How To Price Your Crafts

By: William T. Lasley

Reference: http://artsandcrafts.about.com

Deciding how much to charge for your crafts is an important decision. While ultimately you must decide what your products are worth, there are a few steps to follow that can help.
Difficulty: Average
Time Required: 30 minutes to several hours
Here’s How:

1. Decide how much you (or your employee) will be paid per hour to produce products.
2. Multiply this hourly rate by the number of hours a week that will be spent producing crafts.
3. Write down this figure, this is your weekly cost of labor. (If you need to make $10 per hour, working 40 hours per week the weekly cost of labor would be $400.)
4. Calculate the total cost-of-supplies needed to make one finished product.
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5. Determine how many products one person can produce in a week.
6. Multiply the cost of supplies-per-piece by the number of products produced in a week. (If your cost of materials per piece is $1 and you can produce 100 products a week, the figure would be $100.)
7. Add this figure to your weekly labor costs. (In our example here that would be $400 + $100 = $500)
8. Divide this figure by the number of products produced in a week. (So $500 labor/materials divided by 100 finished products a week would be $5.00 per piece.)
9. If you will be wholesaling your products, multiply this number by two. (Which would give you a retail price of $10 per product.)
10. Compare this cost to similar products on the market.
11. If your price is more than similar products, you may need to reduce it by cutting hourly price, finding less expensive supplies or by increasing your production time.
12. If your price is significantly less than similar products, you may want to consider raising your price.

Tips:

1. Usually one piece will not use an entire supply unit. For instance an 8-ounce bottle of glue may make a hundred pieces. In this case, calculate how many pieces can be produced from a supply and divide by the cost of the supply.
2. This equation does not take into account any expenses other than labor and materials. You can figure in weekly costs of any other business expenses that you may have and add it to the weekly labor and material cost. ***