A common problem for craft sellers is how to price their items. I recently posted a slightly tongue-in-cheek, but (hopefully) also useful guide to pricing craft products, on the Etsy forums. Quite a few people seemed to enjoy it, so I am posting it here too.
1 – Work out how much each item costs you in supplies. Remember to include a little for things like glue, paints, thread and other notions. I know this is a chore, but it is pretty hard to work out a price if you have no idea how much an item costs to make. I recommend chocolate to help you along.
2 – Also add in the Etsy fees, taxes etc. The total is your “I really can’t go any lower than this or I make a loss” figure.
3 – WRITE THIS FIGURE DOWN SOMEWHERE SAFE. Seriously, somewhere you actually will remember.
4 – Think about how long each item takes to make, and how much you feel you would want to “earn” per hour. Whilst you may well struggle to earn that, especially at first, it is important to help you understand your investment in each piece.
5 – Look at your competition and note down the maximum, minimum and average prices for similar products. You may find that you get a more useful figure by using the “modal average” (the number that occurs the most) rather than the “mean average” (add up all the prices, then divide by how many prices there were in your list). The mean average can be skewed if someone is pricing their products unusually high, or low.
6 – Consider whether your particular product has features that would make it more valuable than the average such item. Such as special skills you use, extra features, rarer components, your reputation/qualifications etc. If you are a well known painter, your pictures may well be able to sell for more than someone who no one has heard of. If you are a qualified accountant, your accounting spreadsheets will probably… you get the idea.
7 – Stare stressfully at all these figures for a while, then go make a cup of tea. Chocolate may be required in extreme circumstances.
8 – Pick a price. Try to come up with one that is less than the maximum your competition is charging (unless your products are demonstrably better) but also more than the minimum (you don’t want visitors thinking your products are inferior).
9 – The number you picked, minus the number you saved in step 3 is the profit margin of the item. Handy hint – you want this to be a POSITIVE number!
10 – Use the number you picked as the price in your listing.
11 – Go to bed. Lay in bed wondering if you have the right price. Decide it is too high and seriously consider getting out of bed to fix it. But don’t!
12 – The next day, TRY to forget it. Go about your business. Do other stuff. Leave the bl**dy price alone!
13 – If the item sells fast, and keeps selling – consider putting the price up a little. Or, if you are happy with the current profit margin, just enjoy the sales! Go you!
14 – If the product hasn’t sold after a particular time (you will have to work out a time based on the sales of your other products, sorry) then….
15 – DON’T LOWER THE PRICE – at least until you have reassessed your listing. Could you improve the saleability in other ways? Have you really told visitors why this is a great product? Have you included lots of pictures that show it off? Have you been marketing it to the right target market? Is your SEO ok?
16 – Check your stats and Google Analytics. Are you getting traffic to the new listing? If not – reassess your SEO, marketing and photos before doing anything else. Be sure the listing is complete and customer-friendly before doing anything else.
15 – If you are getting traffic to the new listing, but no sales, CONSIDER lowering the price a little. But be sure you compare it to that figure you got back in step 3 (you did keep it, didn’t you?)
16 – You might also try UPPING the price. Yes, seriously. There is such as thing as “perceived value”. People tend to expect that good things will cost more than bad things. If your price was in the lower area of the price range for similar items, you may be surprised to find that putting your price up can actually make your offering seem more desirable. Of course, you need to have a good description and pictures to reinforce this.
17 – Don’t keep adjusting the price! Anybody who is planning to buy, but waiting for pay day etc will wonder what is going on! And will probably not buy on the off chance you will reduce it in the near future. Be patient, young craft seller.
18 – The better you understand your profit margins, the easier it is to price. Yeah, I know this means maths and stuff, but that doesn’t stop it being the truth.
19 – Accept that pricing is a Spooky Black Art. No one finds it easy (except that person who sells the exact same item in lots of different colours so only has one price, of course).
Best of luck with pricing your craft products!
If you would like more (serious) information on working out craft product prices, please check out Episode 11 of the Craft Seller Success Podcast – Setting a Product Price for Craft Sellers. You can listen to the podcast, or read the full transcript, right here on the Tin Teddy Blog.