03-08-2010, 11:50 PM
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Join Date: Jul 2006
Location: Melvindale, MI
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I am making some hemp jewelery and some hemp necklace charms, keychains, etc.
Thing is, I have no idea how to go about pricing because as much as I've tried to find a comparison for some of these, I can't find any. Is there a formula for homemade goods?
I also make patchwork curtains and figured a per-square price would be fair because windows come in so many sizes this would be a good baseline for what will always be a custom order. Is there a better way to price sewn goods?
I would like to begin offering these things but just have no idea how much to charge.
Join Date: Jun 2009
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I sell a lot of hand made goods too, and a good formula to follow is take the cost of your materials and multiply that by 1.5. Cost of meterials for one piece may take a little calculating because you need to take each item and figure out how many pieces each raw material produces and then calculate the cost for one piece. Then take the amount of time it takes you to create the piece and double that and multiply that by whatever the hourly wage is that you would pay someone to make the piece if you sold like 1000 pieces today and needed help. Take that hourly wage and multiply by 1.3 to cover taxes when you get to the point of having to pay taxes on labor. Then double that to account for your profit margin. So for example:
EXAMPLE of RAW MATERIALS COST
Say a piece of jewelry uses 1.5 yards of string and 8 beads and 1 clasp
String costs $5 for 15 yards
Beads come in a pack of 80 for $3
Clasps come in packs of 10 for $1.50
String for one item is $5/15*1.5=$.50
Beads for one item is $3/80*8=$.50
Clasp for one piece is $1.50/10*1=$.15
(if you are ordering items to be shipped, make sure you calculate your shipping costs)
Cost of raw materials is $1.15 and I always multiply that by 1.5 in case you have to go to a more expensive source temporarily or if you have to get upgraded shipping, etc) so in this calculation, we will count raw material cost as $1.73
EXAMPLE of LABOR COST
It takes me 15 minutes to make the piece, so a less experienced person should be able to do it in 30 minutes.
If I chose to hire someone, I would pay them $9
Taxes I would be responsible for would be roughly $9*1.3 which would be $11.70.
30 minutes of labor is $5.85
EXAMPLE of MINIMUM YOU SHOULD CHARGE
Your base cost is $7.58
You want to make double for your profit so that would make your minimum selling price $15.16. If you sell your items to a retail store in bulk, they will want to make their profit so your Suggested Retail Value would be twice that ($30.32) but you can sell it for anything between those two numbers. Just know that if you do end up selling in bulk to retails stores, they do not like to compete with wholesalers so you will have to figure out a way to sell items direct while still allowing your retail store customers to make their money.
So you can sell these on your site as pieces that "regularly sell for $29.99, but are on special for $14.99 or something like that so that you are not in a position where you have to keep raising your prices as you get bigger - you can just say that the special is over.
Hope this helps - you likely have to play and fidget with your numbers to get them at the price points you want. Jewelry is a hard industry to make money in, but fortunately it is subjective - even if your competitors are selling similar pieces for $5, you can sell it for $19 if you work on building a "brand" making your competitors "knock-offs" in a sense. Work on building a really nice presentation and packaging to make it worth the money so that you still turn a profit.
I usually go all the way to creating unique packaging for shipping my piece which I sell on eBay - your customers will appreciate the special touches, and the higher cost will not be a factor - I sell tons of things for way more than what other people sell for on eBay and people buy because of my presentation.
Presentation is key!
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