Sunday, 29 March 2009


For what it's worth

Probably one of the hardest (and most personal) decisions when you first start selling your handmade goodies is how to price them. Do you use formulas based on materials and an hourly wage? Study going rates of what people are willing to pay for similar things and follow the trends? Are they plucked from the ether? Trial and error? Consult your Magic Eight ball?

It's incredibly common when you first start selling to set your prices too low. You're not established, you worry that people might not buy your things if your price actually reflects your time and effort. Maybe you see how cheap things are on the High Street, and think, 'Why would anyone buy my ten quid t-shirt when they can buy a five quid one from Tesco's? I'm going to have to price mine at five too...' And even if you're comparing your things to other handmade goods, you might think, 'They're established, I can't charge the same amount because everyone will buy from them...' and you make your cheaper price tag the differentiator to try to generate business.

None of this thinking is bad or wrong, it's almost universal when you start out. I've only been selling for nine months, and when I started my prices were generally 50% to 100% lower than they are now. Sure, I sold a lot of things because I was cheap but I was hardly clearing any profit and was selling myself short. And probably pissing off other makers by devaluing handmade. In my experience, people buy handmade because they value handmade, not because it happens to be the same price as something mass manufactured in the developing world.

How should you determine your prices?

Materials are really your bottom line, you should at least try not to sell something for less than your material costs. Unless of course you're doing a loss-leader to generate more lucrative sales, in which case you won't need my advice and I should be reading your blog instead. If you have to sell at a loss to get rid of it, either your materials are too expensive or it's just not desirable enough. *feeling mean* It's worth saying though, that if you physically have goods that are already made, eventually it's better to sell it for something than keep it for nothing. Decrease your price gradually until you have a taker, re-coup some of your investment and learn from it. I hardly keep any stock now, because I don't like having things hanging around not selling. I'll make it once, list it, use the same materials to make other things, and thereby cover my back and make it more likely that my materials aren't sitting around either.

But what about time and labour? I personally don't have an 'hourly rate' rule. If I did, I'd have some crazy prices. For example, I could probably applique fifty t-shirts in the time it takes me to make a complicated three layer jacket. Materials nonwithstanding, should I therefore price my t-shirts at a fiftieth of the cost of my jackets (supermarket prices) or inflate the prices of my jackets to fifty times my t-shirt price (designer prices)? It wouldn't make for a very homogenous brand if I did either of those things. The key for me is to spread my time and profit over a lot of different designs. My ratio of time to profit might be poorer for complicated things, but they are what drive people to my shop, and increase sales overall... including things that have a higher time to profit ratio. As long as it doesn't ridiculously undermine the value of my time (and of course covers the material costs) if a particular item sells at a particular price then I'll generally go for it.

How do I determine the 'particular price'?

Probably the most important factor for me when determining prices (and indeed deciding which designs it's worth pursuing) is the going rate. And that's not just the going rate for all sellers of a similar item, but the going rate of my items (because I'm special, my Mom says so). I have been suitably nervous each time I've increased my prices, but sales have increased as well. That just proves to me that I have been underestimating my product worth. Of course, it can go the other way too. You might think your stuff (especially if you're basing it on an hourly rate) is worth more than people are willing to pay. For example, what if I decided to stop buying blank t-shirts to appliques and sewed them myself? It just wouldn't be worth my while, because an extra two hours to make a blank t-shirt to applique is unlikely to impress a buyer enough to spend twice as much.

It also goes the other way though. One thing that's always quite shocked me is the price of 'boutique' children's clothing in the States. Most commonly seen on Ebay (but also Etsy to a certain extent), they are listings like this one:

The listing is only the dress, none of the accessories. It does have a lot of applique work to be fair. So what do you think... what's it worth? Well, according to the seller: $325 or best offer. I've checked out her feedback and although she hasn't achieved this price for any of her recent sales, she's having an awful lot of sales at around the $100 mark . I always tut when I see the prices that 'boutique' clothing sells for, but their value is based on what people are willing to pay.

If only I had the stomach to make such things, I could be raking it in too...


  1. Brilliant post, thanks, I always have trouble with pricing too. My hubby always says "What would you pay for it?" and the answer is nearly always the same; I'd see it, like it, go home and make one!!

    Can't believe that rainbow dress!


  2. Amanda, what an insightful article; you had me nodding through most of it, and I esp. liked the way you determined your prices, by your own going rate. What you sell is indeed special! Not going for the hourly rate method and spreading out your prices/ profit margins over your range makes a lot of sense.
    Thanks for a really worthwhile read.

  3. Excellent article as always! My first really successful knit was an Adipose (Dr Who, we won't go into the copyright issues at this time, but I learnt my lesson).

    I was selling on ebay - they were selling faster than I could knit, and for a day or two I did nothing else. Eventually it dawned on me to put my price up till I found a comfortable level where I could still sell, but still knit at a pace that I could enjoy.

    I now *know* I'm not in the same income bracket as my customers (fortunately!)

  4. great post, good point, I always think that I have got my prices too high, but then I have some things really cheap... I cannot put them too low as I would not have enough time to make things, but I want to sell a bit more...

    I tried to lower my prices on etsy for the mittens that were selling very well in the winter but it didn`t work... I think I will stick to my price as I am getting good feedback from customers, I am sure that I make unique things and they are very good quality, if have something that don`t sell I don`t have a heart to sell it under the price of material so if all family already have my things I just donate it to charity...

    thanks for the post

  5. great post - thankyou.

    it is sooo hard to price items - there is no way i could charge for my time with my hand-made items - i tend to look on etsy/folksy see what others are charging for similar items and go from there.I'd also agree with Daisie i see things and think well i could make that. . . .!

  6. AMAZING that people are willing to spend that type of money on hand made items!! The Ebay dresses and outfits were so awesome but I could never see myself spending this type of money on clothes! Wow...makes me want to learn how to sew!

  7. I enjoyed reading your article and too find it hard to price my goods. I also use internet sites such at Etsy to guide me.