Friday, August 27, 2010

What Price Should I Charge?

One of the big problems when you start to sell things is deciding what price to sell it for.  If you charge too much, people may not buy it.  If you price it too low, you may end up practically giving your work away.  Obviously, you will charge at least enough to cover the cost of your supplies, but what do you charge for your time?  I haven't been terribly scientific with this one so far.  Most of the time, I do some Google searches and search Etsy for similar items to get some idea of a price range.  I've seen people who sell their handicrafts at bargain basement prices and others who charge more than I ever imagined.  Etsy has a series of articles on "The Art of Pricing" that explores this subject on a variety of levels.  Here are the things I try to consider when establishing prices:
  • Costs - Every artisan encounters different costs.  Some may buy supplies at a local craft store while others buy supplies wholesale.  Some artisans are able to make some of the supplies from raw materials and some are lucky enough to get what they need for free.
  • Fees - This is an area many newcomers to Etsy seem to struggle with.  You pay 20 cents each time you list an item and 3.5% of the final sale price on each item sold (not including shipping).  When  a buyer pays you using PayPal, PayPal will deduct 30 cents plus 2.9% of what was paid.  These amounts need to be factored into your price.  If you decide to renew listings on Etsy so they show up sooner in searches, you will be paying a new 20 cent fee each time.  Even though you may see this as a marketing expense, you still need to account for it.
  • Time - How much is your time worth?  If it takes me two hours to make a tatted butterfly, block it, and fasten it to a pin back, do I charge what I would make at my regular day job?  Probably not.  This part is linked to the next item...
  • Quality/Expertise - I don't charge as much for my graphic design work as a lot of others do.  My work is at a hobby level and doesn't compare to that done by  designers with degrees.  What I offer is enough for those who need something simple and affordable, so I price it as such.  Beadwork, sewing, jewelry making, knitting....whatever it is that you do, your expertise should be a factor in the price.  People expect to pay more for designer clothing, but less for those from an unknown brand.
  • Customers - Who are you trying to sell to?  When you decide to market to  housewives, boutique shoppers, bargain hunters, the affluent, or those with eclectic tastes, you are choosing a price range.  Working backwards, you can adjust the materials you use and the time you spend so they fit in that price range.  Deciding whether to use 14K gold or gold colored settings for the jewelry you make is an example of this.
Pricing often goes hand in hand with your reputation.  I belong to a Women's Business Network as part of our local Chamber of Commerce.  One of the other women in our group is Mary Crafts of Culinary Crafts. She started her business with the intention of having a high quality catering service and she has never wavered.  For those who ask her to lower her prices, she kindly directs them to other reputable catering companies in their price range. I'm sure it wasn't easy in the beginning, but she now has an award winning company with probably the best reputation for quality catering in the entire state of Utah.  There is nothing particularly wrong with having high prices or low prices as long as your customers feel that your product or service is worth it.

1 mad comments:

Diana said...

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