReplyDeleteI really enjoyed your post because pricing is one of those bugaboos that plague all of us trying to sell what we create.
ReplyDeleteI figure $10 an hour for my time, but I know that I'm still not charging enough for what I make. My material costs aren't all that great because I have great wholesale contacts for fiber and yarn. Practically everything is labor, labor, labor. And, I'll have to admit I'm fudging in another area because I don't factor the price of my loom when I price my goods.
Your points about selling at too low a price are good. The real problem comes in being competitive with those that do sell too low. It is a catch 22, isn't it? We need & want to sell what we make for a good price. Yet, if a customer can get a similar product for less, they usually think about their pocketbook. So, we need to make, what we make so extraordinary that it can't be purchased for less. Something to think about.
Thanks for the post. It has given me a lot to ponder.
"Now, how does that translate in an actual piece? Do you figure out time + cost of supplies and add a % for the design or is it a flat rate that you add on to every hat."
ReplyDeleteIt varies. I know if I have spent an inordinate amount of time on a piece I will not put it up for sale immediately. I know I can never recoup the time (and attachment) but if I wait until the emotion of spending 'too much time' on a piece that will eventually be for sale is over, I can price it with more ease.
The ease is comprised of who I am aiming to sell it to, a gut instinct about what it will sell for, and then the actual cost of materials. I try to be really honest with myself when pricing. If it is a fairly simple piece, that can be reproduced by myself (or another), I will not throw in a hefty design fee, but will charge for my labor and materials... which still seems to be more than what other people to charge! But that's ok. My work sells and I will not undercut myself or shortchange the type of work I do. Example.. my dread wrap/cuffs. Lower priced then my other work because I have reproduced it at least 500 times, but actual cost of the handdyed yarn and an actual hourly dollar amount for my labor. I get my price because the yarn is exquisite, the workmanship is extremely well done and because I have a following and a name that has been around for quite awhile.
On a piece that is more unique, where I know someone can copy the 'appearance' of it but will fail in the actual reproduction of it (and winds up with something similiar, but not at all like my work), I charge a greater amount for the design portion.
Regarding overpricing:
I think there are pieces by new artisans that do not have a huge following, where their work is worth a heftier price. This of course comes down to the buyer knowing what they like and how much they have to spend and can 'see' the quality of the finished good. But, overpricing for crap goods is wrong. Period, end of sentence. I feel the same way about the selling of crap goods at any price.
"This translates into if you and I both made pillbox hats, yours should cost more, not because of the design, but because you have better branding or maturity than I do. Make sense?"
Yes, it makes a lot of sense and I agree with it, but, I think there is a point where the 'sense' of it stops making sense! i.e.; If I were to create an incredibly simple hat that would cost $100, were I to make it right now vs. if I were famous, with a famous clientele and charged $1500 for the exact same hat... this does not make sense to me. I understand what has occurred, but it doesn't make 'sense' and actually, it goes very much against my grain, though I would love to have a fabulously wealthy clientele that I could charge $1500 per hat for, but only because I could then make these simple $100 hats and have all this other money to be creative with. I would then be doing simple work for $1500 per hat instead of $48 per wrap/cuff. Can you imagine what my creative pieces would go for????
It is crazy but the artworld is crazy. Sometimes I want nothing to do with it, unless of course I am successful at it!
If you REALLY want to live off of your own work, then the price has to also include things like the cost of the workspace rent/mortgage, utilities, phone line, computer, software, etc. Maybe part of your car is used for business, too. Etc. And, even without considering all those expenses, there is the inescapable matter of income taxes ... I was appalled and disheartened when my accountant pointed out that 50% of my income would actually be going to taxes.
ReplyDeletei have just started selling. all of these questions are in my head. i suppose part of it is also why you are selling. the biggest problem to me is the conflict about who is it really for? me? the customer? the selling community? in a handmade one of a kind world, it is probably quite impossible to survive by just making things on the highest quality level unless you have established some fame. ( which usually involves selling things for more than they are worth) business and art must find a balance if it is to work. and that involves some compromise.and that is a personal decision.
ReplyDelete