As a crafter, sewer, and quilter I am amazed as I pull up auction after auction and see "handcrafted" items for almost zero dollars.
I'm assuming because you're selling on the internet you're operating a "business". The object of a business is to make money. A PROFIT if you will. How many of you crafters can honestly say you are making a profit?
Are you one of these crafters that says "Oh, well, I'd be making them anyway so I do not have to charge much if I just get the money I put in the materials back." In order for you to get the money back that you have in the product you have to charge for more than just the material.
You must charge for your LABOR, you must charge for your OVERHEAD, and you MUST figure in a PROFIT.
Is not your time worth something, that's the labor you charge. As a crafter charging an hourly wage would be ridiculous. We'd be asking $ 10,000 for an item that should sell for $ 300.00. The way to figure a fair labor charge when crafting is to determine a percentage, be it 5% or 10% but charge something for your labor.
What you spend on things OTHER than materials is your overhead. Internet fees, Phone (if you're on the Internet, you have a phone bill RIGHT? Electricity, gas, rent, office supplies, etc. This can also be a figure as a percentage. 5%, 10% it is for you to determine. But DETERMINE it.
This is what it COSTS TO MAKE THE ITEM.
Add up: Material
+ Overhead = All three = COST TO MAKE
Does this surprise you? If it does YOU ARE NOT CHARGING ENOUGH. And we have not even added in the PROFIT margin.
Once you have the total for COST TO MAKE you add the PROFIT margin. How much do you want to actually make for making your product. 5%, 10%, 25% 50% or more. This total would be your RETAIL price.
It's always good to have a WHOLESALE price as well. This is for when you sell directly out of your home, when you do not have internet fees, craft booth fees etc. So take about a quarter of what you've determined your Retail price to be and call this your Wholesale price.
If you spent $ 5.00 on material and sold it on the internet for $ 5.00, you would be PAYING somebody to buy your product. You have internet fees, you have gas, you have electricity, you have your time. GET IT?
This is what you SHOULD BE CHARGING. Using made up figures for Labor, Overhead, Profit, etc.
Material: $ 5.00
Labor $ 2.50
Add together Material, Labor, Overhead
Cost to Make $ 8.75
Profit $ 4.38
Add together Cost To Make & Profit
Amount to Charge Retail = $ 13.13
Wholesale Price $ 9.85
"But nobody will buy it if I charge more!" Have you heard yourself say that? Why are you putting yourself and your handmade craft down? Your product is worth it!
Make yourself a spreadsheet. Fill in the formulas that you have determined then all you have to do is fill in the material amount and the spreadsheet will figure out how much you should charge for the item. Do not second guess the spreadsheet. It's correct. You may have to play with the formulas a bit to determine what the market will bear, such as, a bazaar in the local grange hall is not going to get you as much money as a juried craft fair, You'll have to lower your percentages but you'll always come up with a spreadsheet that works well for you and you will be MAKING A PROFIT.
Many crafters take the material cost and times that by 2 or 3 to get their selling price. For example: Material Cost = $ 5.00 X 3 = $ 15.00 Selling price. This is an easy way to figure out the selling price AS LONG AS YOU STICK WITH IT. I wanted to show you how each equation figured into the charging formula. Material … Labor … Overhead … = PROFIT.
Get started TODAY, Charge more for your product. It's worth it. If you're selling it on the internet or anywhere else you deserve to be making MORE MONEY !!