How To Correctly Price Your Crafts

After doing my  Guide to Markets last time, I thought it might be a good idea to share some information about pricing your crafts. This is not always an easy one to get right.  Assuming you are serious about turning your skills into a viable business, working out price is an essential first step.  You don’t want to price yourself out of the market but it’s important to place a value on your work and ensure that you are actually making a profit.

Unfortunately, it’s not usually top of the list when you’re starting out - getting the product right and venturing into the world of sales is a bit daunting and lots of people (myself included) use guesswork and comparison to set the initial price. I’ve learnt from experience that this doesn’t really work, though, especially if you are aiming to stock your product in retail stores at a future date.
There’s lots of information out there if you Google pricing crafts but I’ve done a bit of research so I’ll share some of my findings here. One of the things I found really useful was the pricing formula below:

Cost of Supplies + Labour + 10-15% Overhead = Total Costs
Total Costs x 2 = Wholesale Price
Wholesale Price x 2 = Retail Price

Taken from The Craft Professional site, it's a really useful starting point and there's lots of other great information on the site, so well worth a look!

Cost of supplies is pretty obvious; you just work out per item how much the supplies cost. For me this took a little work and time but I had a handy reference then to use for any new products. I started by working out the cost per item of my tin candle. This involved calculating how much wax was needed for the tin (175g) and then figuring out the cost of scent, wick, labels etc. As I buy wax in bulk I had to divide the full cost down until I got the 175g and the same process applied to scent etc. A bit fiddly and time consuming but worth it in the long run!

Also, another point worth noting is that if you source supplies from another country with a different currency; make sure you work out the actual cost in Euro as well as including the shipping and tax. Currency rates do fluctuate so your product may end up costing slightly less or more depending on the rate.

Labour costs are up to you really! Basically you decide on a price per hour and then estimate how long it takes to make a particular product. You might keep it at a low figure like €5.00 per hour but really I think it’s important to value your time and set a realistic labour cost per hour, like €10.00 - €15.00.

The overhead costs are an important thing to factor in and these will differ from business to business. Do you need to drive to pick up supplies? Your petrol costs then would be considered an overhead. One of my overheads is use of the gas cooker to melt the wax and I’m sure there are lots of other things I haven’t thought about related to other businesses.

When you have worked out all of the above and have a final figure, you just double it and violá; you have your sales price!

I should probably add that for items that are very labour intensive, you may end up with a price that’s totally unreasonable. What you can do in this case is lower the price to one that people would be willing to pay and perhaps add a little bit more to items which are quicker and easier to make in order to balance out your final profit.

Also, it’s worth remembering that shops normally expect to pay a wholesale rate of 50% of retail price, i.e. what I sell to a shop for €6.00, will be priced at €12.00 for customers. If you are considering approaching shops, be sure that your wholesale price gives you some profit and that doubled, still seems like a reasonable price to pay for your product. It’s important also that the price that the shop charges is the same as the price you charge at markets or online. There can be small differences of course but no shop owner will be happy if you are charging half their price at a market down the road! They’ll be very reluctant to order from you again.

What if you need to change your prices? Well, as it took me so long to get my own prices right, I can totally understand that you might need to do this. My only suggestion would be that you increase slowly and if customers question it, you can just explain that the cost of supplies necessitated a change in price. There really isn’t any point in putting in endless hours of work if you aren’t making a profit unless you decide there’s too much work in running a business and stick with doing it as a hobby.

My final little piece of advice is for when customers question your prices. I’m willing to bet that anyone who has ever done a market will have heard the comment ‘that’s very expensive’ or ‘I saw the same thing for half the price somewhere else’. When I was starting out I felt almost guilty for charging people for my work, and set prices too low as a result. Now I’m firm but polite and stand my ground and I’m quite happy to explain all the costs involved. At length if necessary!

I think that doing a proper calculation of your prices makes you feel a lot more confident and places a value on your time and skill as well as giving you an awareness of the real cost of making your product. So, go sell with pride and check out some further links below which may be useful:

This one is a little more complicated but has good information:

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  • Unknown
    Unknown 10 March 2014 at 17:38

    Great info Cliona and I have realised like lots of others that I never calculate the price correctly. I love that formula and I think I will place it in VERY LARGE print on the wall beside my desk! x

    • Cliona Kelliher
      Cliona Kelliher 13 March 2014 at 20:14

      Yes, it's a great formula, I've always found it really handy as a base guide, otherwise it's hard to know where to start with pricing!

  • Stephanie 139a
    Stephanie 139a 17 September 2015 at 21:26

    That's really interesting - and useful - I think there's a natural tendency to undervalue what we do and then wonder why there isn't any profit! :/

  • Aly
    Aly 17 September 2015 at 21:45

    This is great to know as most people think homemade products are over priced.Now I see it laid out like this, I can see why makers should price their products accordingly.

  • Joanne
    Joanne 17 September 2015 at 22:06

    This is a great blog post for new business owners, I am constantly amazed at how little people value their talent and can see they'll end up with a loss if they don't change their pricing. Turning a hobby into a business is learning a whole new mindset if your not a natural business person. I personally would love to photograph and give everyone beautiful framed prints for free (unfortunately I'm not a millionaire!)

  • Unknown
    Unknown 18 September 2015 at 09:14

    I'd love to craft more and the thought of selling my crafts has come to me before, but I never knew where to start! Thanks for the tips x

  • Emma T
    Emma T 18 September 2015 at 10:25

    Pricing is so hard, especially if you're getting compared to mass market prices. When people start making their own, they then realise how much items really cost.

  • Unknown
    Unknown 18 September 2015 at 11:21

    This is really useful for me right now, I launch my children's clothing line in December. Although I work in fashion so know a little bit about mark ups already, it's really good to read over posts like this to make sure I don't miss anything x

  • Unknown
    Unknown 18 September 2015 at 11:27

    This is a great post and includes all the things you need to take into consideration when putting a price on your work, great tips

  • Unknown
    Unknown 18 September 2015 at 13:12

    This is very useful, I'd love to get into crafts properly but I don't know if I could make it a business! As far as upping prices goes, at the end of the day stuff costs money, supplies, etc, so prices going up is natural. I think people will always find things to complain about with pricing though! :P Exchange rates going mad can also have a huge impact on supply prices. If I ever go into selling crafts I'll definitely have this blog bookmarked for pricing :)

  • Unknown
    Unknown 18 September 2015 at 13:37

    It' must be really hard parting with things that you've invested alot of time into making. I know I would find it difficult.

  • Victoria - WTPP
    Victoria - WTPP 18 September 2015 at 20:09

    I need to show my friend this post! She often asks what I would pay for particular items and undercharges.. She's fab! I think people need to remember how much hard work goes into hand made crafts xxx

  • Unknown
    Unknown 18 September 2015 at 22:05

    I have a friend who has started a craft business and I think she would find this really useful. Thanks for sharing, it's valid for all aspects of business.

  • Joanna Victoria -x
    Joanna Victoria -x 18 September 2015 at 22:45

    Interesting post and very useful.

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