I hope you enjoy my new blog, with fluffy love and quacks, Mother Duck xxxx

Friday, 16 March 2012

How Much!?! Sorry it's too expensive for me!

I have been trying to write a Blog on pricing goods, I have deleted it and re-written it so many times. So hopefully today is the day and someone other than me is reading this.

So you had an idea; you put it down on paper and eventually it became something you are ready to sell. How do you decide what to charge? Well, you could pluck a figure out of thin air write it on a tag and hope it sells BUT is it a fair price? Have you covered the material costs, your time, the cost of utilities used etc? Are you making a profit?

There are lots of books, Blogs and videos out in the world that will give you many different equations on how to price your goods but there are so many variables that I feel it should be up to the individual how they make up the cost of an item.

Do we cost the research time for an item, the planning stages, the proforma stages or do we only count the time spent on the final item? If we are making items for say a craft market or to make stock for an on line store we probably only count the time spent making the specific item. If we are working on a bespoke item then the design time for a specific customer may to be taken into account.

Clearly there are so many variables to be added into any calculations used for pricing. Let us try and look at some of them individually and see if we can make our own equation.

  1. Material costs ... you need to work out how much the materials cost you, don't forget to take into account the postage you paid or the cost of travel to collect materials. Did you pay VAT?
  2. Your time ... so many of us under charge when we calculate this one! At the very least you should be charging at minimum wage BUT realistically as an artisan, a skilled worker you should be charging more than minimum wage. Your time is valuable and you should be charging properly for it.
  3. Utilities ... when you are creating your hand crafted item the odds are you are using one or more of the following, power for tools, lighting, heating and running water.
    Who pays the bill? You do. So surely you should consider passing some of the costs to the customer.  
  4. Profit ... that is quite a scary word to some people, often people feel embarrassed to talk about their profit on an item  BUT you are in business and as such you want/need to make a profit. How much profit margin you add to your items has to be up to you; some people add as little as 2.5% whilst others add 50% or more.
  5. Wholesale or retail price ... these are different. Wholesale is usually when you are making a quantity of something for the same customer that they are going to sell on to their own customers. You need to charge a reasonable figure for wholesale but you also have to price it so that your customer will be able to make a profit when they sell it on. You will need to know your Retail price to calculate a RRP to tell a wholesaler (RRP = recommended retail price) If you are selling the items direct to the customer you are charging the RRP ... the difference between wholesale and retail is a % profit. BUT when you are selling wholesale you still need to make a profit.
    So basically you need to calculate two prices for your items the wholesale price and the retail price.
  6. Are you charging VAT? If you are then you will of course have to add this into the calculations
    Please note that VAT in the UK at the time of writing this is 20%
So here goes at an attempt to make an equation ...

materials + time + utilities + profit = wholesale price

wholesale price + profit = retail price
Don't forget that you may also be adding VAT to the above equations

What we haven't taken into account here things like photography to display your items on line, stand fees and travel to craft events to sell your items, your time at craft events, website costs, postal costs, paypal or bank charges involved in taking payments, costs of other on-line stores. Only you can decide which of these you pass on to your customers. 

I can already hear people saying "if I charged minimum wage for my work plus all the other stuff being suggested people wouldn't buy my items." I ask you ... are you not worth minimum wage?

I am only making suggestions here, this is not set in stone, I am not telling you this is what you have to do, these are purely suggestions. You have to decide for yourself what you are going to charge but I hope this has given you something to think about, somewhere to start. You know your target market and the price range that they would be willing to pay. Believe it or not people will pay more for good quality hand crafted goods.

I am sure this is a topic we shall revisit as I am sure there will be much feedback from our readers, some agreeing with what I have written and others wholeheartedly disagreeing. 

fluffy love & hugs
Mother Duck


  1. This is very helpful. I have been so nervous about charging for my time, especially for items taking more than a couple of hours to make. Using this calculation for some recently made items does result in prices I feel happy to charge and you have given me much confidence in this.. many thanks Mother Duck xxx

  2. I am glad that you have found this helpful Claudia. I was worried about how it would be received; I didn't want to dumb it down for those that already have their own way of doing it nor did I want it to be difficult or confusing for someone just starting out.
    If you are using the minimum wage sum as you are starting out don't forget that as time passes your skills will be improving and as such you will need to consider that your hourly rate will increase.
    Good luck in your new venture I am sure that it will be a success xxx

  3. Even though I have been pricing up my goods on this method for a long time I still have a wobble when I see the final amount. Thank you for taking the time to write this xx

  4. This is really helpful thanks! I'm really bad at pricing my handmade items. I often end up knocking the price down from what I work out is a more realistic price allowing for profit. Every customer will have a different opinion of course of what something is worth. I recently showed some of my t-shirt designs to my mum, who said she thought I was too expensive and when I pointed out the cost of the tops, threads, not to mention my time she said "well...is it worth the bother"! Then, 2 customers told me on the same day that I should put my price UP...definitely something I need to be better at working out, sticking to, and having confidence in my own decision!