Pricing Your Handmade Items

Before you can actually sell any of your products you need to first decide how much to charge for each one. We will show you one simple two-part formula for pricing, followed by an example.

A + B = C

"A" stands for the cost of supplies utilized to make your product*

"B" is the hourly wage you wish to receive for making your product

"C" is your break even point, or the minimum selling price with no profit

*The cost of your supplies should include the materials you made your product with, shipping supplies, tools and purchased instructions you used to make your product, fees from online auction or payment processors, rental space for your studio or store (if you do not have a brick and mortar store, but do have a website, then make sure you include fees related to your website!) as well as portions of telephone, internet, water, and electricity bills.

After you have reached a break even point (value of "C"), we then use our second formula:

C + D = Final selling price

"C" is the value you reached from the first formula

"D" is the profit you want to make off of your product

An Example

To further illustrate this method, we will use an example of a bracelet we made to sell at our store.

The total cost of supplies for my bracelet are: beads $2.45, 8 inches of wire $0.40, clasps $2.99, shipping envelope and tissue paper $0.14, and I charge $1.89 per product to help cover rental space and utilities. (Note: I figured out this value by averaging my total monthly rental bills into the amount of products I sell per month.) After adding them together, the value of "A" becomes $7.87.

I wish to receive $8.00 per hour for creating my products. This bracelet took me 20 minutes to make, therefore the value of "B" becomes $2.67.

Let`s plug these into our formula:

A + B = C

$7.87 + $2.67 = $10.54.

Now, we use our second formula:

C + D = Final selling price

We already know the value for "C" since we just figured it out.

The profit I want to make off of this bracelet is $6.00, which becomes the value for "D."

So, after plugging values into our second equation, we are left with a final selling price of $16.54. Since this is an odd amount, we will round up to $16.99.

An important aspect of determining an appropriate price that many won`t touch on is the importance of knowing your competition. If one of our competitors is selling a similiar bracelet for $9.99, they may get more business! In that case, we would need to adjust the values in our equation. Possible solutions could be finding cheaper sources for supplies or lowering my hourly wage.

In closing, this is only one method of pricing items which has worked well for us for years.

The recommended reading section of this site also includes a few books written solely on pricing handmade items.

Copyright, 2007, Inch By Inch Designs
No part of this article may be reproduced, either fully or partially without prior written consent from Inch By Inch Designs. 

Back to Articles