Pricing I: Pricing Your Product
If someone asks me what was the biggest lesson I learned from running Gracium for four years, I would say pricing.
When I first started Gracium, my initial goal was to be able to earn just enough so that I can craft more for free. Therefore, I wasn’t much interested in making profits. Yes, I saw all those equations of how to price your Etsy products (double your material cost and add labor etc.), but if I use the equation the price came out too high.
(Wedding place cards, one of my best sellers.)
For example, when I first priced my wedding place cards, I thought like this.
“Okay. The cost of materials. The only thing I need is paper and printer, which comes to almost nothing. I don’t need to go buy something every time I make these.”
“Labor. Hm. I can make so much in such a short amount of time. It is hard to even count how long it takes to make one card.”
“So if I don’t need really spend any money and time for this, why don’t I just make it $1 per card? I think I will be happy to make $1 per card.”
Does this sound familiar to anyone? Well. I priced my products pretty much like this in my first year or two. Then I realized something was wrong. I started to get more orders, had to make hundreds of these, worked for so long, but my income was so small. Then I started to think why. Here are my answers.
A piece of paper looks like it costs almost nothing, but a pack of 100 does.
Printer DOES run out of ink. There comes a time where you have to pay quite a bit to replace the ink cartridges/toners.
There are other tools (paper cutter, glue, paper scorer etc.) that can be broken any time and be replaced.
To ship the item, I have to spend money on shipping supplies.
Etsy collects fee, even from your shipping fee.
If you need to spend 1 hour to make 60 cards, that doesn’t mean you spend 1 minute to make one card. There is set amount of time (getting things ready, starting your computer, printing, cutting) to make ANY amount of products.
Yes, I already read about #1-6 elsewhere, but I ignored them.
So here is what I changed.
I started to sell in pack of 10 instead of a single card. I realized that Etsy collects restocking fee every time I sell an item. Because I was selling single card as a product, I paid the restocking fee 100 times if someone bought 100 cards.
I calculated material costs based on how much I PAY (remembering we pay tax) and divided it buy the number of units to figure the per unit cost.
I used the timer to see how long it takes to make different quantity. This helped me to figure out the basic set time to make any amount of products.
I raised the price factoring in the Etsy fee, material costs, shipping material costs, and labor time.
When in doubt, I rounded things up. This would roughly cover cover unexpected spending (machine repair, making mistakes etc.)
Sounds easy, but it took a lot of time and effort. I should do this for every product, but I don’t. I still price some items intuitively. But at least I started and am improving. If you feel overwhelmed by all of these, at least take pricing seriously, even if you do it as your hobby. Otherwise you are serving others at a cost of your precious time and effort which you can spend elsewhere.
Another challenge about pricing is that it could seem too expensive at first. You might worry about customers turning away because of the price. DON’T WORRY. If your pricing is fair and someone thinks it’s too expensive, IT’S NOT FOR THEM. You only sell to customers who value your craftmanship. Even if you get customers by charging low, they will leave once they find something cheaper because the reason they stayed with you was the price. You need to find reasons other than price to draw your customers. So do not fear, charge what you need to charge.
My next post will cover the issue of comparing your price to the others’. See you then!
Best,
Grace
