As a small business owner one of the biggest dilemmas I face & often my most unpleasant is figuring out just how to price my items. I have found this to be a very common problem after talking to many different types of small business owners, everything from photography to handcrafted pieces like mine to small boutiques that re-sell items. We all must determine that magic price that will make us a living, make our time worth it & cover all our overhead.
There really doesn’t seem to be one answer. I have found that the formula that works for someone completing a piece in say under 2 hours is much different than what I must consider when I am making an item that takes 10 hrs. I balance what is a fair price for my client while still making a wage that I am comfortable with. Often, I make right at or below minimum wage on my time heavy items because it just simply makes it too expensive if I charge my normal hourly rate. With items that are much quicker, I make well above minimum wage. It evens itself out. Where my price point is right now, I am on the higher end of the market. Because of this, I make sure to use high quality materials, that the fit is perfect & everything is carefully crafted to make it an heirloom quality piece.
With this being said, I still surprisingly get push back from some other crafters wanting me to raise my prices, saying that I am doing our community a disservice by not charging for every hour that it takes. I cannot follow the same formula they do, it would make my pieces 3 times the current highest market price. I feel realistic in saying that not only would they not sell, but as a consumer I could not justify paying that myself. I will never ask a customer to pay a price I would not pay myself.
This brings up a very common issue within every community. Some people price so low they may not even cover the cost of their materials, let alone their time. These may be licensed businesses or hobbyists just looking to make a little money for something they enjoy doing. They may be brand new to their craft & their prices reflect the quality of product that is being bought. Sometimes, it is simply that they just do not charge enough for a beautifully crafted item because they are afraid of losing their clientele. This can make it very hard for others to make a living when they are priced appropriately for their work, because there is always someone willing to charge less. As the old saying goes “you often get what you paid for”.
Along with others, I’ve heard “Why are you so expensive? My friend’s mom will do it for ‘this’ price.” or “How about you do it for free to get the exposure?”. Sometimes that “exposure” is worth it, especially if they are just starting out or need the experience. If you are asking a very established business that is already very good at what they do, chances are they already have the portfolio they need & will say no. There are some exceptions to that rule, it’s all situational & very much in how you are asking them. No one likes to feel taken advantage of.
I am past the stage of needing to build a portfolio, but there have been times that I have collaborated with other bloggers, photographers or new moms. Mostly because they are absolute sweethearts & it was a mutually beneficial situation. We are all human & try to repay the kindness that we have been shown throughout our careers. We were all beginners at one time & chances are that we had mentors or other business owners that helped us progress. I certainly have & I try to do the same for others when given the chance.
So, what is my formula? I factor in my materials, my time, my overhead, taxes, any fees (from Etsy, Paypal, Stripe, my website, etc) & see what that totals up to. Then I look at the current market for similar items, seeing where that price falls on the spectrum. I always see someone pricing so low that it is not feasible & their quality or reputation is questionable. I see middle of the roaders & I see the high end. I compare material quality. In the end, that first total will get tweaked some to fit where I feel comfortable.
At the end of the day I need to make sure that when I make an item it is worth the time it takes. Every single thing that we create & sell is taking time away from other things in our life. Whether it is creating something else or our families & loved ones. We are very carefully choosing how to price items, so they pay our bills & we can succeed at what we’ve poured blood, sweat & tears into creating. That is the beauty in having the flexibility to price for your business as you see fit.
I do not believe that there is one right formula that will be perfect for every situation. We all have different expenses & time invested. Just like with everything else in the world, there are a lot of strong opinions on how things should be done. I have seen some bitter disagreements about pricing & I think that we all need to just remember there is an “ideal client” for every price point. If you are careful to market to yours & stay kind to each other, we may learn a lot & be happier business owners.