Many people are deciding to make a living by selling homemade items. Whether you make clothes, toys, jewellery, or anything else, you can sell them online and make a business out of your favourite crafts. When selling handmade items, one of the first questions is, “how much should I charge?” If this question is bothering you, you’re in the right place! I will share handy tips and advice on setting a fair price for your items.
The most important part of setting a good price is making sure that it covers your costs. If it costs £15 to make something and you’re selling it for £10, you’re losing money with every sale. So the first step to deciding on a price is calculating your costs. There are a few kinds of costs to consider.
Types of costs
Cost of Materials
First, the cost of materials. How much does it cost for the materials that go into your item? This doesn’t just include what the item itself is made from, be that fabric, wax, whatever is in soap, and so on. Materials also include things like labels and packaging.
Cost of Labour
Next, you need to calculate the cost of labour- how long it takes for you to make a product. It may be more efficient for you to make products in batches. If that’s the case, time how long it takes for you to make a batch, then divide that time by the number of items made.
For example, it may take me two hours to make 6 bracelets. That works out to 20 minutes per bracelet.
How much do you want to charge per hour? Of course, this will depend on many factors. Are you looking to make your business into a full-time source of income? If so, you will want a proper wage, what you would expect to earn per hour at any other job. Perhaps you are looking for something more like a side-hustle. You like to make things while watching Netflix and are selling them for extra spending money- if this is more like you, you may decide to go for a lower hourly wage.
If I decide on £15/hour, and assuming that each bracelet uses £2 worth of materials, that works out to £7 per bracelet.
Overhead costs are all the other costs that go into a product. These include shipping, website fees, and all the time that you spend on your business that is not spent making products- photographing items, packaging items to post, updating social media, answering emails, and so on. Shipping and website fees are easy to calculate. The Royal Mail website has lots of info on shipping prices, and FullFees can calculate fees for popular selling websites including eBay and Etsy. Other overhead costs are harder to calculate. If you have ambitions of a full-time business, you will want to be thorough. You can use a timer to track how much time you spend on overhead over a period of time, and then multiply that by your desired wage. Divide that cost by the number of items you sold in the same amount of time, and this is your overhead cost per product.
If my overhead cost in one month is £240, and I sold 30 bracelets in that month, then that would work out as £8 overhead cost per bracelet, which means that each bracelet would cost £15 to make (not including website fees).
If my bracelets cost £15 to make and I sell them for £15, I won’t be making any profit from them. You can add an extra 10-20% to your prices to make a profit from them!
If I add a 20% markup to my bracelet price, I will be selling each bracelet for £20.
After calculating how much it would really cost to sell your items you may be thinking “that’s way too expensive! I’d never sell anything!”, but this isn’t always the case. There are many things to keep in mind when setting a fair price.
Your work is valuable!
People often compare the price of handmade items to similar things that are found in shops. If I had a penny for every time someone’s told me “I could get something like that for £5 on Amazon!” then I’d be able to buy a pair of diamond-encrusted headphones to block their squawking out. Your products are far more valuable than cheap tat that was made in a factory or sweatshop in minutes for a quick profit. You don’t need to compare yourself with Primark- people go there for something cheap and disposable, people go to small businesses when they want something truly valuable and special.
How can you reduce your costs?
If you’re worrying that your prices are too steep, consider ways to reduce costs. Materials can be bought in bulk or wholesale, which generally works out cheaper than buying in small batches. To bring down labour costs, think about if you can make items more efficiently. How could you reduce the time that it takes to make items? This way, you not only have more products to sell, but you can also sell them at a lower price and still make a decent profit.
If you’re not sure how to price your goods, it’s helpful to see what other people are selling their products for. Look on websites like Etsy and see for what price items like yours sell. Be sure to find accounts with good reviews and lots of sales, as they’re a good indicator of how much people are willing to spend. However, don’t take these prices as gospel. There’s no point in selling your items at a loss.
Is your product worth the price?
Sometimes, there’s no way around it: you can’t reduce the costs any further. If your items are significantly more expensive than similar items, think about what makes yours more valuable. Are your products made with high-quality materials? Can they be personalised? Are they for special occasions? All of these are selling points that justify a higher price. Creating a strong brand can also help increase the value of your product- think about how much some people pay for a T-shirt with a particular logo on it! Cultivating the atmosphere of high-quality, artisan products will make customers more likely to find a higher price reasonable. Sometimes there are products that you love to make, but it simply wouldn’t be practical to sell them as they are too expensive or time-consuming to make. Find products that you love to make and that people are interested in buying.
I hope that these tips have been helpful. It’s not always easy to make a living through handmade goods, but it is extremely rewarding. It’s amazing to be able to make money from something that you’re passionate about and love doing! Do you have a business selling handmade items? Have you got any tips that help you price your wares, or do you have a question about pricing? Feel free to leave a comment sharing your thoughts!