Since diving back into craft markets and online selling platforms a couple of people have asked me how I price my products. Craft Markets and Online selling is a great opportunity for makers to make extra income on the side from their hobby or small business, but one of the most challenging aspects of selling your handmade products is figuring out the right price.
Pricing can be a tricky balancing act between making a profit and pricing your products competitively. This is especially true when it comes to handmade items that require a lot of time and effort to make. So, how do you work out the pricing for your handmade products? In this blog, we will discuss some essential factors to consider when pricing your handmade products for craft markets and online selling platforms.
I will take you through the process on how I price my items to still buy yarn and keep profit and also cover some points on why underpricing your products doesn’t just hurt your business but also those around you in the same niche.
In order to determine the appropriate price for your crochet items, it is important to consider several factors. Firstly, you should take into account the cost of materials and the amount of time it took you to create the item. If you are selling your crochet items in a physical store or online marketplace, you should also factor in any fees or commissions that will be taken out by the platform. Additionally, it is important to research the prices of similar crochet items being sold by other sellers, to ensure that your prices are competitive and reasonable. By considering all of these factors, you can determine a fair and profitable price for your crochet items.
Step on how to work out your pricing
1.Cost of Materials
In the case with amigurumi the method “Yarn x3” won’t be correct as you have a lot more material that goes into amigurumi. This includes materials like, stuffing, safety eyes, and any additional embellishments or accessories you use. Keep detailed records of your expenses, including the brand and quantity of materials, to ensure accurate calculations.
A good investment for your small business would be a notebook, a calculator, and a small kitchen scale. It is important to weigh your yarn and stuffing before starting your project. Once your project is done, write down the weight of the yarn and stuffing to determine how much you used of each.
When you buy inventory for your business or hobby, keep a price list of what you paid for your supplies and what they cost you per gram or per 100 grams.
Do the same with your safety eyes and other accessories you might need to make your toy. Write down the price for a pair of eyes and so forth. This would make pricing easier at the end of the day.
2.Profit per item
Perhaps the most challenging aspect of pricing amigurumi is determining the value of your time and labor. I personally don’t work according how much time I spent on a project because honestly some days I can make something in less than a hour and half and other days it will take me all day to make the same item. What I do is look at my materials. If it was cheap to make I add at least 70 to 80% profit on top of the cost of material. that percentage would be my profit that I use to buy things for my household or pay bills.
3.Overheads and Additional Costs
Besides materials and labor, you should also factor in any overhead costs, such as shipping fees, packaging materials, and transaction fees if you sell online or commission fees some markets have . These hidden costs can significantly impact your pricing strategy.
Formula to price your work effectively
Once you have calculated all the cost mentioned above you can now put it in a formula to price your items accordantly.
The formula I use for my items is as follow:
(Materials x2) + (% profit) + (Cost of shipping and packaging)
The Money for the Materials and Cost of shipping is taken out of the product to restock on supplies. Later you will find that you don’t have to stock up on yarn so often and then you can start putting your material money into a savings account or calculate it as profit.
Setting a Profit Margin
A profit margin is the percentage of the final price that represents your profit after covering all material costs. Before you decide on the profit you want to add to the price for your amigurumi, it’s essential to set a profit margin that aligns with your business goals.
Consider factors such as your desired income, business expenses, and the market’s price range for amigurumi. Easiest way to know how much profit you need to add to your products is to look at your monthly expenses. What are you planning to pay with the profit you make. Once you have a estimate in mind you will have to divide it in the amount of amigurumi you are planning to make, this will give you a better look at how much profit you will need to add to each item.
Looking at your competitors
Conduct thorough research to understand what other amigurumi artists are charging for similar products. This will give you insight into the competitive landscape and help you position your pricing strategy effectively. Keep in mind that pricing too low can undervalue your work, while pricing too high may discourage potential customers.
Also keep in mind where you are looking at for prices. If you live in South Africa and looking on Etsy for pricing you will have to keep in mind that Etsy converts Dollar to Rand and with the Rand being so worthless against the Dollar, pricing will be much higher.
While it’s essential to stay competitive, don’t feel compelled to match your competitors’ prices exactly. Instead, use this information as a reference to inform your pricing strategy.
