Monday, 14 April 2014

FAQs Series: Pricing Handmade Goods

Most designers don't start small businesses with a view of making as much money as possible. They're started because people are passionate about what they make/design, and because they want to share their creations with others, so every decision is made with their customers in mind, rather than lining their own pockets. If you think of your favourite indie designers, I can guarantee most of them will just be taking just enough money to get by from their business, and putting as much as possible straight back into it.

However, we still need to be financially viable to keep providing you with the products you love at the quality you love. One of the most difficult aspects of running a business based on products you've made yourself is pricing, and is usually what separates a business with long term prospects and one that will usually remain a hobby. Your price tells a story and gives value to your creations - so make sure you're telling the right one!

A lower price does not necessarily mean more sales - instead it may have a negative effect on how others value your work, and so it's important not to price your items too low that you devalue their worth, but it's also equally as important not to price them too high for your market. Most creatives have difficult with pricing, because they struggle to match what is offered on the high street manufactured on a mass produced scale in China or by craft hobbyists.

It is so important to understand your market and your competitors - especially whether they're hobbyists who just want a little extra cash on the side, or whether the work full time and need the money make from their business to live - there will be a HUGE difference in pricing between these two groups. The pricing of your items will depend on your target market as well as the demand for the product, and what similar products there are out there, but this does not necessarily mean you have to compete with the prices offered by others. When I started Little Miss Delicious, one of the things that really surprised me was how much polymer clay artists undervalue their creations because they just want to sell a few pieces a month, and that is still something I'm constantly battling with since it effectively makes it seem like I'm charging a great deal more, when the reality is just that I work very hard to maintain a full time business, while the average clay enthusiast just does it for fun, and their livelihood isn't relying on the money made.

My prices are based on the fact each item is completely made by hand, and clay items especially are a very time consuming process, as they are individually hand sculpted as well as hand painted. On average, one piece can take up to 2 weeks to finish - which is why I tend to make things in big batches!

There is no simple calculation when it comes to prices, especially when it comes to evaluating the worth of something you've created. However, there are handy guidelines and formulas to take into account when it comes to pricing your items to ensure you're giving them the correct value rather than underselling yourself - which seems to be a huge problem in the handmade community! Instead of stressing over cheaper competitors, the price for handmade items should be based on the cost materials used and how much work goes into producing them. One of the most helpful formulas I've found for calculating the price of handmade goods is:

Materials + Labour + Profit = Wholesale Price
Wholesale Price x 2 = Retail Price

This ensures all expenses and profit are accounted for in your pricing, although this can sometimes be a difficult way of looking, especially when you're competing with people who sell similar designs at a much lower price than the true costs involved, but it's important not to let this affect your pricing.


This includes all your material fees that should be incorporated into the final price of the item, from the cost of buying your materials to the lesser thought of expenses such as PayPal fees and website maintenance costs (or transportation costs for events). I tend to divide the cost of each item I purchase by how many pieces I can get from it to work out how much each piece costs to make. Another way of calculating the material cost of your products is to write down your total monthly expenses then divide that by the number of items you'd like to sell a month. Items you buy once and use over and over to produce your products are better absorbed into the overall cost of your business rather than individual product costs.


The main difference between mass produced items and handmade products is the time invested into each item. It's important to calculate how long it takes on average to make each item, and adjust your price accordingly. There is no set hourly price, so make sure you do your research! Ideally you want to be earning no less than minimum wage, but due to the time involved in producing  LMD items I tend to price this lower as otherwise the items would be priced well out of my market, but this will be different for everyone depending on your methods and how you value your time - keeping in mind a crafters most valuable resource is usually their time!


Possibly the most challenging part of pricing your items (and something many people forget to include) is allowing yourself to profit from each item sold. While at start of running your business you may only break even, this is because of the initial large investments made, and so once past this stage you should be making something on top of the costs of each item. Again, there is no set price for this, but it should be within reason and largely dependant on what you're selling and what you want out of your business; whether it is something you're looking to do full time etc. This is also where branding plays a huge part - the stronger your brand, the more consumers will be willing to pay the extra to own something from it.

Retail Price

Once you add the above 3 together, this becomes your retail price. However, that is not the price you sell to the general public - it may be tempting to do, but not only does it massively undervalue others that do price their items at the correct retail price, but it also rules out any possibility of selling your goods at wholesale should you choose to do so later down the line.

If after this you feel your price is too high for your target audience, it might be beneficial to consider the way you produce your work and try and see if you can adjust the design or your methods to reduce costs. I do this by buying supplies in bulk and creating big batches of items at once rather than just working on one piece, and it's made a huge difference.

But no matter what you price your items, they'll always be seen as being too high for someone, so it's important to focus on your target market when it comes to pricing rather than a more general audience - especially if that more general audience don't understand the value of handmade items! When I first started, I never expected to run LMD full time so massively under-priced my designs, but it wasn't until I raised the prices a few years ago that things really took off - the higher prices made people appreciate their purchases more, and realise the value and worth of handmade. So Don't by shy and undervalue yourself, but instead use any price criticisms as opportunities to explain the worth of what you produce, the time and effort that goes into them, and the specialist nature of their value. The more makers stop under-pricing their items, the more valuable the general public will start to see them and realise why handmade pieces cost more than mass produced items from China! Then maybe next time a stranger asks what I do and I say I'm a jewellery designer, they won't be so surprised when I tell them I don't sell on eBay and I actually do it full time ;)

This post is just my view on the topic and I'm sure there are lots more out there, but I hope this has provided a helpful insight into the process behind pricing handmade goods! What's your best pricing tip?

Read more FAQs Series posts here.

1 comment:

  1. Thank you for posting about the price of handmade. I'm Rachel and I'm from Chile, I'm a crafter, I knit and do a lot of handmade for hobbie, but since later October from past year I start to sell a lot of products made by me with the name Arco Iris De AzĂșcar and I've got problems giving value to my accesories and others products, so I made a formula similar than yours but your post shows me a better way to give prices and clears me all the way. Thank you for sharing, I'll do the same with my public, it's good to share advices for little crafter with passion on handmade :)





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