Well, well, well, we are finally getting to the good stuff. If we are being honest here, Pricing is a struggle that a lot of us creatives struggle with. We tend not to pay attention to the time it takes to complete our works because sometimes its just too gosh darn fun. Then there is that little voice in the back of your head that tells you "Hey dude, why do you think you are good enough to charge a decent price for that?!". Well I'm here to tell you that the little voice can be silenced and a lot of it comes from sitting down and doing a little bit of bookwork that will carry your little hobby into a full blown business.
When I first started, I listed a few items. Some single flowers and some bouquets. The first bouquet I sold on Etsy was a whopping $25. ( I sell that same size bouquet now for well over $55) It took me an embarrassingly long time to actually sit down and figure out if I was really making a profit. If you're curious, I didn't start turning a profit till about 3 years into my Etsy business journey. That said, I believe that there were a factor of things that kept me from turning a real profit. (One of those was for sure my inability to sit down and do the math needed to succeed.)
So that you don't make the same mistakes as this girl, let's go over a few aspects of pricing that most "creatives" don't take into account when they are sucked into the excitement of selling their handmade "masterpieces." That's right! I said "masterpieces" and the sooner you start believing it, the easier it will be to put the "right" price on it. Now, let's dig in!
1) Cost of Materials:
These are rough estimates and can be adjusted to suit your personal needs, but I will give you a formula to work with that I use in my business.
I mark up my materials (retail) costs by 2 (x2). For example, if my wire stems cost $2/12 stems, that's .16 cents per stem. Double that cost (.16×2=.33). So, I'd mark up to .33 cents per stem.
For wholesale materials, I use a 3x-4x mark up. Those same wire stems, I can also purchase at wholesale for .53 cents per pack of 12 plus (.50 shipping). Shipping costs need to be dissolved into your wholesale and retail cost as well.
For 60 packs of wire, I spend roughly $30. At a cost of $1.03 per pack and .09 cents per stem, multiply .09×4. That gives you a total of .36 per stem. Use the same formula for "each" piece of material you use to create that final product. Some of my major costs include: paper, wire, glue, beads, floral tape and ribbons.
2) Labor: (Hourly Wages)
If you are just starting out and not completely confident in your craft, it's okay to start out with lower wages. Just be sure it's worth your time and is a livable wage for you. This will vary from city to city so don't get caught up in comparison with other artist. They may be charging twice as much as you but they also may be living in an area that has super inflated cost of living. Figure out how much YOU need to make to thrive and go from there.
As you gain experience and confidence in the quality of your work, you deserve to charge what you are worth, so don't be afraid to give yourself a raise every once in a while.
It's not a crazy thing to charge anywhere between $30-$80 an hour. It's really up to you.
With a higher hourly wage though, just remember that a client paying a higher price, will expect a lot more from you. You will not only be promising them your items are expertly handcrafted, but they will also expect "top notch" customer service. This includes: consistent and open communication, care meeting their needs, high-end packaging and on time delivery. These are all essential to conveying the message that their money was well spent.
To breakdown an hourly rate to apply to your item cost, here is an example. If it takes me half an hour to complete a crepe paper rose and my hourly rate is $30, I would charge $15. Of course, this rate is added to your materials and other costs (if you choose).
3) Etsy Fees:
I have heard quite a few folks say that they are afraid to start an etsy account because they don't want to pay for the fees. Just to clarify a bit, whether you decide to use Etsy, another platform such as Amazon, or your own website; You will have to pay a 2-4% fee for any of them. If you decide to use your own website that fee can go up to more as you pay your website company a percentage plus a card processing company another cut or your profits. Just something the think about when you decide to choose a platform.
Etsy charges .20 cents per listing and 2% for each item sold. When you have figured out your hourly pay, costs, materials and cost per item, add the .20 cent listing price. Total your item costs and use this formula to get your total list price.
Item price × .02 = ? + item price = final price + .20 = List Price
For example: $15 × .02 = .30
.30 +15 = $15.30 + .20 = $15.50
Alright! Now that we've covered the super fun math stuff, let's get you back to the creative content. Next up? Photography and item descriptions:
Click here for Day 2: Getting specific in shop policies
Click here for Day 4: Descriptions and Photographing
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