One of the most challenging things about being a creative person looking to profit from your work is knowing how much to charge for it. It can often be difficult to place a realistic price on something so personal, because that's what art essentially is - you sharing a part of yourself with the world. Whatever it is you choose to sell, rest assured that with few careful considerations and some simple number crunching, you'll soon be on your way to seeing the financial benefits of all your hard work.
I'll never forget a piece of advice that was passed on to me in art school after I had sent through a price list for my work in a group exhibition. The curator of the show took me aside and spoke to me (rather sternly) about the importance of pricing my work properly. She said, "If your prices are this ridiculously cheap, potential buyers are going to wonder why that is so - are you using bad quality materials and supplies? Did you not make an effort when you were making it? Do you just not care enough about your own work? Why then would anyone else care enough to buy it?"
Don't be afraid to be honest with yourself and others about how much it costs to make the product you are selling.
Before this chat my prices had seemed fine to me. As a newcomer to the world of selling my creative products and services making any kind of money seemed like a dream come true. I worried that if I charged too much for my work it might not sell. What if people thought it was too expensive and didn't look twice at it? I think back on this now and realise that I didn't value myself and my skills as much as I should have.
Having confidence in yourself and the things you do is an essential first step when pricing your work. You are an artist. You have an amazing creative skill. You work hard and make incredible stuff. Not everyone can do what you do. These things are all true, and for this you deserve to be rewarded! Don't be afraid to be honest with yourself and others about how much it costs to make the product you are selling.
Also, in a consumer market filled with cheap, low-quality goods that are just a click of a button away, it is becoming harder and harder for those of us trying to make it in the handmade marketplace to succeed. Don't be scared of this - handmade goods are so much more precious than cheap, mass-produced things. Pricing your work below what it is really worth is not only selling yourself short, but could also be sabotaging other creatives like yourself because it is setting an unrealistic standard for consumers when it comes to buying handmade.
Do The Math
I'll be honest with you, I hate numbers. I'd rather be spending my time making pom poms than crunching digits. I'm sure there are a lot of you out there that feel the same. That's why having a handy formula set in place will make pricing your work a cinch, leaving more time for the fun stuff!
Why use a formula? Well, pricing to a set formula will keep everything consistent and ensure that you can always cover your costs while also making a profit. Sounds good to me! There are many different pricing formulas out there, and by all means use them if they suit you better, but I found the one I'm about to share with you the easiest to understand and use.
Handy Pricing Formula:
Time + Materials = Cost Price
Cost Price x 2 = Wholesale Price
Wholesale Price x 2 = Recommended Retail Price
- Your Cost Price is how much it actually cost you to make your item, including your time. (Time + Materials)
- Your Wholesale price is the base rate at which you would price your work if selling it in bulk to a retailer. (Cost Price x 2)
- Your Recommended Retail Price (RRP) is the rate at which you (or a store selling your items) would price your work for sale to the public. (Wholesale Price x 2)
Figuring out your cost price is probably the most complicated part of this formula, and will require you to do some hard thinking about how much you value yourself and your skills as a designer and artist. To calculate the Time portion of your formula you'll need to work out an hourly rate that you feel comfortable with charging for your services.
There are handy rate calculators to help you do this, like the one over at FreelanceSwitch. Once you have an hourly rate that you feel good about (don't sell yourself short - think about what an acceptable rate would be if you were working for someone else!) multiply it by the amount of time it took to make your item and you'll have your Time figure.
From there, you can easily fill in the rest of the formula to complete your pricing! Now you'll be guaranteed to get paid appropriately for what you make, while also ensuring you make a profit whether you're selling wholesale or in your very own shop.
Be Competitive Without Compromise
So now you have a pricing formula to work with. Yay! After I used it for the very first time I did a bit of research and looked at makers that were selling similar products to mine, just to get an idea of how my product prices were sitting in comparison to others. I realised that in some cases, there were huge price differences between us, despite the fact that our products seemed to be made in similar ways.
I had another look at my production costs and realised that I was sourcing my materials solely from big retail supply stores, where products have already been marked up to make a profit for the store. If I found some wholesale suppliers to get my materials from, it would cut my production costs down and place me a bit more competitively in the marketplace. So that's what I did.
It is better to cut costs by finding more affordable supplies than it is to cut costs by sacrificing how much you yourself are being paid to make the item.
You too can find wholesale suppliers in your area, or even interstate. They're out there! And they usually have a larger selection of product to choose from at a way more competitive price than if you bought your supplies from a craft store in the mall. If you're worried that your final product price seems a bit expensive (believe me once you add all the numbers up it can definitely seem that way!) it is better to cut costs by finding more affordable supplies than it is to cut costs by sacrificing how much you yourself are being paid to make the item.
That being said, sometimes it is hard to reduce your materials costs, especially if your items are made using specialty supplies (for example, hand-spun wool, eco-dyed fabrics, locally made products etc). If using these kinds of materials is important to you and to the story behind your brand, don't comprise! Stick with your prices because that's how much it realistically costs to make your products just the way you want. And there's nothing wrong with that!
The Ultimate Package
Selling your creative work is super exciting and being able to make a profit from your passion is the ultimate dream! Having a strong pricing system in place means you are already well on your way to achieving that dream. But how can you ensure that your wonderful products are being noticed?
Combine that solid pricing structure with creative and strong branding and packaging, clear and concise product descriptions, great product photos, an active social media persona, stellar customer service, and a passionate story behind your products and you'll be the ultimate package. Good luck, and have fun!
I'd love to hear about your pricing strategies, feel free to share your top tips in our comments section!