Handmade Business 101 – Pricing

There isn’t a single one of us who doesn’t take it personally when someone overlooks what we have made. It’s okay, we work hard. We imagine things, and give life to them with our hands. I own a handmade business and I’m a cake decorator, so when someone admires something I’ve put my heart and soul into, checks the price, and then immediately walks away – I feel your pain.

More on “Don’t look Rejected at a Show” another day 😉

I was in business for 6 years, and I hadn’t made a penny. Lot’s of sales, for sure, but no profits. In fact, there were some orders where I ended up paying out of pocket. I’m sure a lot of you can relate to that, as ridiculous as it sounds.

In fact, it was a really long time before I began to ask myself if I cared more about the sale, then I did about making money.

I had this idea in my head that the more sales I made, the more people would tell their friends, and my business would grow. It was true in a sense, but eventually I realized that while people did tell their friends about what I made, it was the deal they talked about; And those referrals wanted the same.

A handmade business, even from home, is like any other. You have to have a little time and money to invest in your start up and stock. There needs to be product, enough that you can “fill” a store, and you need, really need, to be patient.

Patience might seem like a strange word, but the advantage to working from home is that your overhead isn’t going to kill you (I’m assuming you already had a home you were paying for, some other way). Use that to your advantage and don’t play the price-war with online and local retail shops. Patience is the thing I had to learn that finally helped me get my act together. I once waited 2 years for a particular wreath to sell. 2 years… I had online inquiries, but no follow ups. You can’t imagine how badly I wanted to pursue the sale, even if it meant a sale price… but the day an order for it came in online, I made a profit, and the woman who bought it loved it so much, she left me a lovely review.

These days, I focus on profits and not sales. I may sell less, but I am making more personal income. Yes, I still have the occasional friend of a friend, or family member ask me for something, but I have a new rule I live by. I price everything the same, and the price is the price, no deals. But if I can give this item as a gift, then I count the personal investment as a pay out to myself, that I then log as money I spent on a gift.

Below is a list of 4 really important points, a list that I personally review with every.single.product. I make to sell. It requires some organization, but the payoff is… literal, actually.

  1. Remember you deserve to get paid for the work you do! Keep a Project-Log for every piece you work on. For me, that is a post-it note, stuck on each thing. I keep track of my time, and the cost of my materials. If I use half a bottle of glue and 1/4 bottle of white paint, I do the math.
  2. Set an hourly rate for yourself. Do it. This is your job, and you have a valuable skill. When you price your item, adding your hours is key. If you want to get this cost down for your customer, then you will just need to learn how to multi-task and and produce more per hour. I find that making 2 or 3 of the same thing at once helps with that – once you’re on a role and you already have the materials out, it doesn’t take that much longer on the clock, a savings that is passed to your customer.

    Setting the hourly rate is up to you, but this is the formula I follow. If I am hands on and working diligently, I charge a standard hourly rate and log it. If I am spending 5 minutes working, and 55 minutes waiting (therefore working on something else), I apply a reduced hourly rate to it. I don’t go so far though as to charge per minute… generally, the hour is the hour unless I really was only at it for about 5 or 10 minutes.

  3. Staple your receipts for materials to your project-log. I save on materials by using Amazon, downloading 50% off coupons at Michaels, and buying seasonal supplies on clearance, to be used for the following year. Example: Christmas supplies are 75% off in January, and can be stored for the following year.
  4. Be PATIENT. This is the hardest one. As consumers, we are conditioned to slash prices if something doesn’t sell within a few months, or once a season has passed. This is price game that no one actually wins. Competing on price will force you to lose money, never making it, and it will also teach your customer that if they wait, they can get a better deal.

    I’m not going to lie, sometimes that sale will take a long time to come if you don’t play the price game, but when it does come, you will make the money you earned.

Have anything to add to this list? Leave a comment! For more tips and shared ideas for having a Handmade Business, join my Facebook Group!!







Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s