How to Calculate The Price For Your Handmade Goods
Our calculator is designed to be simple and easy to use. It covers:
- your base costs of time
It also allows you to input a desired profit margin on top.
We hope this calculator helps you make more money for your handmade goods business.
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Learn more about starting a handmade goods business:
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More Tips On Pricing Your Handmade Goods
How To Price Your Handmade Goods
One of the most challenging aspects to starting a handmade goods business is determining how much to charge for your handmade goods.
When businesses under-price their product, this can be extremely detrimental to their bottom line and reputation.
Often times, businesses under-price their products to drive demand and volume, but that last thing you want is for customers to view your product/service as "cheap." Additionally, this can have a big impact on the type of customer you attract, which can be difficult to recover from.
On the other hand, when businesses over-price, this tends to be just as damaging to the business.
When customers buy, it's likely that they will explore the internet and look at other competitors to ensure they're getting the best value + deal. This is why it's so important that you research your competition and understand where you land in the marketplace.
Here are some factors to consider when pricing your product:
Understand your customer
It's important that out of the gates, you identify the type of customer you want to attract and how much they're willing to pay for your service. One great way to do this is by surveying your customers. Here are some important items you'll want to takeaway:
- Customer demographic: Age, gender, location, etc.
- Buying habits of your customer: What they buy + when they buy
- Level of price sensitivity with your customer
All of these segments will help you identify the type of customer you're attracting and how to price your product accordingly.
Understand your costs
When pricing your handmade goods, it's critical that you first identify all of your costs and consequently mark up your handmade goods so you can factor in a profit.
The actual cost of your handmade goods may include things like:
- The actual cost to make the product (ie. raw materials, supplies, manufacturer).
- Shipping + overhead fees
- Operating costs to run your business
You may want to consider creating a spreadsheet with every single expense involved in operating/owning your business. This will give you an idea as to what you need to generate in order to at the very least, break-even and will help you price your products to factor in a profit.
Create revenue goals
When determining the price of your handmade goods, you'll want to create goals for revenue + how much profit you want your handmade goods business to make.
This process is simpler than you may think:
- Think about your breakeven cost (by completing the above step).
- Create a revenue goal based on your break-even cost
- Evaluate the # of items you plan to sell in a given period (make sure this is a realistic number)
- Divide your revenue goal by the number of items you plan to sell
This figure will help determine your estimated price per product in order to meet your revenue goals.
Evaluate your competition
The last piece in determining how to price your handmade goods is by simply looking at your competition.
The best way to do this is by finding like-minded businesses that offer product(s) with similar perceived value. Then, you can compare prices of the different businesses and determine where your handmade goods fits best in the marketplace.
All of these factors play an equal part in pricing your handmade goods, so it's important you evaluate each one individually to come up with an accurate price that will help optimize your business from the start.
Lauren Costanza, founder of Bluminary provides us with a detailed spreadsheet of all of her costs associated with running her business:
I knew this would be a self-funded adventure, and I set aside $3,000. During the first three months, I had a detailed spreadsheet where I tracked where the money was going and what was going toward products versus researching and developing new products.
The spreadsheets involved columns and rows of numbers to craft a budget and gain an understanding of how much would need to be invested at each stage of the process - from gathering supplies to building a website, and shipping materials.
Examples of a successful handmade goods business:
. Batch ($1.8M/year)
Samuel Davidson (from Nashville, Tennessee, USA) started Batch about 10 years ago.
I’m Sam Davidson, a four-time entrepreneur and the co-founder and CEO of Batch. We are a regional gift and retail company specializing in offering Southern, handmade, small-batch gifts that are perfect for corporate events, meetings, weddings, and everyday use. We are based in Nashville, TN with our flagship retail store inside the historic Nashville Farmers Market.
To date, we have worked with over 300 small businesses to curate their products and sell to our customers in our store, online, and via our corporate gift program. We have shipped our gifts to all 50 states and a dozen countries, selling over 75,000 gift batches earning annual revenue now nearing $1,800,000.
. PortraitFlip LLC ($540K/year)
Sunny Choudhary (from Pune, Maharashtra, India) started PortraitFlip LLC about 6 years ago.
I am Sunny Choudhary, a 24-year-old co-founder of PortraitFlip with a B.Tech in Mechanical Engineering from Vellore Institute of Technology, Chennai.
We make sure to choose the best artists across the world so that there are no doubts in the hearts of our customers.
. Just Artisan ($120K/year)
Marcello De Lio (from Mississauga) started Just Artisan over 3 years ago.
Hi everyone! My name is Marcello De Lio, I am the founder of Just Artisan. I created Just Artisan in 2020 to help artists and makers sell their creations online.
Our beta launched in early 2020 and received amazing feedback from our early artists, and vendors. With strong results, we fully launched in June 2020, and have been growing ever since. We had $15000 in sales during December with very little ad-spend and are on track to keep growing through 2021.
. Humble Blades ($24K/year)
Christopher Sofia (from Austin) started Humble Blades almost 8 years ago.
My name is Chris Sofia and I make handmade custom knives in Austin, Texas. Mostly Chef Knives, I like the idea of thinking that my products and effort will create a situation where I’m invited to dinner, but now and then I make something that will guarantee an empty seat…
It’s the most romantic passion-filled set for failure conception you can imagine too. With no knowledge of production, manufacturing, or even how to make a knife, I spent my last unemployment check and purchased all the wrong materials to make some terrible knives, but something about the process pulled me in a way I’d never been pulled before, and in a way, I’ve always dreamed of being moved. Follies and hardships aside, every day has led to new challenges to overcome, developing physical skills.
. With Love From T To You ($12K/year)
Theresa Healey (from Hopewell, New York, USA) started With Love From T To You about 6 years ago.
Hi, I’m Theresa the owner of the blog DIY Lifestyle. On my blog, I share dozens of gluten-free, vegan, paleo, raw vegan and healthy recipes, fun crafts & DIYs, helpful life hacks, and travel tips. I started my blog because I was looking for a place to write down useful information to share with people all around the world but it quickly turned into something more.
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Hey! 👋 I'm Pat Walls, the founder of Starter Story.
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