It struck me today that at the crux of the tricky matter of pricing handmade goods is one simple dilemma (masking a myriad of complex ones...) and that dilemma is this: whether to price your products based on the value you award the goods yourself or the value dictated by the market demand for those goods.
Pricing Based On The Value You Award Your Products
There are lots of formulas out there on how to do this... 'x+y+z = wholesale x2 = retail'... just google it and you'll come across websites that will do it all for you, or browse the Etsy forums for similar equations to help you work it out yourself. Mainly they involve adding up the cost of materials, a reasonable hourly rate for the time you've spent making your product - sometimes other expenses such as electricity, petrol, internet etc are included, sometimes the hourly rate extends to time spent planning, photographing, describing and listing a product but the bottom line is the same - these calculations are there to help you work out what you have a right to charge, what you deserve to receive for your skills and labour.
Here is a fab article all about this side of the scale: Why Handmade Is "So Expensive"
Pricing Based on The Value Dictated By Market Demand
Now here is the other side of the scale... a) it doesn't matter if you spent 40 long years lovingly handcrafting something, if nobody else wants it, it has no value - in monetary terms anyway. Sad but true. Then there is b) if there are a LOT of other people making things very similar to your products, it is going to be tougher to get a 'fair' price for them - in this situation the customer has the luxury of being able to choose the very best of the best and if that's not you, then you will need to reduce your prices to get a piece of the pie.
There is an excellent article all about this side of the scale here: Econ 101: Jill Gets Sick Of Dumb Pricing Advice
Still Confused About How To Price Your Handmade Products?
I was super excited to find the above articles today (courtesy of Lois Addy over on UK Handmade). Then i had my little lightbulb moment about the fundamental dilemma facing crafters selling their wares to the public:
PERCEIVED (perhaps this should be deserved) VALUE V MARKET VALUE
Yet i'm still none the wiser about how to find the happy middle ground between these to factors. However, at least now i've realised that there is a middle ground to find!
Not that this is the end of the matter - even armed with a price that meets both of these requirements to a satisfactory degree, there are further considerations to take into account... what about the economic climate? What about the tried and tested theory that increasing prices can lead to more sales because the customer has greater confidence in the quality of the product at the higher end of the pricing scale...
I will return to this subject soon, hopefully with more answers (and very possibly more questions!)
I would love to hear you thoughts on this thorny issue... :)
Happy crafting! x