 |
|
|
Story by
bethela
Published on October 10, 2007 in How-To |
Photo by barbie2000 |
Beth is an admin at Etsy on the Business Operations Team. She is writing about pricing in a multi-part series, so ask her your questions in the comments below.
Figuring out how to price your items can feel like the most challenging part of selling. Don’t worry, it's normal to feel a little overwhelmed. Fancy business schools devote full semesters to this subject. And the one thing they teach? There is no magic pricing formula. Fortunately, pricing is more art than science, and Etsy is full of great artists.
If you are running your Etsy shop as a business and not just as a hobby, the first thing to do is to cover your costs. Direct costs include:
- materials used to make the item
- packaging
- PayPal fees
- Etsy fees
Even include that yarn that you dug out of the closet where it'd been stashed for years or those buttons your next door neighbor gave you; these are materials you could be using for something else, like design fees, the internet in your home office or rent utilities.
Indirect costs may include machinery: for instance, a large loom, or payment for access to a darkroom or a metal shop. These costs should be factored in as well.
Next, consider your time. Think about the time it takes to create the item and list it. On the creation side, don’t forget the time to design the item as well as the time to physically make it. Include time that might otherwise be considered “down time,” like working on the item while at your table at a craft fair, knitting on the bus on the way to work, or spinning during your favorite television show. In addition, remember it also takes time to take a great photo, to list your item, as well as to carefully pack and ship the item.
(Picture by gisarah used by permission)
On Etsy, sellers don't fold the cost of shipping into the price of the item; it's a separate but real cost you need to consider. When you list an item on Etsy, you are responsible for calculating accurate shipping amounts. You name the cost of shipping for your customer to pay. In determining the shipping prices, don't forget to think about insurance, tracking, or international shipping costs (for articles on shipping and packaging, click here).
Consider how much you want or need to make for your time. This is how much of a wage you're paying yourself. This is particularly important if are looking to quit your day job. You need to make a profit to make a living. You deserve to be paid for your efforts, your time and your creative talents.
Danielle, an Etsy Labs admin, had this to say from her education at art school and her experience being a fulltime Etsy seller (preciouspups):
"Here's one way a professor of mine taught us pricing. Figure out how many pieces you make a day. Figure out what salary you need to be paid/would like to be paid. Figure out how many pieces you can make in a year and then divide your desired salary by this and see what you come out with. Most people will find they are selling themselves way short."
Once you know your total costs and total time to make the item you can start to think about price. Many of you sellers have your own calculations, no doubt. Share them below in the comments. We want to hear what you think! Check back for the next segment on Competitive Pricing.
| Tags | Art of Pricing, business, costs, expenses, HOW-TO, pricing, Seller Handbook, selling |
|---|
50 comments Login to add your own!
bopdotdesigns
this article is very helpful! I like to think of etsy as my retail shop (as a general rule retail is 2X cost+labor). take all of the costs (packaging, materials, tools, etc) and TIME into consideration. and double that amount making sure that you are making a fair wage. always think of the # of hours you have been working.
I think this pricing is very fair to customers too. they understand they are getting a quality hand-made product. I also like to compare similar products' pricing by browsing other etsy sites. in a perfect world, we see that if an item is priced higher there is a higher quality of material used.
ok last comment: I have been very happy with the quality i find on etsy and the prices that go along with them. if a shop has a great balance in price, quality materials and craftmanship it's bound to be a hoot.
shoshonasnow
This is an excellent discussion!
It is also important for buyers to realize that some of us on here also sell in galleries and shops and need to keep are prices on Etsy in check with those prices. Most galleries and shops take a much larger percentage of your sale than Etsy and Paypal fees total up to. I can usually still offer my work a little less than in the "real" world by offering work that is exclusive to Etsy.
Yay! for making a living at what you love!
bethela
Thanks for the great comments so far. In response to thefunkyfelter, pricing is a challenge, particularly in a highly competitive market. Sometimes making your best estimate and a little trial and error is the way to go. I will looking at this issue more in-depth in my next article.
Shoshonasnow brings up an excellent point about "Channel Pricing," that is the price of your items in different places, such as in gallerie, boutiques, etc. There can be differences in price, but large differences may cause confusion, as well as frustration from the other venues.
peelapom
Great topic! Right now my artwork is a sideline, but I would (of course) love to do it full time. Pricing is a HUGE question for me. The work I do tends to be very time intensive, so I have to factor that in, as well as materials, but I also look at artistry. I do both entirely original designs and pieces that have a modification of something else. I charge more for the thoroughly original pieces because they require more artistry. The others require skill and craft, and artistry, but in a different way.
