Monday, March 1, 2010

Running Your Business on a Budget: Pricing Your Work

How do you price your work?  Do you use a formula?  Do you remember to charge for your labor?  How much do your materials cost and do you mark them up when you sell?

I may increase my prices when I get more comfortable with my work and produce more advanced styles of jewelry and accessories.  I increased my prices slightly when I started making my fabric flowers at a higher level of quality and one immediately sold.  It's as if people are willing to pay the fair prices for the work that we do (imagine that) and understand that sites like Etsy are for high quality handmade goods and not for getting bargain bin prices for manufacturer throwaways.  That's one of the reasons I continue to sell there in spite of some of the weaknesses you'll discover on your own if you spend just 5 minutes perusing the forums (we've had problems with manufactured throwaways sneaking onto the site for ages, up to and including NutriSystem meals -_-).  It's on Etsy that I was encouraged to charge more for my work than I had originally because I was taking into account the cost of supplies and the cost of shipping but not the cost of labor.  A bag of beads and wire is not worth nearly the same as a beaded necklace that took time to plan, design, and execute and that should be reflected in the jewelry artisan's pricing structure.  On the same token if a scarf and glove accessory designer is pricing, he must consider that his work is valuable to the degree that a ball of yarn is worth less than a finished winter scarf I can wear out in this still chilly March weather.

People equate higher prices with higher quality and you should let your pictures do the talking for you as to why your prices are fair.  You don't want to overprice your work either though, for example, by charging $200 for a simple pair of sterling silver earrings with manufactured findings and Swarovski crystals that took you a quarter of an hour to make.  There is a balance to be struck and as a businessperson you have to figure out what that balance is.  Research your competitors and find out what they're charging for similar work.  (Don't just do what they do because they have a lot of sales.  There are jewelry artists out there who sell only $1 and $2 earrings and they aren't the ones you want to emulate because they aren't making a profit.)  There are formulas out there you can find in forum threads and probably in a Google search that indicate what might be a reasonable price structure.  If you find one that resonates with you and you don't mind doing the calculations, go for it!  Find a way to make your pricing make sense (i.e. not arbitrary) and that gives both you and your customers a fair deal.

How do you price your work?  Let us know in the comments!

Until next time,