Pricing - {Part 2 of handmade business owning}

This is part 2 of the series I started last week on owning a handmade business...

In part 1 I talked about the difference between a hobby and a handmade business, and the work that goes on behind the scenes when you shop handmade products online.  Today I want to focus on how to price your items.

source

Last week I talked with a good friend about having a business mindset and the first thing she wanted to discuss was how to price my handmade items effectively.  In order to keep your business going, you have to make sure you are being compensated for your materials and your time.  

Pricing; it's such a tricky thing.  

How do you know what to charge and how much you want to earn.  I will be 27 in a couple months and I can say that I do want to make more than my 17 year old self working at an ice cream chain, and there is nothing wrong with that.  It's important to make sure you are paying yourself a reasonable wage.  As a shop owner, artist or designer, you have to decide how much you need to charge an hour to feel compensated, and for everyone, that number might look different.

While talking with my friend, we decided to write down every single materials cost for specific items in my shop, starting with bow-ties.  After looking at my supply list, I broke it down by how many ties I could make per yard of fabric, one spool of thread, package of elastic, etc. and came up with an individual price for each supply.  After I had the total, I factored in my Etsy and PayPal fees, and then added my 1/2 hourly wage per tie because that is how long it takes to make one tie from start to finish.  

What did I come up with?!

A number slightly higher than what my ties are currently priced.  Breaking down every single cost, fee and adding an hourly wage really helps evaluate your shop listings and forces you to ask yourself, am I charging correctly to make up my costs and earn a living doing this?  I have been in the situation where I made things for people and I didn't charge labor, I gave a big discount or I got myself into a situation that just wasn't working.  As a designer, it is so important to charge correctly.  If you under calculate your abilities and your time, you will become burnt out.  

There is sometimes a fear that if you charge more for your handmade items that people will not buy them.  Instead of having that fear, we should worry about marketing to the right audience.  If you sell organic and recycled items, you should market to environmentally conscious people.  If you sell dog items, market yourself at pet expos and on animal blogs.  If you sell handmade home decor items, find interior design sites to help promote you.  This way you are reaching your target audience instead of trying to reach and please everyone.  {This is something I am working on for my own business!}

Source: etsy.com via Michelle on Pinterest

Today I read the following:

"if you are working towards a creative business that you can make a living from, you have to be sure that you set things up so that you can earn a living wage. You have to be able to pay yourself. Or else it’s not going to work."

-papernstitchblog.com


There is so much I am learning with my handmade business, even after almost two years of having an Etsy shop.

I hope this encourages you to find what prices work best for you and your products!