Who’s been there? Trying to figure out how to price your beautiful masterpiece that you spent hours creating.
You don’t want to price homemade products too low, because you worked so hard, but if you price too high, no one will buy it. Ah the tortures of creative business.
How to price homemade products like art, natural skincare, candles, jewelry, digital prints, consulting services, etc. depends on what it takes and how much time was spent to create your products. As with any business selling goods and services, you must account for everything it costs you to make something and add your profit margin (how much you want to make after all expenses have been paid).
Why Creatives Feel Hesitant to Price Homemade Products
I’m going to say that it comes down to the market looking down on homemade goods and services. It’s really all just a bunch of bull. Just because someone makes something from home does not mean that it’s worth any less or more than something made in a factory. Of course, this depends on the quality of products as well, but generally speaking, it’s the same thing.
As a fellow creative, I’ve been there. Family and friends feel like you should give them free stuff because of your relationship. Prospective customers think that just because your Swarovski necklace was made from home, it isn’t worth as much as the one you can buy in the shops.
Guess what, ya’ll. It’s the same crystals and sterling silver components you can get at your craft store. I’ve used and love Fire Mountain Gems, and I’ll be using their prices in my examples here. So don’t feel hesitant or shameful for charging for your hard work and services. Be proud, and hold your head up high!
Account for Your Supplies and Inventory
The very basics of business is knowing how much it costs to make something. Let’s say you are making a necklace for your Etsy shop. To make this necklace, you’re going to need these things:
- 18″ Sterling Silver Gossamer Chain 1mm Flat Cable with Clasp – $7.07
- 20 x 19mm Swarovski Crystal Star Drop in the color Crystal AB – $1.68
- 8x3mm Sterling Silver Ice Pick Bail – $8.26
Next, unless you can find these products in a store near you, you’re going to pay for shipping charges and taxes. Taxes will vary depending on your state, so you’ll want to make sure you use the approximate percentage for your situation. If I were to ship these items to me, it would cost $5.99 and no taxes will be charged from this site. Awesome!
For supplies, we have a total of $23.00.
Pssstt… I made this graphic, but feel free to use it and spread the creativity sparkle!
Don’t Forget Your Overhead
When calculating overhead, you’re going to want to include the resources used to create this necklace. Do you have a home office or craft room? How much time did you spend developing your idea and then creating it? What is the shipping cost?
These are the things you would add to your expenses. Determine how much each hour of your time is worth and add it up. To develop the idea of and create this Sterling Silver Swarovski Crystal Star Necklace, it might have taken you an hour total. If you decide that you’re worth $20 per hour, you add this to your cost.
If you’re adding your office space to your expenses, you would deduct how much it costs to use that room for an hour in terms of rent. FYI, this is also tax deductible. Yay! I have an office, and for an hour of work, it would cost me $0.10.
To ship this product via USPS Flat Rate, it would cost $6.45 if I purchased shipping online. Note: You save money when you use Click-to-Ship on the USPS website. #notsponsored
Total overhead expenses comes to $26.55.
The Profit Margin Goodness
So here we are at last. Making a profit from your business is ultimately your main goal. If it isn’t, your business model needs some work. I can help – check out my Easy Business Plan Creation! So back to profits. You determine how much you want to make on top of all your expenses.
I know you might be feeling a little queasy about adding more on top of those numbers you already see, but that’s how business works. If you don’t, you’re essentially giving this stuff away for free. Your business will go broke. Unless you can afford to, I recommend a strong, solid profit margin. All this really means is that you should add an amount to charge on top of your total product cost.
For example, we’ll use a 20% profit calculation. This means that you’ll add an additional $9.91 to your total product cost. If you do this, you’ll have that extra $9.91 to put away for a rainy day. You could also buy a coffee and a donut. Every day is a good donut day.
Adding It All Up
When you add everything up, you come to a total of $59.46 for this beautiful necklace. Let’s run through the math real quick one more time. Feel free to adjust numbers if odd/even numbers and change bother you. Personally, I’d charge $59.50, but that’s just me.
- Total cost of materials: $23.00
- Total cost of time spent: $20.00
- Office expense: $0.10
- Shipping cost: $6.45
- Product cost: $49.55
- Profit Margin: 20% at $9.91
- Retail Cost of Item: $59.46
So there you have it, and I hope I’ve inspired you to stop giving away your craft for free. You are the only one that can create like you. Price like it, and be proud. Now, go make some stuff!
Some of my favorite Creative Entrepreneurs. Enjoy!
Dorkface Shop by Jemma – Beautiful, fun, and quirky artwork
DehLezhen by Masha – Handmade gemstone jewelry
Wonder Forest by Dana – Home decor, custom cases, prints, and accessories