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.
