Pricing handmade items is a trending topic amongst Etsy sellers and artisans of all kinds. It’s important that you figure out how to price handmade items because it ultimately can make or break your business. It’s a hot topic because many people struggle when it comes to finding a winning formula for calculating materials, time, and overhead costs.

The most common mistakes when it comes to how to price homemade items are pricing their listings too low, in the middle, or too high.

Let’s talk about each one of these:

If you price your items too low, it will be a lot more difficult to keep your business running.

Too often when people start out a business they set their pricing so low they are not making any profit, they don’t have enough money to put back in the in business for tools and marketing, and they run the risk of people perceiving that your products are cheap and poor quality.

If you price your items in the middle it does make it hard to grow as a business. Many people recommend ideally to price your items right in the middle but if you are barely making any profit how you expect to put more back in your business to grow.

I am a firm believer you have to spend money to make money. If you want to put money back into your business, run advertising, get a new website, do email marketing it’s going to cost money, and pricing your items in the middle is not going to help.

If you price your items too high, you have a potential risk of turning potential buyers off and them buying from your competitors.

The main issue with this method is that you might occasionally get a sale, but you will be scrambling every single month trying to get people to buy from you.

It will not help you get continuous sales every month and unfortunately might put a stop to the growth of your small business.

You might be asking yourself, so how do I calculate price for handmade items? How do you find that sweet spot? Maybe you are want to learn how to price handmade items for wholesale. 

Here is a simple formula that many use that works like magic:

Materials + Time + Overhead Cost = Minimum Base Price

Here is an example for an art printable with this formula:

Art printable materials cost you $2.50 + time 15 minutes $2.50 for a $10/hour rate + overhead cost $1.00 with printables there are minimal overhead costs = $6.00

To figure out the retail price many multiply the base price by 2.5. For the art printable it would be $15.

Please note retail price is the price a business normally chargers for an item. The shop buys at wholesale price, then adds a markup (to cover the cost and hopefully profit.) 

You can use this simple formula to properly learn how to price your homemade products. 

The difference you make from the markup is your profit.

I usually use this money for:

• buying more clipart and supplies for my printables
• invest in tools to help grow my business
• invest in my business by hiring help
• Sign-up for different business courses
• pay for apps

It’s important to learn how to price handmade goods and especially get paid for all the time you have put into it. Don’t sell yourself short by starting too low in the beginning.  Make sure to save this formula when in need how to price handmade items. 

I hope you enjoyed this video and let me know in the comments section below if you have any questions and share your tips on how you price your handmade items!

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