Why does that t-shirt cost $75?

A really great "food for thought" article by a handmade clothing designer about thinking through what really goes in to making her work. http://whatthecraft.com/overpriced-cant-afford-handmade-pricing/

Resource Article: Plain Speaking & Etsy Success

A great article from the outright.com blog that helps translate basic "Etsy Success" business advice into really simple step by step explanations: http://outright.com/blog/decoded-analyzing-etsy-success-tips/

There are some everyday success tips that will work well for almost any Etsy shop. The good news is these tips are simple, basic business steps. Though they are simple and basic, they must be implemented correctly. What if you’re not sure how to take apart a bit of advice and make it work for your shop? Here are some proven Etsy success tips, decoded, to make them easier to understand, implement and benefit from.

(Happy Leap Day everyone!)

Mini Critique: Pricing your Products

So this week, Kara of The Felted Posey has agreed to let me critique her shop. She had several things she had questions on so I just picked one I hadn't covered yet & went with it.

The Felted Posey on Etsy

So today, we'll be tackling Pricing!

Okay, this is going to be a quickie!

There's no need to take a look at The Felted Posey's shop prices or for me to critique them. This goes for any shop other than my own as well. Why? Because I have no clue about what goes in to making the products you offer in your shop. Only you do. That means that today's critique is going to be a self-critique for you to do on your own shop.

Now you need to be thinking about the following things when it comes to pricing your products.

1. Cost of Materials
2. Cost of Time/Labor
3. Associated Fees
4. Overhead Costs
5. Profit

Let's talk about each one separately.

Cost of Materials

This is the cost of everything you use to make your product. Everything. Thread, ink, glue, beads, tags, dye, paper, whatever it may be. You need to come up with a materials cost per item. 

You need to come up with this cost based on what your materials would normally cost. Not their cost if you get them on sale, but what they would be normally. You may not always be able to get materials on sale & if you calculated your cost based on what you got them for on sale, you'll end up losing money. Make sense?

Cost of Time/Labor

Pretty self-explanatory. First off, how much do you want to make per hour? This should be based on the skill required to make the product. Second, how long does it take you to make this product? Now calculate your labor cost. Is it reasonable? 

Keep in mind that your not going to be extreme here & decide you want to make $20 an hour, make a handmade, embellished thank you card, & charge $20 just for your time. No, you're not going to do that. Make it reasonable please!

Associated Fees

This includes your listing fees & the fee that Etsy gets from the sale. This should also include your PayPal fee if you're using PayPal.

Overhead Costs

Overhead is all the little things that you're supposed to keep up with for your business. That is if your running your business for profit. Overhead includes things like electricity, internet costs, wear & tear on equipment, rent, that sort of thing. Most of the time you can calculate a set amount into each product to cover this. 

Profit

How much do you want to profit on your products? Don't be stingy. This isn't going directly into your pocket. You get paid from the Cost of Time/Labor, but the profit belongs to the business. It gets reinvested into more materials, better equipment, hired help, etc. That's the way it's supposed to work. Profit is usually a set amount or percentage of the total cost of the item. It doesn't change based on the product. 

You calculate your materials cost, your time/labor cost, your fees, & your overhead then double it or triple it to get your final price. You profit per product is based on whether you doubled or tripled the cost or whether you increased it by a percentage...whatever you choose. 

That final price is considered the retail value or retail price of the product. That's what you sell it for to individual people buying it directly from you. It is not the wholesale price. Wholesale prices are lower.

Here's an example:

You're making a crocheted skirt. 

Materials: $4 {yarn, button}

Time: $10/hr. - 2 hrs = $20

Fees: 10% total price

Overhead: $2

Profit: 100% {doubling}

Materials + Time + Overhead = $26 x 2 {profit} = $52

$52 x 10% {fees} = $57.20

Retail price = $57.20

Okay, I hope this has helped you. 

Have you been pricing your products correctly or not? Let me know what you've been missing below!

Hugs, Meagan

Wanna learn more about growing your creative business. Connect with me on my blog, Facebook, or Twitter!

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.