One of the most commonly asked questions in crafting business is how much to charge and/or how to price items. Pricing your products is one of the cornerstone decisions you’ll make, because it impacts almost every aspect of your business, and will define your success. There is no one single formula that gives you final pricing number. It is a combination of factors/variables that go into figuring out the price:
- Cost of materials
- Your time
- How much do you want to be paid for your time
- Local taxes and/or your customer’s taxes if you are shipping
- Shipping costs
- Extra fee for rushed order
- Market price for your product
- Production costs
All of these variables need to be calculated well before you name your price to your customer. Additionally you have to consider things like: “Are you OK with accepting loss for the first two years as you establish business?” If you are making less than minimum wage accepted in your state, does it make sense to take that order?”
Now that you have your pricing point you can research your market and competition to determine how your pricing point compare. If your pricing point is low, you’ll need to adjust your margin. If your pricing cost is too high, you’ll need to look at reducing your costs to keep up with your competition.
At the end, your numbers need to ensure that you are in positive and your business brings you profit.