I think how badly you want the sale vs. how much you value you work work also has to come into the equation. And of course -- what the real market value for your work is.
But I ramble! Great topic and I look forward to the rest of the articles and discussion.
RealReal
While I think looking at a shop's competitors is good practice from a sellers perspective it can be a bit of a trap. Nothing on Etsy is a commodity, with the exception of some supplies, things are unique and should be priced accordingly. I know when I am buying, I am not comparing the prices of similar items. I find the item I want and if the price is reasonable I buy it. Often I buy a more expensive item because I believe the price also shows me something about how much the seller values their product.
wonderamy
While I try to be logical about how I price things, I have found at times it's also an emotional issue. With my paintings (which I sold early on in my Etsy seller days), I knew I had priced something too low if I felt like crying when I handed it to the post office clerk! So much of our heart and soul goes into some of the things we make. Pay attention to your gut when you send something off...was the amount you got paid worth it, given your attachment to the piece?
XOHandworks
bopdot-
If "as a general rule retail is 2X cost+labor," how do you figure your wholesale cost? This seems way too low to me ...
Craftiejean
Over the years I have known it to be X3. This is what my momther & great grandmother has always told me. And I have also come across a lot of people that has always done it this way... So if your cost is $5 wholesale would be $10 and retail would be $15..
PicturesofLily
I look forward to the next segment on competitive pricing. I know when I started selling here, I wanted to make sure my prices were not to much higher than similar items from other sellers. I figured if a customer could buy say, some magnets for a few dollars less somewhere else, why would they buy from me? Since the beginning, I have learned to have more confidence in my work. Now, I think that if my prices are a bit higher than those of sellers selling similar items, it's OK, because someone will like what I have enough to pay what I am asking.
How nice it would be to have an incredible, unique item that is in such high demand that I could dictate the price completely. I can dream.
sharonoyoung
I agree with peelapom about the work we do being labour intensive, but sometimes it's not feesable to cost the work according the hours spent on it. I try to find the middle ground, bearing in mind that I'm an unknown artist, but at the same time all my work is original and should therefore be worth more than a copy. But at the end of the day, what counts is that somebody likes tour work enough to want to buy it.
A great, much needed article, looking forward to the next segment.
phbeads
Great information. I use a different formula but will now work out prices a couple of different ways to see if I'm on the mark.
DesignsByTrisha
Thanks. That is the hardest part for me. Your help is greatly appreciated.
CreationsByKari
Thank you for this information. I think I fear charging too much and not making a sale or charging too little and not getting a fair amount for my efforts. Setting prices is hard!
BigSky
Thanks for the great series of articles; looking forward to more. I have found that, at least in the wholesale aspect of my business, there is a "wow" factor on some pieces that justifies the price being a little higher. But I certainly struggle with pricing myself!
AthenasDisciple
I have a formula for this that is a bit complicated to talk about too much. But I basically record time for everything and seperate it all out so that I can specify time for a specific item vs design that can be recreated. Also listing time for retail. Also record and categorize all fees. Have a formula built in excel that figures out a retail price and then cuts it in half for wholesale. The wholesale price has to be at least $10/hour for it to be worthwhile, and thats not even that much, but I'm just getting started in figuring this all out.
Excel is your friend. :)
FrenchTouch
This is a great article, thanks! Based on this, however, I definitely charge too little! But with euro/dollar rate being what it is right now, I'm afraid my items would not sell if I set higher price. Ah, the dilemma of pricing!
Vanessa
Ah, international exchange rate is something to take into account too!
momomadeit
it is a struggle. i want to be able to offer folks a quality made item at an affordable price. if i did the 2x cost+fair labor, then a simple cotton apron would be in the $32-38 range. in my mind, i don't think an apron should cost more than the clothes it was designed to protect. i know there are sellers getting that and more, but i guess i want to keep it more realistic. and with consumerism the way it is today - just because you can, should you?
i have had several wholesale inquiries lately - and i can't see wholesale being profitable for me as i can sell my things at half my listed price as i would be essentially giving my time away.
tlsexton0913
I know this article is somewhat old, but I would like to offer this. I just listed my items on another site and I had to list them in Euros. The dollar is falling in value and the Euro is now worth more. How do you account for this when figuring your costs?
On another note, I am using the x2, x2.5, or x3 rule. Since I make jewelry and I don't pay attention to time I use a different formula for labor. This has been an extremely helpful article.
