With the new year in full swing, I am revisiting the prices for all the products that I have on my website. Not that I will automatically go up in price, but to review cost of materials (which do go up), overhead and also I might want to give myself a raise.
I do not charge differently for the same product when I am at a show or on the website. The only difference between the two is that the website order will have shipping charges. Even shipping charges have to be monitored because it does affect your costs.
How do you know if you are being fair to your customers and of course to yourself? Even if you are selling your products at shows, you really are part of a community of craftsman and artisans that rely on their products as a source of income. So DON’T UNDER CUT THEM. I see this a lot at shows that I attend. Unfortunately, even at shows that I am a vendor. With craftsmen just “selling their goods”, it really hurts the rest of us who want to make a go of it.
So as a very basic rule of thumb about pricing your crafts:
1. Overhead + Materials + Labor + Profit = Wholesale Price
2. Wholesale Price x Markup = Retail Price
When you sell your work wholesale, retailers will mark it up at least two times, but the average is between 2.3-2.5 times. This allows the retailer to make enough money to make a profit on the sale. Notice that a profit for the artist (yes, YOU) is also written into the formula.
If you don’t give yourself a profit, you won’t have the funds to try a new technique, new medium or expand your business. You can’t use your labor cost as that, because you can’t (shouldn’t) work for free.
I do not get upset when people say, I can buy “such and such” at the local big box store for 1/4th of what you are charging. I feel that the customer doesn’t realize that the big box stores are usually not carrying handcrafted pieces. They usually purchase their stock from overseas, via distributors where profit and labor costs are nowhere near what we have in the USA.
So begin reviewing your prices and see what you should be charging. You may be amazed.