Wednesday, July 2, 2008

Calculating Costs/Pricing For Etsy

Here is another topic that we run into all to often on Etsy. People dont know how to value their work. Most of us are stuck because we dont know how to value our work. Many times we look at the costs of listings, paypal, materials, but we forget about our time and effort. In this blog I am going to put my two cents into pricing for Etsy.

Your going to see a recurring theme in my blogs and that is about quality and perceived quality. In my last blog on Photography For Etsy part 1, I talked about how you have to show people the quality of your work through photography. The same holds true with your pricing. You need to be able to justify your pricing through photography and your item description. If you are taking the time to make a quality product you should be compensated for it.

To many times people are trying to look at their competitors and undercut their price. STOP DOING THAT!!!!! Instead of underselling your competitor tell people why they want to buy your product. Give them reasons to buy from you. I dont know all the crafts on Etsy or the proper terminology but use it. If you are making a bag to be sold on Etsy did you use interfacing(my wife helped me with this one) between the layers of fabric? Are the zippers sewn in correctly are you using a stronger stitch on your seams or whatever it is you are doing tell people. It helps build value in what your selling.

As for figuring pricing only you can come up with a price. You need to figure out what your true cost is. I am going to keep using the bag example because my wife makes a ton of them (however doesnt list them on Etsy yet anyways)for friends and herself. Now lets look at what her actual cost is the pricing I am using is made up I have no idea what this stuff costs.

Fabric $3.00
Thread $1.00
Interfacing $1.00
Shipping/packaging $6.00
HER TIME 2 hours @ $7.50 (minimum wage)
Listing/paypal fees $2.00
Misc costs $2.00 (electric, gas, equipment, tools etc.)and yes set this aside for this purpose.
Total Cost $30.00

This only accounts for the cost of the materials, labor and pricing. As far as I know people are on ETSY to make money. If it costs you $30 to make a bag we still havent figured in the money for you. Yes we figured in a labor cost for you but not a profit. This is the hard part in my opinion. What do you feel your work is worth. This is where I think people have the hardest time making their pricing decisions. This is where you have a little bit of play. Do you want to make 25% profit or 50% profit? How do you figure out what you can add to your cost? Keep reading.

Now its time to shop your competitors. Look at their products their pricing and most importantly their QUALITY. If you look at these things it should make pricing your items easier. If your QUALITY is better then you know you can charge more as long as you SHOW PEOPLE YOUR QUALITY. If you show them with pictures and tell them with your descriptions you can justify the price of your products.

I am sure there are a ton of other people out there with their own thoughts and theories on pricing for Etsy. This is just my take on the subject. I am sure there are costs that I havent thought of but I dont know all of your crafts. All I am saying is make sure you take the time to figure out what your TRUE COST is and then mark up based on your competitors.