I still feel like my items are overpriced even at x2 and I keep very detailed records of what goes into each piece of jewelry.
dinaladina
Thank`s for the help! Great discussion.
I always have a problem when I want to know the price for my work, and the problem is : most of the pieces I create take too much time to make, so, I can never get the fair value for my work. If I take the fair and real value for my time, how can I get a competitive price?
sugarplumbaby
Thanks for the info. I find pricing to be the most difficult aspect of my running my shop. I make a lot of fabric labels and they are time intensive from start to finish. I'm trying to stay competitive and offer a quality product while still paying myself a fair wage. Sometimes I loose money because the time involved in design or fickle customers and communiction delays, keeps me working on a single, particular label for double the normal processing time. Nothing I can do about that because of the made on demand style of product that I offer. In the end I do feel that I'm doing a pretty good job at staying on the plus side of profit.
GarySnyder
I would modify the recommendation such that you compute the labor component using what you would have to pay someone else to assemble the item, not by what you would be satisfied with per hour. If you are a business, and want to be a successful business, then eventually you are going to have to grow, and that means getting and paying for help.
My model is cost (materials + labor + overhead) x 2 = wholesale, and wholesale x 2 = retail.
If the retail price seems like it's going to be "unsellable", then I don't make the item. I find an item I can make within those boundries.
miguez
Thanks to your article and to all the other comments. I got featured on Handbag Designer 101 and I received a comment that my prices are too low.
It made me think and realize that I am really underestimating my product.
Here's another article that might also be helpful:
ClockworkZero
taking photos is something commonly missed I suspect. I spend quite a while with my photos - not just taking them, but resizing, editing, rotating, adjusting for colour.. whew! it can really add up. Even though I increased some of my prices from what I used to sell... I sometimes get told: its is still too low! I'm always shocked.
luckyloulou
thank you for all the comments... I am doing 2x's cost right now and not selling wholesale at this time because I dont want to raise my prices to my etsy cust .. hummm lots to think about!
nicoleleeartistry
Wonderful article! I was seeking this exact information because a buyer sent me a convo to ask if I accepted "best offers" on my work. I have already COMPETITIVELY priced my items (and in some cases, perhaps underpriced - which needs to be changed) and I was initially insulted, but my immediate second thought was that it was my opportunity to educate the buyer on pricing and the value of my hand made, one-of-a-kind items. This article, along with the many forum threads I read, really assisted me in formulating a response to the interested buyer! Thank you!
windyrbs
I wish I knew how much to pay myself versus how much I wish I could pay myself. For my time, so far, I've been figuring about $0.75 per minute. But even with that built into my Etsy prices, my items are not selling and I wonder if they are priced too high for the market?
anaprindiville
Fair pricing is a tricky subject, however it all depends on the perception of "value" if you price your items too cheap the buyer perceives the item as "cheap" or having cheap components, you have to be the judge of the "perceived value" of your items, if you use good materials and your workmanship is good, you will be able to get a higher price for your items and the buyer will feel that he is getting value for their money.
CreationsBySallyLynn
I have to agree with (last year's response)Craftiejean . I was always told to take Cost + Labor X3. I've been making my items since 2005 and used this method and no one seemed to complain about the cost being too high and received 100% positve feedback that the quality and craftsmanship was well worth the asking price and better than those they could get from well known companies who charge twice as much.
CreationsBySallyLynn
...And the wrong time posted as it is 11:26 PM here in the Southwest! Wonder why it post 2 different times zones? Weird...
jewelsgems
Thankyou for your information. Your input makes it easier to understand the uncertainity of public pricing. I feel that I have priced well. I paint for those who appreciate art and the beauty of color. Art lovers will take notice! Again, thanks!
yellowwalls
rkdsign88
sheilascrafts
I still have a difficult time pricing my items since they are crocheted items. Could someone please convo me on the proper pricing for items such as mine?
Thank you for this great article.
justagirlcreations
I hadn't even thought about all the time I put into taking pictures and listing the items. Great info!
ShoestringPress
I just read an article in The MBS Newsletter(Miniature Book Society) about pricing miniature books...same concerns: What contributes to publishing & binding costs and how to establish prices that cover those costs and still provides a reasonable profit. With direct-to-customer pricing we are able to eliminate many of the costs associated with retail selling.
ShoestringPress
Whoops! Don't know how the comment got published twice with such different dates and times????
vintagekeepers
I figure I am worth 15 dollars an hour
when I knot between each bead..........
16 inches takes about 1 hour. If they do not want to pay $15 an hour then I do not do it for them!!! MY WORK IS WORTH 15 DOLLARS AN HOUR: DO NOT UNDER SELL YOURSELF. If it takes longer than it should then of course that;s your flaw ...adjust the price for that item only!!!! You know what is fair.
