Pricing Homemade Crafts for Profit

Pricing homemade crafts for profit: Increase your prices and boost profits with seven factors that impact the amount shoppers will pay for your handmade items.

There are plenty of factors that influence the price shoppers are willing to pay for your handmade product.

Some factors, like the quality of your product, and the effectiveness of your marketing strategies, are largely within your control. I've written about those ways to make your crafts more profitable here.

Other determinants of value are more broad and not within your direct control. That's what we'll look at in this article. We'll also examine how to address each factor, so you can price your crafts in a way that is profitable.

1. Competition

Price Comparison

Other sellers at the same venue and in the same category can have an impact on what shoppers believe is a reasonable price to pay for your product.

This effect can go both ways.

Competitors who have higher prices can make it easier to set your own prices higher. In fact, if you're pricing your handmade crafts much lower by comparison, shoppers might wonder about the quality of your products.

Competitors who have lower prices can make it harder to set your own prices higher. If your prices appear quite high by comparison, you will need to differentiate your items from the competition and make it clear to shoppers why your items are worth the price.

Additionally, if a lot of competitors in a particular venue are selling at low prices, you may want to consider whether that venue is the right place for your business.

Market Saturation

Perceived exclusivity and uniqueness is one factor that increases perceived value of handmade products. Shoppers are often willing to pay more when there is limited availability.

Too many vendors in the same category at the same show can reduce the perceived value of products within that category.

If a craft show is made up of 50 percent jewelry makers, overall the jewelry can appear less rare and special. If you work in a competitive category like jewelry or art, you can look for venues that limit the number of sellers in a category to help minimize this effect.

2. Target Market

The nature of your target customers will have a big impact on the prices your customers are willing and able to pay for your products. It will also have an impact on what your customers value.

Work to develop an understanding of who is most likely to buy your products.

What is their age range, gender, location, income level? What are their biggest priorities and needs?

Once you know what your target customer values, you can make sure your products deliver on what they are looking for. You'll be able to create marketing that speaks to what your customers value, and sell in venues that are frequented by people within your target demographic.

3. Seasonal Demands

Seasonal changes typically have a huge impact on craft businesses. You'll typically be extra busy in warm weather months if you sell at craft shows, and things will ramp up again leading into the holiday season. January to March, for most, will be slower times when you can regroup and prepare for the next year.

However seasonality impacts your business, you'll need to plan and work ahead so you'll be ready to make the most of the busiest times of year.

Pricing can have a particular impact during the gift shopping time leading up to the holidays. Do some research to determine how much people in your target market typically spend on gifts for individuals and brainstorm ways to offer items that perfectly fit those expectations.

For example, a popular soap maker offers boxes of five handmade soaps for $25. You choose the scents, and the soaps are packed in a pretty box that's perfect for gift giving. The price point is perfect for many gifting occasions.

The soaps packaged for gift-giving are smaller and made with fragrance oils. The company's regular soaps have a higher price because they are larger and made with essential oils. These differences allow the gift packaged soaps to be sold at a lower price per bar without devaluing the higher priced offerings.

4. Current Trends

Current trends can impact the amount shoppers are willing to pay for your products. Some shoppers will be primed to value items that are in line with current style, decor, or lifestyle trends.

Look for ways to show your products inline with trends of the moment. You don't have to change your entire product line with every passing trend. Instead, look for ways your existing products already reflect trends, and put those items and features front and center.

Alternatively, look for ways to incorporate trends into your marketing materials, products photos, or your craft show displays.

Incorporating trends can be as simple as gathering all of your items that are in the hottest color of the year together and place them in an eye-catching location in your display.

5. Geographic Location

Economic Factors

Economic factors such as average wages and cost of living in a location will impact the amount of disposable income people are willing and able to spend on handmade items.

If you can focus on selling your crafts in a city where residents have greater purchasing power, you'll be able to set prices higher.

If economic factors aren't strong in your local area, you may not need to travel far to find a location where people have more disposable income. Sometimes there are huge differences in cities that are geographically very close to each other.

Take this factor into consideration when you decide where you will focus on selling your handmade items. A product that it considered too high-priced in a shop in one city may fit perfectly with shoppers' expectations in a city just up the road.

Tourism

Tourism is another element of geographic location that can impact pricing and the perceived value of your products.

If you live in a location that is popular with tourists, you may be able to promote your products to that market. Your products will be particularly appealing to tourists if you make items that are easy to transport and have some specific connection to the location.

If you position your business well in this market, your products will have a higher perceived value to tourists. The desire to hold onto their wonderful vacation memories once they return home will help form an emotional connection with your authentic, local, handmade products.

6. Sales Channels & Specific Venues

The venues where you choose to sell your products can have a huge impact on the price shoppers are willing to pay.

People can have wildly different expectations at different venues.

For example, shoppers at a prestigious craft show in a big city will expect to pay higher prices. The reputation of the show will prime any shoppers who attend to expect higher prices. In fact, people may chose to attend a prestigious show because they know it will be filled with high-quality items.

For the most part, vendors at this type of show will have a well-established business, and will have maximized perceived value so they can charge higher prices. That means your prices won't look high by comparison.

On the other hand, if you're selling at a small community event, such as a local church craft show, shoppers will generally expect lower prices because of the nature of the event. Often vendors at this type show are hobbyists who aren't as focused on earning a substantial profit in the same way a vendor at a more prestigious show would be. Shoppers typically don't show up to this type of event prepared to buy higher-priced items.

7. Customer Education

Do your customers already understand the value of your products?

Do they understand the characteristics that reveal that your products are well-made? Do they know the benefits of the superior materials you use? Are they aware of the skill required to make your items?

In short, do they know quality work when they see it?

If they do, they will know they are investing in quality when they purchase your products.

If they don't already have that knowledge, you'll need to work to educate and communicate that information to shoppers.