I’m going to be honest here. I hate talking about money and I spent a few days debating about doing this post. I don’t feel I need to justify what I charge for anything, after all, a lot of time goes into crochet. However, I got a notice from Etsy that I have a listing expiring and I should look it over to see if I can figure out why that item didn’t sell. So, after some thought and math and an eye opening revaluation and remembering that I had stern words more than once with my friend over at The Crafty Gamers about how low she was pricing her baby blankets initially (she wasn’t even covering her costs) I decided to go ahead with it.
If you look around long enough on Etsy or any other site where you can buy handmade items, it seems that there is no rhyme or reason with the big picture of item pricing. How do people determine their prices? That is as varied as the people selling things and I can’t even begin to go into that. I’ve sat through some basic business and accounting classes and have the knowledge I need to run a home based business. I also know how to promote myself online – I hate promoting myself but I will promote others until the cows come home. I feel like I am being arrogant or something talking about myself. I don’t know why. That’s a blog for another time.
The first thing I do is make a note of how much my supplies cost. This is crochet, so that means yarn. I am currently working on Twinkie Chan’s Gummy Shark Scarf so I am going to use that as my example. It’s also what I have already done the math for.
The scarf is made out of 9 of these shark panels. That’s 18 shark bodies plus dorsal and tail fins, and the yarn to sew the two parts together. By my estimations it’s costing me about $15.00 in yarn. I am using Lily’s Sugar ‘n Cream for this in white and overcast. (This is actually the first shark that I put together, it has so much “character” where it was my learning curve shark.)
One of the formulas for pricing items tells you to double the cost of supplies to get your selling cost. That works well for small projects. But let’s talk about this scarf. When done it’s around 108 inches (274 cm). Now double that because there is a grey side and a white side. That’s a sizable project. Not as large as say an afghan, but it’s time consuming. $30 doesn’t even begin to cover my time to make this for someone.
Minimum wage in the state of Virginia is $7.25. I’m using that number because my time is worth at least that according to the state Department of Labour. Each shark body takes me about 20 minutes to put together. I don’t know what my crochet speed is compared to other people so don’t judge me (I also have tendinitis and arthritis in my hands so that probably slows me down). There are 18 of those bodies plus fins, sewing the fins on the sharks, and sewing the layers together, then sewing the sharks end to end.
- 20 minutes for grey body
- 20 minutes for white body
- 20 minutes for fins (10 minutes for dorsal fin, 10 minutes for tail fin plus sewing them on)
- 20 minutes to attach the grey and white pieces together
- That’s 80 minutes a shark
80 minutes X 9 sharks = 720 minutes – That’s 12 hours plus the time it takes to sew all the sharks together where it’s a scarf. Let’s say 12.5 hours total.
12.5 x $7.25 = $90.63
Add in supplies and the grand total for a shark scarf is $105.63
I am not comfortable with charging someone $105.00 for a scarf. Is there anyone that would spend $105 for a shark scarf? If you would, let me know, would you? Thanks. XD
I came across a blog post titled 8 Surprising Reasons You Should Raise the Price of Your Handmade Items over at Creating Beautifully. I am still not charging someone $105.00 for a shark scarf.
- Most buyers equate price with quality.
- You’re not taking everything into account
- Your can’t make money selling your products to wholesalers at your current price.
- You’re paying yourself less than minimum wage.
- Your sales might actually increase!
- Just because you can’t afford your own products, doesn’t mean someone else can’t.
- People don’t like to give cheap gifts.
- Sites who feature handmade sellers, might not feature you if your prices are too low
Still not charging $105. for a shark scarf. Let’s discuss these points.
I do have to agree with Jules on the first point. I also have to give her point number two. However, I really don’t want to sit down and figure out how much electricity I burned having the lights on while I worked along with the radio or on the rare occasion the TV (some people argue you can’t charge for the time that you crochet while watching TV because then you aren’t devoting all the time exclusively to working on a project). I also don’t want to try and guess how many things I am going to sell a year to equally dividing web hosting costs between everything (it would be a few pennies, at least)…There are so many small things that go into a business that you have to be able to cover the costs of.
- gas to go to the post office and store for supplies
- business cards
- time spent listing items and taking pictures
- time spent on marketing
My brain hurts just trying to figure out how to incorporate all this into the cost of something, but it is overhead and boutiques and yarn stores take these things into account. I don’t have the patience for it all so I just deal with most of it at the end of the year as business expenses that I can deduct as a loss on my income taxes at the end of the year.
I am skipping point 3 because I don’t plan on doing this as I am currently using other peoples patterns and this is against their TOU. Maybe down the road it will be a concern.
Point four. I probably am. Actually I know I am because I do not count into the price of anything the time that I spend taking pictures and doing Etsy listings and promoting things. That would probably be another hour or two of time on top of my estimated time, at least. Jules pointed out under this “This is your business, and you should be paying yourself a decent, living wage. I would say at least $20 an hour, because you’re a talented craftsperson.”
Let’s figure out the cost of this shark scarf using Jules way of pricing. 12.5 hours (plus another 2 for pictures, listings and marketing) X $20 an hour plus supplies comes to to…$305 for a shark scarf.
Either I need to find people with more money than brains to buy my stuff or I need to learn to crochet a lot faster. $105 is starting to look a lot more reasonable, isn’t it?
And moving on to point 5, at $305 a scarf I seriously doubt my sales are going to increase. People are going to look at me like I have 3 heads. Everyone I know would ask me what the hell hell is wrong with me. On the other hand, if you consider a 40 hour work week, that would be 2 shark scarves plus some small items, but we are only talking shark scarves here for ease, so $610 a week. That’s a decent paycheck…IF they sale. There are no guarantees, especially at $305. Okay, they just aren’t going to sale at that. Who am I kidding saying IF. It’s not happening. And as for point 6, just because I can’t afford my own stuff, doesn’t mean someone else can’t. Can we talk about how just because you can afford something doesn’t mean you still want to pay the asking price of something, especially if it’s outrageous. I’m sorry, if I crocheted the sharks out of hand dyed angora yarn, it might be worth $305, but I’m using 100% cotton here. Some perspective is needed here.
Point 7 – people don’t like to give cheap gifts. This is true, but at the same time if someone found out that grandma spent $305 on a 100% cotton shark scarf they might have her committed to the retirement home because she’s going senile.
Point 8 is something else that I am not worried about because I have no idea how sites choose to feature things. Maybe it’s something I will look into, but I seriously doubt that anyone is going to feature a $305 shark scarf, even during Shark Week.
So, how do I work out what I charge for something? This is where it gets a bit arbitrary. Cost of supplies plus Time spent (at minimum wage) minus at least $20. That brings said shark scarf down to $85. There is a good chance that more would be knocked off the price. If others are selling a similar product for between $50 and $60 I would bring my cost down to match the average going price because I like to think that I am a sane and reasonable person. Even at $60 I would be making $45. I’m good with that because I like crocheting and I like giving people the things that I make. I can’t give away everything I make, my family would take away crochet hooks and yarn and bank card where I can’t buy replacements and my cat wouldn’t have yarn to play with and no one would be happy.