Then I triple what I paid for the Materials. If you are GOOD you will get your price UNLESS there is 10000 of the same thing out there......YOU KNOW >>>'DEMAND' BUT I did notice ALOT of Bead designing artists UNDERSELL on ETSY!!! Alot of twisting and wrapping and not pricing HIGH enough for their labor. WAKE up....if it is a hobby and you do not care what you earn; you should, because it ruins it for us artist that work for a living!!!!
WHEW!!! I"M OFF MY SOAP BOX!
CuteHeartDesigns
so if i sell an item for a buck or two i wont make anyhting profit cuz of fees?? im a real newbie
Tinateee
I agree with this article I did a blog about this at my blog.
My hand knitting takes sometime for my cable hand knit scarf it takes 18-20 hours to make and on top of that it takes about 9 hours to complete a cable hat and 9 hours to complete a pair of cable wrist warmers.
I have a product pricer I use and do include etsy fees, paypal fees, ontop of listing fees and along with packaging which I try to use priority however the scarves are too beautiful and need to have a clear plastic bag for protecting my work.
I am low I believe in my pricing, for 7/hr for my stuff however I've been getting that my scarves are too high, it's appears to me people arent understanding the time it takes.
But I also stand by the pricing system.
JacquieT
This has been the toughest part of selling my hand made work...Pricing.. Agh! This article and all the comments have been great! I do however totally agree with vintagekeepers about underpricing. We do need to get paid for our time. However, I may be guilty of this at times myself...It's Just So Hard!
havilahashby
This topic has been a HUGE issue for me. I am trying so hard to keep my prices low for my customers. Especially since it is a childrens clothing line and I know parents dont like to spend a rediculous amount on outfits their child will wear for 3 months. However, a lot of mine are grow with me outfits and I try to keep my cost around $30.00-$34.00 which I think is reasonable. Right now it can be frustrating though because all the time I put in for such a small profit. Plus I dont buy my fabric in bul yet so every time somebody orders something I have to pay for their fabric plus shipping for the fabric to be sent to me...augh!! I could go on and on all day, lol. Any suggestions on how I can start making more of a profit and keep my costs low? Thanks! :)
ThePink
This is a huge issue when your work is fairly time consuming! Have yet to figure it all out...Great article!
olivebrown
thanks for this pricing tip. i knit most of my items, and even though prices are similar to some of the other sellers, i feel that sometimes i need to charge more--it takes time to knit! i've also noticed that the other etsy sellers who knit, have priced their items WAY below what they should be, therefore, making sellers like myself seem too expensive...
what to do?!
risingphoenixtoys
Wow, I would never have thought of paying myself for coming up with the ideas, packaging time, etc! I've been calculating strictly the time I spent on the item, even the time it takes to get out and put away materials! Thanks so much!
gifteddesigns
Pricing has been an issue for me as well.
For instance, I have a necklace in my shop that I priced at 85$.
It cost me 22$ to make the item and it took 3 hours to make (I never even though to include photography and set up and everything!) I'm charging a very fair 20$ an hour for my work. So that came to 82$. I put it to 85$ because I have a think of 5s...:)
According to many sources on pricing...what I have just done is to provide the Cost Price. They suggest that this price should be multiplied by 2 for wholesale and 2 again for retail. That would be 170$ whole and 340$ retail!
I've shopped around on Etsy, online, and in stores and I've noticed that items made similarly to this particular piece of mine are priced in the 80-150$ range. Would it then be fair to even list at 170$? Which is, according to these publications, the wholesale cost?
It's rather confusing!
glorygifts
bugbitesplayfood
Excellent info, that has been hard for me too, this series helps iron out the icky details of selling. I use the 3x method.
Previous Page
Thanks so much for this information! I'm thrilled that you are doing a series of articles on this subject. Product pricing is usually the most difficult thing for me to determine. I love creating my hand felted items, but I am somewhat at a loss when it comes to pricing, even with a formula that I go by.
I always try to consider all the above mentioned things in your article as well as what price the market will allow and competitors' prices of similar items. Sometimes these things don't seem to match up, and I feel that might be selling myself short. So I guess, I'm wondering how to find a balance. Do I price it for my costs, time, etc., but if its too high, it just sits in my shop, or do you have to sometimes let the market for your items dictate price? This is my biggest struggle with pricing.
Thanks again! I know your series on pricing will be helpful to me and many others. I look forward to more info.