Why Are My Prices Changing??
You may have noticed a change in my prices this month. I have been working hard to standardize my pricing these last few weeks, with lots of excel spreadsheeting involved. My goal by the end of the year is to be paying myself at least for my time sewing and patterning for my business. (paying myself for my admin is a whole ‘nother issue I need to tackle) Right now, all of the money I make goes straight back into the business, buying supplies and marketing materials, etc.
My pricing breakdown is something like:
Profit I get from Etsy = price + shipping cost - cost to wash fabric - cost of shipping supplies – cost of material – my actual cost to ship - my labor (cost of my time patterning and sewing, cost of my time listing the item, cost of my time shipping the item) – 3.5% Etsy fee – (3%+.25 direct deposit fee)
Wholesale Profit = (retail price * .5) - cost to wash fabric – cost of material – cost of my product presentation and packaging– my labor (cost of my time patterning and sewing, cost of my time interacting with store owners)
I am trying to juggle these two formulas, and also trying to standardize some of my profit margin: 25% if it’s resale, and 15% if its wholesale
That 15-25% profit? It is there to help cover random overhead costs of my business: my car fuel, my administration work hours, my internet, my website, assets like my camera and much more. Is it too high? Is it too low? I’m not sure yet. Only time will tell. Covering those overhead costs depends a lot on how many items a year I sell, as well as how expensive of an item it is, and the total of my overhead costs, all of which I don’t have nailed down yet. I also haven’t been super strict when it comes to these numbers, because the products I sell are so varied in price. So 15% of a $10 item is much much different than 15% of a $400 item. So sometimes I adjust accordingly.
I have no idea if I am doing this right. In fact, I have no idea if there is a “right” way to do it. It is simply what I came up with for now. And this change in pricing isn’t final. My product prices are very likely to change again. Here’s why:
The moral of this story? Pricing is complicated. And in order to be a profitable business (that can actually pay me) I am doing my best to figure out how to price my items to cover all of my costs. So bear with me as I make changes. They aren’t random, or greedy, or personal attacks on your wallet. They are just a reflection of a small one-woman business trying to figure it all out as she goes.
P.S. I am always open to tips on how to price things! Let me know if you have any suggestions, or see that there is anything I can do better!
Thanks Eddi! It IS complicated, and I'm still learning new parts to it every day. I hope that giving everyone an inside look will help people understand why it can be expensive to buy handmade. And maybe it will help other handmade businesses to take a look at their pricing too!
4/13/2016 07:42:48 pm
I think it's really helpful that you included the cost breakdown! Everyone knows that starting a business is expensive, but most people are unclear of just how many areas the money made off an item needs to be allocated. Very informative!
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creative business owner. designer. hoosier. crafter. runner. sewer. swing dancer. outdoor enthusiast. entrepreneur. wife. material hoarder.
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