When you price your crafts, you are communicating a lot of information about the value of your work to your potential customers.
You are also having a huge impact on shaping the direction of your business, so it's smart to take a serious look at your business goals and consider what you want to communicate to customers when you make pricing decisions.
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If your prices are going to reflect your business goals, first, you need to understand what those goals are and where your business fits in your market.
Once you've considered your costs and needs for business growth, the ideal price range for your products lies somewhere in the answers to these questions.
If your business goal is to build a mystique around your products and sell high-end items to a specialized market, then you may consider using a luxury pricing strategy when you price your crafts.
Luxury pricing involves using higher prices to help create a real caché around your products and can result in selling fewer items but at a higher price.
Of course, if this is your business strategy, you'll need to learn how to boost your product's perceived value, so customers will pay those luxury prices.
Do you want to create affordable products and sell to a larger market? If that's your goal for the growth of your business, then it should be reflected in your strategies when you price your crafts.
Be a bit careful with this business goal. It's very difficult to pull off when you make handmade items because you can't easily make up for a more narrow profit margin with high volume, and setting low prices can undermine the innate specialness of items that are handmade.
Rather than under-pricing to keep your prices lower (if that's your goal), you may, instead, build efficiencies into your production process which allow you to lower your price but still make a reasonable profit.
For example, if you have a clearly defined line of products, you'll typically have fewer expenses and demands on your time per piece than someone who makes one of a kind pieces. Therefore, you'd typically be able to price your crafts at a lower price than you could for one of a kind pieces produced using similar techniques and raw materials.
Running your costs through a simple craft pricing formula will help you to ensure you're not under-pricing your work. The video below shows you a quick outline of a popular equation for pricing handmade products.
Take some time to consider your competition before you price your crafts.
Check out sales venues where you intend to sell. See who your competition is at these venues and what typical prices are for products that are similar to your own. You can also get a good sense of competitors' prices by visiting their websites or sites like Etsy.
Keep in mind, though, I'm not suggesting that you compete on price. You're not researching competitors' prices in order to undercut them, merely to understand how your prices compare with your competition.
The problem with competing on price is that you really can't know without a doubt whether your competitors are making a profit at their current prices and what went into their pricing decisions. Also, by under-pricing your work you'd be contributing to the devaluation of handmade products.
People don't typically buy handmade items on price anyway. People buy handmade pieces because they are unique and they fit with their own sense of style and self-image.
So once you understand how your prices fit within the prices of your competition, you can use that as one piece of information to inform your pricing decisions. But rather than competing on price, find ways to make your products stand out from the crowd so they are more attractive to your customers.
The price that people will be willing and able to pay for your products will vary geographically. It will be important to take that factor into account when you price your crafts and create your marketing strategies.
Several years ago, while I was in school, I worked at a local clothing shop. The store was part of a small chain, and it was new to the area.
The owner had previously managed another store that was part of the same chain in a town less than 30 miles away from her new store. She often commented to me how extremely different customers were at her new store compared with customers in the town that was only about 30 miles away.
She noted that customers at her own store constantly commented on how fantastic her clothing prices were, while in the town just 30 miles away, customers consistently complained that the same prices were too high.
Although the towns were practically neighbors, there were real economic and cultural differences in the two areas, and that made a huge difference in the perception of price in the two locations.
Again, I'm not recommending you under-price your crafts. But do realize that not everyone will be your customer, and that is fine.
Once you determine the price of your products, ensure that you are selling them in a venue and an area where there are customers who can and will pay those prices. Find your price, and then find your customers.
Determining the characteristics and motivations of your target customer will help you to develop a more focused and effective strategy for pricing your product and avoid craft pricing based on emotion.
Do your products appeal to the teen and twenty-something market? If that's the case, you'll likely do best with more modest prices. However, if you are marketing luxury to the successful business professional, your most profitable price will be significantly higher. The high price, in this case is not necessarily tied to the cost of raw materials, rather, it reflects the exclusivity of the product.
Keep in mind that finding the most profitable way to price your crafts is not necessarily a simple matter of finding the highest price that people will pay for your product. Nor is it always a matter of finding the price that will encourage the most people will buy your product.
Decisions about pricing your crafts should be closely tied to your business development goals, image and marketing strategies. Keeping the big picture in mind when pricing your crafts will help you to maintain and meet your business goals.
For an excellent, in-depth look at all of the factors to consider when you're pricing your crafts, the book How to Price Crafts and Things You Make to Sell is a wonderful resource that I highly recommend.