Most of us in craft business don’t know how to price our own products. We are afraid to put higher price tags on our products because we think that customers may think it’s not a reasonable price. Thus we end up putting lower price tag to our products. Most crafters are preoccupied that lower price means more customers. But they fail to realise that customers judge your products based on their price. If you put lower price compared to others they may think: why this product have lower price? is this product have higher quality? will this product last long?
So how to price your product reasonably? Reasonable price will give you not only good profit but also promotes your brand as a quality brand. Here is a simple formula to price your product:
material + labor cost + expenses = wholesale x 2 = retail price
Let us discuss everything one by one.
Material cost :
Material cost is sum of cost of each material you used in the making your craft.
For example in order to make a toy you use fabrics, buttons and fiberfill.
Let say you buy fabrics for $10, buttons(50 in a pack) for $5 and fiberfill(500 gm) for $5.
If you used only 2 buttons and 100gm fiberfill for one toy.
Material cost will be : $10 + [($5/50) x 2] + [($5/500) x 100] = $11.20
Labor cost :
This will be the important part your pricing your product. Most of the crafters understimate the value of the time they spent to make a craft. First determine how much time you spent roughly to make a product. Then fixed an hourly wage for yourself. That’s all the product of time you spent and hourly wage is your labor cost. I let you fixed yourself your own hourly wage because only you know how much effort you had put on to make a product.
Expenses: Most of the crafters forget to include expenses when putting price tag on products.
1. Transportation fee to your studio/ working place
2. Postage fee
3. Packaging fee
4. Small percentage of utility bills ( electricity, water ..)
5. Small percentage of internet bills
6. Small percentage of rental fees
7. Small percentage of advertisment bills
And any other expenses that you think appropriate.
Finally by including all these three (material cost + labor cost + expenses) we can get the wholesale price.
According to wholesale price is the price offered to purchasers of manufactured goods or to commercial sellers in many cases.
By doubling the wholesale price we can get our retail price. That’s is the price you should put in your price tag.
One thing we all must understand is that we should put our price reasonably and don’t underestimate your talent. Always remember that is the price for your talent and you deserve it.
That’s all 🙂
by Lucky Piria