Friday, 17 August 2012

Selling Handcrafted Goods - The Pricing Dilema

It struck me today that at the crux of the tricky matter of pricing handmade goods is one simple dilemma  (masking a myriad of complex ones...) and that dilemma is this: whether to price your products based on the value you award the goods yourself or the value dictated by the market demand for those goods.

Pricing Based On The Value You Award Your Products

There are lots of formulas out there on how to do this... 'x+y+z = wholesale x2 = retail'... just google it and you'll come across websites that will do it all for you, or browse the Etsy forums for similar equations to help you work it out yourself. Mainly they involve adding up the cost of materials, a reasonable hourly rate for the time you've spent making your product - sometimes other expenses such as electricity, petrol, internet etc are included, sometimes the hourly rate extends to time spent planning, photographing, describing and listing a product but the bottom line is the same - these calculations are there to help you work out what you have a right to charge, what you deserve to receive for your skills and labour.

Here is a fab article all about this side of the scale: Why Handmade Is "So Expensive" 

Pricing Based on The Value Dictated By Market Demand 

Now here is the other side of the scale... a) it doesn't matter if you spent 40 long years lovingly handcrafting something, if nobody else wants it, it has no value - in monetary terms anyway. Sad but true. Then there is b) if there are a LOT of other people making things very similar to your products, it is going to be tougher to get a 'fair' price for them - in this situation the customer has the luxury of being able to choose the very best of the best and if that's not you, then you will need to reduce your prices to get a piece of the pie.

There is an excellent article all about this side of the scale here: Econ 101: Jill Gets Sick Of Dumb Pricing Advice

Still Confused About How To Price Your Handmade Products?

Me too!

I was super excited to find the above articles today (courtesy of Lois Addy over on UK Handmade). Then i had my little lightbulb moment about the fundamental dilemma facing crafters selling their wares to the public:

 PERCEIVED (perhaps this should be deserved) VALUE V MARKET VALUE

Yet i'm still none the wiser about how to find the happy middle ground between these to factors. However, at least now i've realised that there is a middle ground to find!

Not that this is the end of the matter - even armed with a price that meets both of these requirements to a satisfactory degree, there are further considerations to take into account... what about the economic climate? What about the tried and tested theory that increasing prices can lead to more sales because the customer has greater confidence in the quality of the product at the higher end of the pricing scale...

I will return to this subject soon, hopefully with more answers (and very possibly more questions!)

I would love to hear you thoughts on this thorny issue... :)

Happy crafting! x


  1. It's a tricky one indeed. I must admit- I don't actually price consistently across my work. One piece I made recently took probably about 5 hours to make, but even if I price below the minimum wage at £5 per hour I think people will still think £25 for a felted brooch is expensive- and that's without material costs! I've tried to get a bit cleverer with designs, so that I can make more than one thing at a time which cuts time and therefore can be sold at what appears to the customer to be a more reasonable price.

    1. i've found pricing for my time one of the trickiest things too, i'm guessing its one of the main pricing issues for a lot of crafty folk as so much time goes into handmade products, sometimes way more than many people imagine. It doesn't seem 'right' or fair to undervalue ones work and essentially receive a fraction of the minimum wage... yet at the same time, like you say, the appropriate price can often end up being way above what people are willing to spend.

      Your products are so beautifully made with love and care that it makes me feel sad that you don't feel able to ask the price you deserve for them, yet i know that i'm in a similar situation... I think that in the back of my mind somewhere i'm thinking that once i've built more of a stable and reliable business i'll be able to increase prices a little and also cut down on the time spent creating my products - making more than one at a time makes things quicker over all for example. Also, a lot of time goes into photography, writing descriptions and listing my creations on various websites - the more of each item i sell once its listed, the less impact this process has on the overall time spent on it. I could go on all day about the ins and outs... but i won't!

      thank you for your lovely thoughtful comment Jenny :)

      Natalie x

  2. Oh my! This is a very real dilemma for me right now. The items I feel I've priced reasonably and fairly do seem like a lot of money. The items I feel I am pricing on the cheap side make me feel a little bit cheated. What's a girl to do eh?
    Pah! It's a minefield isn't it.
    I do need to set aside some time to properly look at all this, but not today ;)

    1. thanks for commenting Zoe :)

      I know exactly how you feel, it is a mine field! and i'm not sure that the easy answer exists... I guess the best thing is just to go what feels right at a gut level. At some point i think my pricing strategies will need to change as a natural evolution of my small business - i'm not sure i'm quite at that stage yet... i'm hoping that i'll know just what to do when that time comes!

