Business Tips — How to Price Crafts

A series of Business Tips from the book:how-to-price-crafts

How to Price Crafts and Things You Make to Sell

by James Dillehay

As new craft sellers, we tend to under value our work and consequently under price our products.
— James Dellehay

In all the years I worked as a sales rep (frequently to new producers), under pricing products is one of the areas where new producers need help and guidance.

For example, I had one woman who made beautiful hand-crafted wooden earrings.  I loved her line and wanted to rep for her, but, first, I suggested she raise her wholesale price of $6 to something higher.  Ironically, she was willing to do this for “my customers” (those stores that I sold to), but was not willing to raise her price across the board.

Of course, I needed go on about how unethical this suggest was, and I ended up just walking away.

The bottom line was that this gal — plus many other professional crafters and producers I have represented — didn’t value herself, her time or her work and that was reflected in her pricing.

Stay tuned as we explore this issue via James Dillehay’s suggestions…

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The marketing message that win sales then are those that speak to one or more of people’s needs.  Seen in this light, the pricing question then becomes one of determining how much value people place on getting their needs met.
— James Dillehay

Having your customer’s needs met basically boils down to what do your customers want!

So how do you appeal to the needs of your customers?  Start by getting out of the ‘me’ thinking and adopting the ‘you’ mentality.  From there, design your packaging and promotional materials to address the benefits your customers will receive upon becoming the proud owner of your creation.

Once you appeal to what your customer needs and wants, pricing will become a moot point as they REALLY want what you have.

For example, in Idaho/Montana, huckleberry products are a much desired jam and syrup item as they are unique and hard to find, pick and process.  So, whereas, a strawberry product may cost only $3, the same type product in the same size bottle or jar of huckleberry could cost up to $10.  And they sell out at that price!

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In the handmade marketplace, lowering the price more often lowers the perceived value.  Raising the perceived value, however. lets you increase your prices and boosts your sales.
— James Dillehay

The perceived value of a product has more to do with how much you can charge for your items that just about anything else.

Most newbies to the craft business, inevitably, undersell their handcrafted items.  These artisans, often, don’t value their time, their products, and ultimately, themselves, so under price their unique creations.

I see this issue over and over again, and recommend these crafters check out local markets to see what price range other products like their own are marked.  In other words, do some market research before pricing the item(s).

James shares several tips to help increase the perceived value by raising the worth of what they are getting for their money, such as:

  • Tell them it’s handmade
  • Produce quality work
  • Be earth friendly
  • Include benefits in your description
  • Use eye candy packaging
  • Sell sets
  • Personalize your products ….

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Think of pricing as made up of two parts.  The first part is learning how much it costs you to make an item.  The second part is determining how much buyers are willing to pay for it.
— James Dellehay

Knowing how much it costs to make an item should be fairly easy — if you are keeping track of your costs appropriately.

To determine your costs per unit, take into account the following:

  1. Ingredients or raw materials needed for your item or product
  2. Labor to build your product from the raw materials (and if you do this yourself, make sure to figure a dollar amount for your time)
  3. Packaging or label costs for your product
  4. Special supplies and misc. cost related to making your product

The second part of the pricing formula is not as mathematical as the first part.  Typically, this can be determined by doing a market analysis — which simply means checking out what stores typically sell an similar item to your product.

There is a detailed description of this process in James book and also in a smaller e-quide I wrote, available here: How to Price Your Products

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Knowing if you can afford to sell wholesale profitably, can open new markets and bring in more income when other sales channels dip, fade, or dry up.
— James Dillehay

Unfortunately, too many producers won’t consider wholesaling their products.  Often, I find that they just don’t understand wholesaling and how it works.
First, when you wholesale, you are selling in multiples rather than selling just one or two items.  Production goes up and costs can go down when making or manufacturing in larger batches.
Second, like James says, you can wholesale during the ‘down times’ of craft fairs or other retailing venues.
Third, if you actually take in to account the amount of time and money you spend on booth fees, travel expenses, and the time or wages paid to operate the booth, your profit may be the same as wholesaling.
Think about it!

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