Overcoming Fears When Pricing Handmade Items
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Even with the pricing calculators and hundreds of blog posts available on the subject, pricing handmade items is one of the most difficult challenges a new business owner must overcome. And most of the struggle comes from our own heads.
I can still remember the day I first listing my handmade jewelry for sale, and I had to decide how much I was going to charge for each piece. My palms were sweaty, I drank way too much tea, and I must have revised the prices at least a dozen times!
Fear over pricing handmade items can be absolutely crippling. It can keep someone from ever starting their business. If this is you, don’t despair – you can do this.
Let’s go over how you can overcome these fears and put a proper price tag on your unique creations.
Ready? Here we go!
Gather The Numbers
When determining your prices, you must consider several hard facts:
- The cost of goods – meaning, the cost of the materials you use to make and package your items.
- Your overhead costs. Do you rent a studio? Use your car for deliveries? Pay fees for using a website like Etsy or for renting a table at a fair?
- Your time. You absolutely must get paid for your time!
Then, you may need to consider some other subjective items, such as perceived value and popularity.
Once you have this data, you can then come up with a pricing formula that you can apply to every product you sell. Not sure how to do this? Search Google for “handmade item pricing formula” to find a few to try. I like this easy pricing formula by Michigan State University.
Pricing Handmade Items Correctly Attracts The Right Customers
Inc.com had a great way of saying it – “it’s not your job to save your customers money”. (Read the whole article, too!)
By charging what your items are worth, you will attract the right customers. Because if you think someone cannot afford your items, then they are not your perfect customer!
If you used the pricing guidelines stated above then you can assume that your price is not outlandish or unrealistic – you are charging what your items are worth.
So if someone tells you that your prices are too high, then it’s just that the price may be too high for them. Your perfect customer will not even question your prices because they will know that your unique pieces are priced appropriately.
Afraid of Losing Sales?
One common objection to raising prices or charging a price that may be seen as high, is that it will result in fewer sales.
But there is no indication that this will happen! In fact, you may see an increase in sales. Perceived value is real and is a factor to consider when determining your prices. If you’re making something that is especially popular than the perceived value may be even higher than the price you developed with your pricing formula!
Of course you may see sales decrease, especially if you are raising prices after already selling your items at a lower price. But – if you are making more per sale, then you may still be making more profit overall. Plus, you’ll be paid what your product and time is actually worth.
Think about it – if you are undercharging for your items, you will eventually start to lose money. You will not be able to keep your business going, since you’re not being paid enough to cover your materials, your time AND make a profit.
Thoroughly Cover The Benefits of Your Product
When creating your product listings or talking to craft show customers, make sure you lay out the benefits of your items. Make a list of why your creations are so valuable and unique.
Do you use a technique you created? Do you source high quality materials that your competitors don’t use? Have you been creating your items for 20 years so you have a wealth of experience that goes into each one?
All these points are validation that your products are worth their price. And seeing this list can help YOU be confident with your pricing. The more you embrace what makes you and your brand unique and valuable, the more confident you will be, and your customers will respond in kind.
Pricing Handmade Items Is Both A Science and An Art
The best advice I can give you when it comes to pricing your handmade products, is to do the work, then have faith in yourself!
By doing the work, I mean gathering ALL of your costs, looking at the market to see what people are willing to pay, factoring in your time (and how much you want to get paid for it), and then using a pricing formula.
Then apply the art to your process. Think about perceived value and the current market. Factor in any possible fluctuations in your costs. For example, if you purchase materials that can increase in costs frequently, then you may want to factor in this increase now, instead of having to raise your prices again later.
Or maybe you make handmade clothes that come in several sizes. Of course the larger sizes are going to use more materials, but customer perception is that all the sizes should be the same price. So then you’ll need to develop a price that subsidizes the increased cost of goods for the larger sizes.
All of these research and prep work will not only ensure you’re getting paid enough. It will also increase your confidence in your pricing. Knowing that you did your due diligence and came up with your prices based on facts and the market can help squelch some of the fears you may have about selling.
I hope these tips give you a little peace of mind when it comes to pricing your handmade products. You are worthy, you deserve to get paid for your time and effort, and you deserve to make a living!
The Business School for Makers
The Business School for Makers
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The Business School for Makers is your one-stop-shop for getting your craft business up, running, and making money.
Get all the details about the course here: The Business School for Makers. Let’s get you set up the right way (without the side of stress!).
