One of my least favorite things in the world to do is ask for  money. The worst part about opening my etsy store — by far (yes, way worse than trying to figure out all the technical stuff, which is trying, too) — has been determining prices. When it comes to naming the price for my products, I have thought very seriously several times that I am not cut out for this and I should probably just give up.

I don’t know what makes me so nervous about it. I guess I am afraid that if I don’t charge enough I’ll be taking on a lot of work and it won’t be worth it. If I charge too much, I fear that everyone is going to start talking behind my back about how I am charging too much and ripping you off and making a killing by doing so.

I’ve lost sleep over it.

I have very truly been very seriously stressing…and have knots all over my back to prove it. Maybe this isn’t the calm, collected “I own my own business” manner in which you think I should present myself…But if I don’t tell the truth, then I guess I’d be lying, right? Deep thought.

I have done lots of internet research, listened to conference podcasts, read several blogs, and have looked into all the info I’ve received from etsy. I have heard over and over and over (and over) again that the biggest mistake sellers (especially artists) make is under-pricing their work. I have looked at several formulas for calculating prices (and have crunched a lot of numbers). A formula for calculating prices looks something like this:

materials + labor + overhead = “break-even” cost

“break-even” cost + profit margin = wholesale price

wholesale x 2 = retail price

retail + additional fees like those charged by paypal & etsy (and shipping and applicable taxes) = the price that a customer should pay


I am going to spend the next several days sharing how I have broken down this formula and what it looks like when you plug in numbers.

First, I welcome you to take some guesses. Throw some numbers out there. Make some suggestions.

I’d be especially interested to know what you think a fair hourly wage would be (the labor part of the cost)?

Also, how much of a profit margin do you think needs to be added in to the wholesale price in order to cover future expenses and finance growth?

-:-

Follow the Whole Pricing Process:

General Pricing Formula (You Are Here)

Calculating Break-Even Cost: Materials

Calculating Break-Even Cost: Labor

Calculating Break-Even Cost: Overhead

Adding a Profit Margin

Adding Retail Mark-Up ?

Adding in Fees: Establishing the Final Price

-:-

I’m linking up:

The Southern InstituteSumo's Sweet StuffSew ChattyThe Girl CreativeNinth Street NotionsDIY projects and craftsBWS tips buttonTip Junkie handmade projectsTodays Creative BlogPhotobucketworks for me wednesday at we are that family Catch a Glimpse ButtonA Little Knick KnackTickled Pink at 504 Mainkojodesigns

  1. Amber Vlasnik says:

    I don’t think it would be fair for you to charge anything less than 10-15 an hour.

  2. Grammy Sammy says:

    I have been very pleased with price and quality of the items I have purchased for gifts. The recipients have commented on beauty and quality as well. Keep up the great work!

  3. Tracy says:

    This has been really helpful info!! Thank you so much for taking the time to share it! Most of the time when I’m trying to figure out prices for my items I just look at what everyone else charges for similar items and pick what looks reasonable. The only problem with that is, usually other people’s pricing is all over the place!

  4. L.A.D says:

    Thank you for posting this. I hate charging people and I always hear that I under price my items. This is so helpful!

  5. Jill says:

    I agree – it’s really hard to put a price on handmade – everyone struggles with this I know. Sounds like a good idea to come up with a ‘formula’ to work out costs!
    For a fair hourly wage? When I had my market stall I used to go on $10 per hour – actual sewing time, but then do you take into account all your other time – setting up your shop, taking photos, promotion, packaging…….
    I think you have to charge what you personally are happy with – and a lot of that depends on your reasons for making and selling! Good luck with it all!

    Thanks for linking to a Round Tuit!
    Hope you have a fabulous week!
    Jill @ Creating my way to Success
    http://www.jembellish.blogspot.com/

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