      From what i've seen of your work it is very clear that a lot of time and care has gone into your creative process - i'm sure that others notice this too and don't mind paying that bit extra - isn't that what buying handmade is meant to be all about?

      best of luck with it all :)

      Natalie x

    2. I'm sure we will find our way eventually. It's early day's for me so there is a fair bit of trial and error involved.
      I have had a couple of sales and a commission this week so amfeeling more positive that I may be pitching it right :)

    3. yay! good news :) i hope that many more follow x

  3. Excellent post - I think pricing is one of the trickiest dilemmas of all for designer/makers. However, I think as you go on, it does get (a little bit) easier to put your prices up - not only are you selling more and getting more confident, you do actually get better over time at what you're doing. Ironically, you also get quicker as you learn how to make the processes quicker, you batch-make and you get pickier with design (knowing which fiddly bits to leave out to speed things up). So, it's possible that you do actually end up getting a better rate of pay the longer you do something - if you can make it that far. I appreciate for some crafts it's pretty impossible to get a decent wage and that's really quite sad. Sometimes it pays to be creative and look into teaching, writing and designing rather than just making and selling.

    1. That is a great insight into the process of developing a handmade business Wendy, thank you so much, your advice is invaluable and what you say definitely makes sense to me in the context of what i have noticed so far about the way my approach to creating for sale is developing.

      I can see too that there is scope to develop sidelines to provide extra income further down the line... good news! x

  4. This is really important issue and also so hard to get right! The more research I do, the more confident I feel about my prices, but they are still lower then what I want them to be to earn at least minimum wage and cover all my overheads. I think, what's important to realise, that we sell 'luxury' items - meaning, that people do not have to have them to live (unlike food..), so even if we price them very low, people might still not want them ! Looking at it like that, it helped me to start pricing better.

    1. that is so true about most handcrafted items being 'luxury goods' - they are the first to suffer in an economic downturn of course... but does this mean that we should reduce our prices to compensate...? like you say, when people are just buying necessities they don't even consider additional luxury items at any price!

      i'm glad that you feel more confident about your prices after researching the issue, that's a good place to be :) i can completely identify with what you say about wanting to achieve minimum wage and overheads covered - i think that most handcrafters would. At the same time though that leaves me feeling that something is 'wrong in this picture'... When people complain to me about their income in relation to minimum wage i often quip 'i can only aspire to minimum wage' - how depressing! I guess its the same old story of any of the creative industries being the hardest place to make money - the 'starving artist' syndrome - romantic in a novel but quite annoying in real life!

      thank you for your thoughtful comment, it is always so interesting to hear how other people think/feel about these things :) x

  5. Arrgghh the dreaded pricing minefield! personally I price using the calculation method, though I have to admit with some of the hours put in my prices would be way to high and I still round down by quite a bit. In one ear I have my mother who loves a bargain and when told how much I'm charging for something goes into a muted silence and in the other ear, the old man is telling me my items are worth so much more than my current prices. If sales are slow is it because you are undervaluing your work or too expensive, what to do and how do you find that happy confidence in what you are charging?

    1. Thanks Clare :)

      At least your parents have both sides of the scale covered between them! I completely agree that it is frustratingly impossible to know what exactly causes people to either decide to buy or decide not to - i often wish i could ask everyone who has liked the look of something i've made but not bought it what exactly changed their minds! Of course i know it is sometimes (in fact probably mostly) related to price - i always assume people feel they are too high, although as you say, it could easily be just the opposite - i've worked quite a bit in retail in my time and it is amazing how often people buying a present for someone insist on spending the amount they have decided in their head is appropriate on a gift and will even disregard something they think would be suitable if it is too cheap!

      Anyway, i digress... it sounds like you are doing well to at least start out the pricing process with a reasonable calculation even if you then make some deductions - this is pretty similar to my approach although i probably try and access the market value first and then work out if it is going to cover my wage/expenses!

      When i have done some more research on this issue i will do another post about it - hopefully with some answers to your excellent questions! x


Your lovely comments are much appreciated x