Along with the joy of creating are things that you have to do for the business end of the deal. We all struggle with the business aspect of things that must be done if we are to continue to create and sell. Pricing is one of those confusing topics. I see pricing in selling venues for like items that go from the ridiculous to the sublime. It can be confusing to a buyer to see like items with such a wide range of pricing and it shows that someone is not being realistic.
One of the first things I did for my GalleriaLinda Artist-designed Jewelry shops when I started selling online was to research pricing formulas for retail. I came up with several different ones. After studying them all, I decided to use one that best suited my business.
One pricing guide, Pricing Your Handmade Jewelry, impressed me the most with the details of pricing and is a resource guide from The Beading Emporium by Ebay powerseller cloudninecat. The guide uses jewelry as examples but you can easily translate the process to any product you may sell.
From a strategic standpoint, did you know that your pricing becomes a part of your branding? Are you known for inexpensive items, expensive items or moderately priced items? This is a part of "who you are and what you do," and how you position your products, your business, and yourself as an artist.
As you read resources and mull over where you fit, here are a few things to think about relative to your pricing:
- Know the actual cost of materials in a piece
- Know your annual operational costs (utilities, equipment, rent, etc..., so you can assign a percentage to each item)
- Assign a labor cost for your work (some start out at $8-$10/hr and work up as they become more known and proficient)
- Select a pricing formula that best suits your business in the moment - your pricing needs may change as time goes on - be flexible and fluid (be conservative if you are new to the craft)
- Keep in mind wholesale pricing for inquiries (don't price your goods so low that you cannot give any discount for wholesale. You may not want to wholesale at this time, but you never know if you will want to in the future - now is the time to be proactive and prepare)
- Research your product's competitors - it is very important to understand the market in which you are entering and what your competitors are charging for like items
- Research what has sold online that are similar items to yours - research frequency of sales and the prices, if available
- Understand your selling venue audience - some target those who spend a lower amount, others target a more affluent audience*
- Above all, once you work through this entire process and come up with a retail price, be realistic with what the market will bear (you may have to back down your retail pricing on an item if it is "priced out of the market," and this goes back to the importance of buying raw materials at the lowest cost)
*A note about your choice of selling venues: each venue targets a different type of buyer or audience. It is important for you to know what that is in terms of affluence, average price of sales, and the aesthetics appreciated from the buyer. See Indie CEO's post on selecting the right selling venue as a good resource to help you research these things.
ThePrettyPeacock has posted a good pricing article on her blog that is worth reading! Checking the blog roll of resources here on Indie CEO on the left side will unearth several articles on pricing.
Let me know through your comments if you would like to see more links on pricing handmade goods - I will research for you!