Wednesday, October 8, 2008

The fine line of pricing...

Pricing is probably one of the hardest components of running an Etsy shop. Etsy prices seem to be (confusingly) cheaper than you would find in a store, and with such a large amount of sellers can be very competitive! Being an international website also throws exchange rates and fluctuations into the mix – which makes pricing a bit of an art for those based outside of the US!

But wherever you are running your shop from, there are several things you must take into account before setting your pricing. Its all well and good deciding on a nice round figure, or ‘just charging what everyone else does’ – but if selling on Etsy is anything than more than a hobby to you, this approach won’t work.

When pricing, remember there are no hard and fast rules, but by taking the following into account you can break it down so that you’re not taking a stab in the dark!

The first thing you must do before looking at the money aspect are to answer some important questions about your shop:

1. Is your shop full time, part time, just a hobby?
2. Will this be an income or extra money?
3. Who do you consider your target audience?
4. Do you want your prices to be competitive?

It is very important that you know your target audience, and in depth. For example if you sell gloves – your target audience IS NOT ‘anyone who wants to buy gloves’. Think about it, many people want gloves, but there is a large difference between Paris Hilton and Mr. Average when it comes to buying gloves!

You then need to consider and note the following –

1. How much profit do you hope to make from each item?
2. How long does it take for you to source your materials? Make a pattern? Research?
3. How long does it take to make each item?
4. How skilled are you in your craft?

Now you’ve had a think about your shop, work timings, effort etc you can look at the actual costs.

I’m not going to note everything you need – I’m going to direct you to a free downloadable spreadsheet made for Etsy.

Chris Parry has put this together (and it has been used by thousands!) it includes everything you will need to factor in – take your time and work through it, the questions you have thought about will help you to decide on your preferences. It’s a very good starting point, and includes lots of factors you may have never thought to include.

The figure you will get at the end will be surprising – and again is not the be-all and end-all of pricing. Use this figure as a baseline, and apply the answers to the first three questions to this figure to get a price that you are happy to work with.

The only other thing I have to note here is to VALUE YOUR TIME. It’s very hard on Etsy to get caught up with the thousands of others who are fighting with each other to sell the cheapest item. You know yourself how much time and effort you put into your piece, make sure you charge for it !

lishlash runs her UK etsy store selling paper goods and jewellery. She is a frequent writer for this blog.


Kits and Caboodles said...

I agree. Remembering to pay yourself for your time is vital. I have many items in the Paper Goods catagory, and I see so many things insanely underpriced. I purchase similar materials so I know they arent making much, if any, profit on those items. Remember also...
People equate quality with cost. You are not helping business by offering an inexpensive item. You might be hurting your business in the long run by giving the impression that your time and product are worth very little.

Great post! Thanks, that spreadsheet is awesome.

Julia Catherine said...

This is an amazing article with basics of pricing. Main points are that you need to take into account your costs and what you want your hourly rate to be. The spreadsheet breaks it down to how much you want your yearly salary to be.

It is important to NOT devalue your work and underprice your items. When you do that your doing a disservice to other sellers as well as yourself!

Quercus said...

I absolutley agree. I may not have huge shop overheads but it's important to my self-esteem as well as my business that my prices are accurate.
That spreadsheet looks great.