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)
I’m linking up: