By: Maria Nerius, FaveCrafts.com Resident Craft Expert
If you're making crafts to sell, you want to know how to price your work and what to consider when you price your work. Maria Nerius gives you some things to think about in this Craft Business article.
One of the most difficult tasks you have when you sell your work is putting a price tag on your work. There is no magic formula. Pricing considerations include the amount of labor (your time), cost of goods (supplies used), and your overhead (electricity, phone, rent). These are the basics! You may be thinking that since you work at home you don’t need to include a percentage of your price to cover electricity or rent, but you do. You are a business and need to price like the professionals.
At least once every time you create a design you need to write down every supply used (Cost of Goods/COG) and how much time you spent making it. It’s not the fun part of selling your work, but you need to document details so you can quantify the costs of material and labor. Time is money and as creative people we don’t often realize just how much time an item takes to make. Making one of an item takes more time than if you can create several in an assembly-line method (paint all five at once, then attach the decorations to all once the paint dries, etc.). You’ll need to average your labor between custom orders and “mass” produced items.
The basic formula for pricing is (Cost of Goods + Labor) x Overhead= Price. There are numerous percentages used for Overhead. Overhead can range from 5% to 45%. Note that when companies are tightening their belts or trying to get expenses down they tend to cut Overhead. I advise to streamline your Overhead. Take a good look at your electric bill and rent/mortgage and think about what percentage you feel you are using or you want covered.