Your Market Counts in Pricing
Where you are selling your goods and who you're selling them to can play a role in pricing your handmade items or creative services. If you decide to sell to gift shops and boutiques, you will have to come up with a wholesale price (which may or may not be your regular retail price!), since these shops will want to mark up the price so they can earn money as well. When selling at a church bazaar, you may not be able to get the price you might get at a large annual upscale art show, since the customer base may be different. You need to know your market (your customers) and you need to research pricing of similar items sold at retail shops, in online galleries, and through mail-order catalogs.
I’ll use the example of a hand painted glass Christmas ornament. Using the traditional pricing formula of (Cost of Goods + Labor) x Overhead, you've decided to price your ornament at $5.00. However, while browsing the web and looking through some mail-order catalogs, you see similar Christmas ornaments are selling for $20.00. It happens! Crafters tend to under price their goods. With this research, you may decide to average the prices and sell your ornament for $12.50. Or you might decide to go for it and initially price your ornament for $20.00 and see if it sells at that price. You have some playing room in your pricing and you should adjust your selling price to earn more profit if you can.
But what if you were browsing that catalog and you found many similar ornaments selling at a lower price than yours, say $4.00? In this situation, you can give your $5.00 price a trial period to see if you can sell at the $5.00 price. Or, you may find that the lower ($4.00) price is the price that the majority of your customers are comfortable paying. In that case, you might begin to look for ways to reduce your COG, Labor, or Overhead to help you earn more profit from your Christmas Ornament while you reduce the price to what the market will bear.
Do you have any pricing guides or tips? Email me at Maria@FaveCrafts.com.
Read NextBasics of Pricing Your Work