Pricing Strategies
Have different price points to suite different customers and their needs
Consider offering different price points for your amigurumi creations based on factors such as size, complexity, and materials used. This allows you to cater to a broader range of customers and showcase the variety of your skills.
Examples of this would be keychains, small amigurumi, medium and big more detailed amigurumi.
Special request and custom orders
Create a sense of exclusivity and premium pricing by offering limited edition amigurumi or custom orders. Customers may be willing to pay more for unique, personalized items. If you have to do custom order for the client increase your price as this will take time out of your inventory to make it.
Increase your pricing during festive seasons
Adjust your prices according to the seasons or holidays. Amigurumi themed for specific occasions can command higher prices during peak demand periods.
Should you adapt and change your prices?
This is a personal preference, but I like to adjust my prices for each craft market I attend. For example, there’s a market at a local school that is held twice a year. The first one occurs when the school is open, and the second one takes place later in the year when the school is closed for the summer holidays. If I anticipate more kids will be attending a market without their parents, I tend to offer smaller and more affordable items. When I expect more adults to be buying at this market, I raise my prices slightly and offer a wider variety of toys at different price ranges.
What problems can you face when under pricing your products?
Lead to burnout and financial strain:
Underpricing your handmade items can take a toll on your well-being and financial stability. By not valuing your time and effort appropriately, you might find yourself working long hours for minimal returns. This can lead to exhaustion and burnout, negatively impacting both your mental and physical health. Additionally, the financial strain caused by underpricing can hinder your ability to invest in your craft, purchase quality materials, or grow your business.
Destroys your profit margin for your business, leading to No growth:
Consistently underpricing your products can have a detrimental effect on your business’s sustainability and growth. When your profit margins are constantly compromised, it becomes challenging to reinvest in your craft, expand your product line, or even cover basic operational costs. Over time, this lack of financial growth can hinder the long-term success of your small business.
Cheap prices attract Bargain Hunters that will only support you if you have a Sale or sell something for cheap; They won’t become loyal follow-up customers:
Underpricing tends to attract bargain hunters who are primarily motivated by low prices. While they may make occasional purchases, these customers are less likely to become loyal followers of your brand. They are always on the lookout for the next bargain and won’t form a lasting connection with your business. This lack of customer loyalty can make it challenging to build a stable customer base that sustains your business over time.
You show lack of respect for your own worth by underpricing your Items:
Pricing your handmade items too low can send a message that you undervalue your skills and the worth of your creations. It’s essential to recognize and communicate the true value of your craftsmanship, materials, and time. By setting fair prices, you convey confidence in your abilities and encourage others to appreciate the quality and effort that goes into your handmade products.
Your products will come off as cheap and not worth spending the money:
Underpricing your items can create a perception that your products are of low quality or not worth the investment. Customers may associate low prices with factory toys that are cheap and east to come by. This can harm your brand’s reputation and make it challenging to establish your products as valuable and worthy of the price you deserve.
Ruin small businesses around You by diminishing the worth of handmade items:
The practice of underpricing handmade items doesn’t just affect your business; it can also harm the entire community of part- and full-time crafters. When one seller consistently undervalues their work, it sets a precedent that others may feel compelled to follow, further diminishing the perceived worth of handcrafted goods in the market.
Create a chain reaction That handmade products aren’t worth the price Tag some Give It:
Underpricing can create a negative chain reaction throughout the handmade products industry. It can create the misconception that handmade items should be inexpensive, which undermines the efforts of talented crafters who pour their creativity and skill into their work and depend on their business to financially support their families. This misconception can discourage consumers from recognizing the value of handcrafted items and prevent them from supporting small businesses that offer unique and high-quality products at a higher price.
As you embark on your handmade business journey or seek to refine your pricing strategy, keep in mind that your creations are not just products; they’re pieces of your heart and soul. They carry your creativity, skill, and the love you put into every stitch. Your pricing should reflect this, ensuring that you receive fair compensation for your hard work and dedication.
In the end, pricing your handmade items is a reflection of your commitment to your craft and your belief in its value. By finding the right balance, you can build a sustainable business that not only supports your passion but also brings joy to the lives of those who appreciate your unique creations.
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