Set Yourself Up For Profit: Pricing Tips for Your Handmade Goods
The romantic dream of selling your handmade goods can quickly crumble when you find yourself shelling out a ton of cash on craft supplies, staying up late to complete projects, and never coming out ahead. If you want to make money by making crafts, you need to get strategic about selling and pricing.
Author, teacher, and handmade business expert Kari Chapin says the very first step in developing a pricing model for your handmade products is not about figuring out the cost of materials and doing calculations of your time – it’s about getting clear on how much money you want to make and defining your big income goals. After you get clear on these two components, you can focus on individual product pricing.
Here are some of Kari’s top pricing tips:
Set a stretch goal. A stretch goal is a goal that has you making big leaps. When you’ve been selling your crafts, at cost, to family members a stretch goal is a product priced to profit, sold to buyers who pay top dollar. Personalize your stretch goal by assessing where you are now with your product pricing and setting a goal that excites (and yes, even scares) you.
Create a demand. Selling out of something in your product line can tell you a lot about your prices and it very likely means that you have priced an item too low. If something you make is flying off the proverbial shelves, it’s time to charge more. Once you know you have created a demand for something, you can be confident that an inch up in a price isn’t going to stop sales.
Make the price as high as you can stand it. It is so tempting to be the do-gooder who is making their goods super affordable, but the reality is that you are in business to make money, not friends. The handmade goods you are selling aren’t essential items, they are luxury goods and you aren’t doing your bank account and your financial future any favors when you price your products too low.
…But don’t bump up prices on slow sellers. As was just mentioned, we are all for selling your goods at the highest possible price, but you need to be real about prices on goods that aren’t selling. If you’ve priced for profit and you have a slow seller, don’t raise the price on it. In fact, slow sellers are items that you can consider price reductions or temporary sales on. Just be sure you’re still coming out on top.
Pay yourself. Remember that income goal? That money has to come from somewhere. Think about your sales and how many you need to make over a set time horizon to make the kind of money you want to make. Now price your products accordingly. You might find the mark-up above materials is much higher than you expect. That is okay. You aren’t running a wholesale business. You must mark-up to pay yourself.
As Kari says in her course, Start a Handmade Business, “you are in business to earn money.” So set your prices for profit, and don’t forget to make sure your needs are being met along the way.
For more insights from Kari (plus a complete guide to starting a handmade business), check out the video and see the full course here.
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