This month we’re asking the makers about pricing.
Lately there’s been lots of talk on here about how to price things and we thought it would be a great idea how we each came to our current prices. What’s really important to note is that we acknowledge that our prices are continually going up. That’s great news, right?
Pricing is the hardest part, it always have been and, unfortunately, will be for me. I researched how to price handmade items a lot and tried to apply to formulas to my creations but it never worked for what I make. My items are time-consuming and sometimes I have to add a little more to one item to cover for the others. Small items can only cost so much but sometimes they are the most labour intensive, thus, I include a few dollars extra on the larger items as they can be priced a little higher but take as much time. The biggest decision I had to make a year ago is say no to wholesale, of now anyway. There was no way I could include the wholesale margin in my pricing and still be competitive. I also didn’t want to compromise with the designs by making them simpler (not including the embroidery for example). Thus I can price my items a little lower as they don’t have the wholesale mark-up on them.
I change my pricing every year. After Christmas I always sit down and work out which items to keep and which ones will go on sale and then be discontinued. Some items go at a introductory price so I see how they go and then, after announcing it to my customers, I put the prices up. It’s usually not more then $5 price change though as I try to get the price right from the start.
The pricing in my shop is determined with the old formula that many makers use which factors in material cost, time and the price per hour – but I go further than that. As sometimes I work on a project for a few minutes a day for three months, which i do realize is silly, but sometimes that’s the process for that piece, it needs to be a little more flexible than the formula allows. I like to consider factors such as material rarity (if the piece includes vintage textiles), uniqueness, availability, personalization and popularity of an item. My prices change if any of those factors change, for example, after my initial necklaces were featured in a national magazine and on TV, I raised the price – not a ton, just a few dollars a piece. I don’t follow a strict formula.
For me, pricing has always been tricky because there are so few materials involved in production of art prints. The physical cost of materials plus the time involved in printing each one is well below $5. However, I want to make sure that people appreciate my work and value it as they would that of an established artist. That perception is mostly what determines my prices. In January I’ll be launching a new line of limited edition pieces which will be going for several hundred dollars. I’m really excited about this because it will put me closer to the artists I want to be perceived with when people think of my work. It’s always important to ask yourself who you want to be associated with and then compare your prices. You wouldn’t place Toms shoes next to a Louis Vuitton bag and assume they’re in the same ballpark. By aligning myself with established artists, I have a better chance of selling my work at the price point I believe it’s worth.
Pricing is the bugbear of us all, and honestly, it’s never ‘done’. I put my prices up store-wide last year – twice – for two reasons.
One, I hadn’t raised my prices since I started in 2008, and after re-doing some calculations realised I was seriously undercharging, especially as I now had years of experience under my belt.
Two, I was getting too busy! That is, I was getting to the stage where I was receiving the maximum volume of orders I could comfortably fill, so I had to do something to decrease my load. Putting prices up meant my order volume dropped a little, but my revenue actually went up. This is a process that I will no doubt repeat again in future as my brand becomes more well-known and volume increases (I’ll be reviewing prices after Christmas and will likely take this step again this year).
I follow the pricing process outlined in this post: Pricing with the Head + Heart.
How do you price your work? And when was the last time you raised your prices?
Want to start or overhaul an Etsy shop?
Download this FREE 2-page checklist now - it's part of my Handmade Business Toolkit for Makers.
Don't make those common Etsy mistakes: make sure your Etsy shop is the best it can be!
(P.S. It’s also packed full of links to additional resources on all aspects of Etsy shop setup.)