So you’ve started a handmade business, congratulations!
You know your product as well as the work and supplies needed to produce it, but what price do you sell it for? As a creative, this will be one of the hardest things to master in your business.
Unfortunately the old “cost of materials x2” just doesn’t cut it anymore.
What about your time? What about your overheads? Equipment?
I’ve created a simple (as simple as I could get it) spreadsheet with options for pricing one product or multiple products depending on your processes.
It’s a great place to start when setting up your business. It’ll get you thinking about how much time you actually spend making your products and you can also assess other parts of your business to help with long term success and sustainability. For example your material costs and overheads are they too high?
Going through the process of pricing your products correctly as well as understanding your business and how you spend your money is a really important exercise to do.
Do Your Research
When pricing your products and choosing the best mark up, it’s a good idea to do your research. You need to understand your target market and what they’re willing to pay.
If your price is too high or too low you could drive away sales.
If your target market is high end but your materials are low quality, yes, you’ll earn more profit by charging a higher price. But at what risk? Selling a sub-par product, and risking your audience believing the quality and pricing don’t match up or make sense.
Do you have a mid-level product? Then price it mid-level.
Want to sell a high-end product? Use high end materials and charge a high-end price.
There is an unspoken desire for a certain level of quality based on price. Higher price, higher quality.
‘You get what you pay for’.
Know Your Competitors
Pricing your products like other successful businesses who sell to a target market like yours is a good idea. They’re selling to a market similar to yours with a product of comparable quality. As long as it works with your costs calculated in my product price calculator!
When you research your competitors and gather a handful of prices, you’ll see that everyone prices their products differently, despite similarities in product and quality. This is because they have different overheads, materials and mark up in their own way.
So, I’m suggesting you do your research and see what products are available at what prices but don’t copy just to fit in.
It’s important not to under-price your products. This isn’t beneficial to you for creating a profitable business but it also has a negative impact on your whole industry.
When you’re just starting out in business or moving your mindset from hobby to business it can be difficult in deciding your price points. But I guarantee once you’ve made some sales you’ll feel more confident about pricing your products for what they’re truly worth.
I hope I’ve given you enough information to help you on your way.
1. Use the calculator
2. Understand your target market
3. Research your competitors
4. And don’t stress! If your prices aren’t working, re-evaluate!