1. Am I aware of my worth?
So, what do I mean by this? Well, it is widely understood that “handmade” to many people, means cheap. When, in fact, that couldn’t be farther from the truth! There is a big difference between giving a discount to close friends or family and just undervaluing yourself to the public. I have spent nearly my entire adult income on pricing my own time. I have almost always been self employed, so trust me when I say, it is hard to confidently price your time and skill at first. You may see it as “asking” for money, but you shouldn’t! You are delivering a quality product that took, time, years of skill and knowledge, materials and lots of care and love. Let’s say, for instance, that you sell handmade scarves and beanies. This may seem like a simple and easy product for you to make now, but think about how daunting it was when you very first started! It is only easier for you now because of all the time, attention and practice you have put forth to be better and better and provide that excellent quality beanie. There may be millions of people out there that do exactly what you do, but there are also millions that don’t, and that is why your skill is special and unique to you. You should be aware that you are making an awesome product that many people covet!
2. Am I making a profit?
This one should be obvious! Are you making a profit? IF you are actually selling an item that you poured so much hard work into, I would assume that you would at least want to be compensated? Let’s break it down. At the simplest level of pricing you should be including,
1. How much you spent on the materials.
2. How much you’d like to be paid hourly.
3. How much time you spent creating the product.
4. What percentage of markup you want to put on the product.
I’ve heard from makers far too often, “Well, I made back may materials cost, so at least I didn’t lose money.” If you have found yourself saying this at some point in time, I’m sorry, but you did in fact lose money. There is so much that goes into making and selling an item other than just how much you spent on materials. If you sell online, you need to think about how much your website costs you, what processing fees are taken out by your site host. If you’re selling at a market, you most likely have a booth rental fee and setup and prep that goes into it. If you’re real lucky and can somehow sell for free (no overhead charges) then you should still be taking into account that you’re basically “working for free” if you just make back the money you spent on materials. It would be the equivalent to showing up to work, making an item, and going home, unpaid. You didn’t lose any money from it, but you also didn’t make any, so you’re right back where you started. You have to look at it as a business, not a hobby, and once you start taking your business seriously, others will too!
A great, easy and FREE app that I’ve found in the apple app store is the Craft Pricing Calculator App. It includes all 4 elements I mentioned before and gives you a fair pricing for your item. It has the retail profit markup preloaded at 40% since that is standard with most retail markup items. But you can change it to be more or less depending on your preference. (Please don’t make it less though, remember what I said about valuing yourself!)
Here I’ve included a sample pricing (screenshot from the app!) I’ve marked the material cost at $10. Next, is the number of items made from that material, 1. Then, you calculate how much time you spent on it. For the example, I put 2.5 hours, (some may be more or less time, this was just for the example.) Then, the hourly wage. Usually, I price this a little higher, but the for the example, I put at least minimum wage, since that is the very least you should be paid! And finally, the 40% markup. It displays numbers for the wholesale cost, then the retail price, which is the price you should be concerned with! It displayed a total price of $49. If you are thinking that $49 is too much to price a hat or scarf at, then you should really be adjusting the way you view handmade items. This item was not made in a factory by a machine or a robot, it was made with my own two hands and the knowledge I have to create that item! $49 is a fair price for quality and care. AND, the best news is, there are people out there who agree and will absolutely pay that amount for quality products! Now, I’m not saying that all my hats have been priced this much, this is just an example, but it is how you should be valuing your skill, time and expense that was used to create your unique products!
3. Are you selling for business or hobby?
The third and final question you should really ask yourself is, why are you selling your product? Is is because you happen to make lots of items from your hobby and want to share it with the public, or are you trying to create a brand and business? If is for the first reason, then you may want to consider gifting your items or “selling for donation”, where you have it known that you create the items and would just like to be compensated for the material costs. Or you can donate your items to charities, shelters or hospitals. There are plenty of places that will gladly take your extra items off your hands and you’d be helping people in the process! If you’re selling to create an income and a business, then you need to have confidence in yourself and your product to know that you are worth it! Always keep in mind the 4 key elements I stated above and mostly have fun! When you love what you do, your work becomes fun and don’t let your profit take away from your joy of creating. Being a maker is a wonderful thing and an incredibly important outlet for us creatives who have the need to make with our hands.
I would LOVE to hear your thoughts on this topic. Did you find this post interesting or informative? Let me know in the comments! On another note, as I stated earlier in the post, this is a really hot topic within the maker community. Some makers on instagram that consistently have great info on the topic are @knitatude and @tlyarncrafts just name a couple.
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