topnav
header
navbar

Archive for April, 2012

An Etsy Tale… Pricing for Profit

It’s a common known problem that if you charge too much for your items, people may dismiss them for being too expensive, but not many people seem to realise that it works both ways. If you charge too little people may dismiss them for being too cheap and not of a good quality. Have you heard the saying, “Too good to be true?”

Pricing is always difficult, but once you find a formula that works for you, it will be a breeze.

SET YOURSELF AN HOURLY RATE
Once you’ve done this you can work out how much time it takes you to create each piece and then work out your ‘labour’ charges for that item.
If your hourly rate is £10 an hour and it takes you 20 minutes to make an item, your labour charge will be:

10 ÷ (60 ÷ 20) = 3.33

We divide 60 by 20 because there are 60 minutes in an hour and you use 20 of them to make the item. Thus you are dividing the hourly rate by three (three 20s in 60).

When setting your hourly rate consider that there will be some tasks you carry out that you won’t end up charging for your time for, for example listing items, packing orders.
Try and decide on your hourly rate with this in mind.

Don’t under sell yourself as an artist. You have a skill, take pride in your work. If you already do or you want to make this your full time job then you will need to earn enough money to pay the bills and put food on the table.

Bow Purse | Curious Miss Clay

COST OF SUPPLIES
To make life easier, keep all your receipts and invoices in a binder. You will never remember how much you paid for something a couple of months down the line.

If you have supplies delivered to you remember to include the shipping cost into the cost of your supplies.

Example: If you buy 100 jewellery ear wires for £8 and then the postage charge is £4, to work out the cost of each ear wire do as follows:

8 + 4 = 12

12 ÷ 100 = 0.12 (12p)

So an ear wire costs you 12p or a pair for a pair of earrings will be 24p

PRICING FOR WHOLESALE
Don’t forget that as well as selling your beautiful items to individual customers, you may get enquiries from companies who wish to buy in a large amount of your items and sell them in their shops, galleries etc
If you don’t take this into account, you will never be able to sell wholesale without losing money. You need to set a wholesale price before you can set a retail price. Your retail price is what you will charge on Etsy.

I will go into wholesale selling in more detail another time, but remember that if a company wants to sell an item of yours in their shop they will want to compete with your retail price for it in their shop. They will not buy items at full price and then add their retail mark up to it because they may lose their customers to you as you offer a much better price. Most wholesale bought products will be marked up by at least half so if they buy an item of yours for £18, they will likely sell it on for at least £36.

Do not accept a wholesale price unless you are selling in bulk, e.g. 10 of each style.


Price Tags | pinkdotsetc

HOW DO I PUT THESE COSTS INTO A RETAIL PRICE?
To work out your pricing you need to add the cost of supplies, including delivery to you, to your labour cost for the item. This total is then below the minimum you need to charge so you are not losing money. Once you have worked out your wholesale price, bearing in mind you need to make a profit on that, you need to at least double that amount to get your retail price.

So my item costs might go something like this…

20 minutes of labour at £10 an hour = £3.33
a pair of ear wires = £0.24
6 beads (3 each earring) = £3.60
a pair of headpins = £0.18

Total = £7.35

Wholesale price = £12

Retail price = £24

POSTAGE AND PACKAGING.
On top of your retail price, you will need to charge postage and packaging. You can do this in a number of ways, but don’t forget to incorporate all costs such as jiffy bags, ribbon, business cards, printed invoices etc

You can charge for this all under ‘postage’.
You could add the packaging costs to the item cost and have your ‘postage’ charge be the actual amount you pay at the Post Office.
You could incorporate the entire cost to the item and not charge any extra for postage. This all depends on how you like to work.

In my experience, do not load any of the item costs onto the postage and packaging price. Keep your shipping costs as low as possible so as to not put customers off with these charges.

Tennessee State Quarter Ring | customcoinrings

OTHER TIPS TO HELP YOU PRICE FOR PROFIT
Charge at least what the same item is being sold for on the high street. If you’re selling on Etsy your items are made by hand, each one is individual, each one is cared for. They are not mass produced in a factory. A handmade item carries a premium price.

Research. Search Etsy for similar items and note down their prices. Be aware that some similar items may not use the same components as you and some other sellers may not have their pricing right so don’t be too put off if you feel you can’t match another sellers pricing.

Feel free to ask friends and family what they would pay for one of your creations, but take what they say with a pinch of salt. Often family members don’t know the market like you do and they don’t realise all the work you put in. Sometimes it can feel like a hobby to them.
Try going onto the streets with a survey and ask the general public. Take your survey to different areas… students, stay-at-home mums, working professionals. While you’re there try and get their email addresses so you can let them know when you start selling or give out business cards for your shop if it’s already up and running.

Prices are not set in stone. Don’t be afraid of pricing, you live and you learn from your mistakes. If you sell an item and realise you’ve made a loss, chalk it up to experience and quickly put changes in place so that it doesn’t happen again. Trust me, we’ve all been there. I can’t believe some of the silly prices I used to charge ;)

Don’t change your prices all the time, this will be frustrating to customers. However you are well within your right to charge what you want.
If the costs of your supplies go up, you will have to increase your prices. Make sure you review your pricing at least once a year.

That’s all folks!

See previous installments, here:

An Etsy Tale… Introduction An Etsy Tale… The Basics An Etsy Tale… Shop Info &
Appearance

 

posted by onetenzeroseven in Uncategorized and have Comments (9)

Easter Weekend… Minus the Easter.

So this weekend has been super long here in the UK, not sure how wide across the world this holiday spreads. We had Friday off and go back to work tomorrow (Tuesday) and quite frankly I want to marry this bank holiday and have it’s super awesome babies ;) I feel SO cleansed, like you wouldn’t believe. I have scrubbed so many tasks off my ‘to do’ list and I feel very clear on what I want now… getting it is the next hard part, I guess.

I usually spend Easter Sunday with my mum and my brother. The last few years my brother’s girlfriend has also been getting involved and we still have an awesome (and wildly competitive!) Easter Egg Hunt, despite being in our mid-to-late twenties (Holy God, I am in my mid twenties?!). This year, however, my brother couldn’t make it down until next weekend so we’re, uh, postponing Easter. Thus meaning my boyfriend will be at band practice so I am a team member down! FAIL.

It’s been so nice around where I live, super quiet! I live in a very ‘student’ area so I guess everyone went to spend the holidays with their families. I adore the peace and quiet it has brought us, especially in the park!

My mum brought me this vest back when she went to California a few years ago to visit her partner’s family, it’s quite worn and a bit bobbly now, but I still love it. The necklace I got more recently from a jewellery shop in the mountains of southern Spain where my uncle lives. I really love how the two look together. The colours aren’t complementary whatsoever ;) but the whole ‘tribal’ look brings them together and means I can wear a red cardigan with my vest. Whoever said “Red and green should never been seen…” I stick my tongue out to you.
In other news, I’m finding outfit posts harder each time, which is unexpected really. I can’t help but feel that pang of sillyness, but I shall not give in.

Cardigan | Zara
Vest | Forever 21
Jeans | American Eagle
Brogues | New Look
Necklace | Unknown Spanish boutique

I will let my freak flag fly.

x xx

Related Posts Plugin for WordPress, Blogger...
posted by onetenzeroseven in Uncategorized and have Comments (4)