Wednesday, August 18, 2010

The Art of Pricing Your Handmades

How do you know if you're pricing your handmade work correctly?  There's a lot of info out there, including right here in our Art of Pricing series.  The trick is to keep learning and evolving, not only in your craft, but in your pricing strategies, too.  I've put together three exercises to bring focus to your bottom line.  These exercises are here to make you think about your pricing, hopefully they can help you create a formula that works for you.  I hope they help you as you continue to work on pinning a value to your items.
Exercise 1: What's It Worth to You?

Imagine if you will, a complete stranger asks you to create an item (something you currently sell in your shop). That's not all, they want you to photograph, list and promote this item as well. Whew! "Is that all?" you ask. No, they have one more request: package that item, print a shipping label and drop it off at the post office. Now imagine they want you to do all this for the price you currently have this item listed for in your Etsy shop. Would you do it happily? Would you grumble? Would you deny this task altogether? Reality check: It's up to you to determine the value of your time and efforts. Make sure you take a step back from your work and your prices and look at it from all angles.

Exercise 2: Get to Know Your Customer
Close your eyes and think about the ideal person you would like shopping in your Etsy shop. How old are they? How do they dress? How much disposable income do they have? Do they shop online? What type of handmade items do they love? Now that you have a clear image of this shopper, ask yourself, "How much would this person spend on a unique item?" How do the prices in your shop compare? If this is a hard exercise for you to imagine, get a clipboard and hit the streets! Find someone who pops out to you as your ideal customer and ask them a few questions. Yes, I am instructing you to talk to strangers. Feeling shy? Get your local Etsy Team together to survey as a group.

P.S. If you are brave enough to do this, leave a comment below and let us know what happens!

Exercise 3: Number Cruncher

1. Decide what you would love your yearly gross sales to be.
2. Figure out how many items you make per week, and how many for an entire year.
3. Divide your gross sales goal by the number of items you can create. (For example, perhaps you work on your shop part time and you'd like to sell $12,000 worth of goods. If you make five items a week, your yearly total will be 240 items. Dividing $12,000 by 240 items would give you a $50 price point.)
    This equation will give you a suggestive price. Keep in mind this is just an exercise, some items may be more and some less, depending on time and materials. Also, you (most likely) won't sell every item you make, but with this average amount as an indicator, you'll know if you're on your way to your yearly goal!


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