Book Giveaway! Tips on Selling Handmade Crafts

Have you ever thought about selling things you knit and crochet? With the popularity of etsy, many crafters are opening up shop and selling their handmade creations.

If you do decide to go for it, the first question that is bound to come up is pricing. How do you know what to charge? To help answer that question, we’re turning to the expert James Dillehay, author of the book How to Price Crafts & Things You Make to Sell. (And to sweeten the deal, we’re giving away a copy of his insightful book. Read on to find out more!)

Q: Pricing can feel a bit like a guessing game. How can people be more strategic about it?

A: When I couldn’t figure out why I wasn’t making much of a profit, I began applying the following strategy. Whenever I go to price an item now, I look at: 1) how much a piece costs to make and 2) how much shoppers are willing to pay for similar items in similar marketplaces.

What it costs me isn’t necessarily my asking price, because the average market price of work like mine may be higher. If I only ask enough to get my costs back, I will leave money on the table. I have a gallery in crafts village near Santa Fe, NM where I display my work. I started off pricing my hand-woven scarves at $65 because it covered my production costs and paid me a decent hourly wage for my time.

However, when customers coming into the store mentioned they had seen scarves the same size of mine priced at $100 in nearby Santa Fe, I immediately went through and upped my prices to $74. My sales not only did not suffer; they increased.

Q: What kinds of things should crafters consider when assessing their production costs?

A: Production costs include the cost of all the materials that go into each item and the cost of your labor. For example, you make a Christmas ornament that has glass, wire, paint, and glitter. You may have to estimate little things like how much paint and glitter, but get as close as you can. Let’s say you find you have $2.75 in total material costs.

Next, figure how much time it took you to make the ornament. For example, you want to earn at least $10 per hour and it took 45 minutes to make the item; your cost of labor is $7.50. Add material costs to labor costs which brings your production cost to $10.25.

If you sell at shows, you need to account for rental fees, travel, and food. Over time, I learned my overhead tended to average around 25% of sales, so I started adding 25% of my production costs to cover overhead. This may be a little low since you could be selling at prices higher than your production costs but look at your own sales over a year’s time and determine a percentage that comes close.

So for our example ornament, I add $2.56 (25% of my production costs) to $10.25 which brings my total costs to $12.81 per piece. I cannot charge less than this amount without losing money.

Q: Why do so many craft makers undercharge for their products and why is that a mistake?

A: I think it’s natural to think a lower price means we’ll sell something faster. But with handmade items, this isn’t always true. In my gallery, I have several times had to raise prices on items before they start selling. Shoppers saw initially low prices and thought the items were cheaply made, so they passed them by. Once I upped the prices, the perceived value increased and so did sales.

About the author: James Dillehay is a professional craft artist, gallery owner, and author of nine books. He has been interviewed in The Wall Street Journal Online, Yahoo Finance, The Chicago Tribune, Bottom Line Personal, Family Circle, The Crafts Report, and many more including Entrepreneur Radio and HGTV. For more information on his book and tips on pricing crafts, see http://howtopricecrafts.com.

This Q&A barely skims the surface of all the great, practical advice this book has to offer. For a chance to win a copy, leave a comment below.

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