Pricing handmade goods is a sore spot for most crafters; price too high and you risk scaring away potential customers. Price too low and you devalue your whole product sector for everyone. You want to recoup the cost of the materials, but you should also be compensated for your time. I’m sure everyone has heard stories of buyers approaching sellers to point out that the yarn to make a given item would cost a particular amount, so why are they then charging more? Putting a value on time is certainly difficult, and most sellers have some kind of formula that they work to.
Knowing your niche is important – there’s no point charging £10 for a necklace consisting of particular materials if everyone else who makes a similar product only charges £7. That said, if there is something about your necklace that makes it unique from the other versions, then I think you absolutely should charge more for it. Yes, it might put people off, but there will be someone willing to pay for the exclusivity of your item.
The Case for Pricing High
There is a theory that there will always be someone who is willing to pay what you charge – your task is to find them. I read somewhere that you should always start high, and only lower your prices if necessary, since it is much more difficult to start low and raise them later. You don’t want to sell an item for £10 and then discover later that you could have easily sold it for £50!
The thing I find most difficult is the fact that a lot of customers would be happy to walk into Primark and pay £6 for a hat made from scratchy, acrylic yarn that hundreds of other people will be wearing, yet they baulk at the idea of paying £7 for a handmade hat made from good quality acrylic yarn that no one else will have. For some reason people equate handmade with ‘low cost’, but they’ll pay the same for an item made in a sweatshop. Bizarre.
So yes, you will put off a lot of casual buyers, or opportunistic bargain hunters, by charging higher prices, but you could end up coming to the attention of more informed buyers who care about quality and like supporting home grown businesses. You might lose sales by pricing more highly, but you’ll make more from the sales you do make.
Have different price bands for your products. I sell different types of handknits and it would be unrealistic to expect me to charge the same price for, say, a beanie made from acrylic yarn and a similar hat made from 100% merino wool. Either the acrylic version would be too expensive, or the merino hat would be too cheap.
So I’ve created two separate sections to reflect that, named Affordable Knits and Luxury Knits. If you look at contemporary marketing theory, if you want to make the price of something look reasonable, then have something more expensive as a comparison. Suddenly me charging £11.99 for a matching set of a beanie and handwarmers in acrylic yarn doesn’t look so bad when a houndstooth patterned hat made from pure merino yarn costs £12.99.
The Case for Pricing Low
The majority of buyers won’t want to pay £12 for your item if everyone else is selling it for £8 – it’s just how it goes, and this is something I’ve been struggling with lately. So I actually cut the prices on my jewellery to bring them into line with what other Etsy sellers were charging for similar pieces (by similar, I mean they used similar materials, not necessarily techniques). Yes, it’ll cut into your profits a tad, but you’re more likely to sell more products, so you’ll make less per item but you’ll make more in total simply by selling more stuff.
Obviously the downside of this approach means that you need to make more items. Your shop needs a more steady stream of products to keep up with the fact that the lower prices mean you’ll hopefully have a higher turnover of stock. Not to mention the fact that lowering your prices forces other sellers to do the same in order to remain competitive. I’m in a Facebook group for Etsy sellers and a lot of crafters are unhappy that ‘hobbyist’ makers are selling for such a low price that professional makers can’t really compete. Their only alternatives are cut their prices, or find cheaper materials/techniques.
Find ways to cut your costs without necessarily compromising on quality – make items in bulk, to cut down the amount of time you spend crafting, or source your materials in bulk. I tend to buy my luxury yarns when they’re on sale so while I charge more for luxury handknits than I do affordable ones, the items are still cheaper precisely because I sourced luxury yarn for less money. Experiment with your techniques to see if you can accomplish things more quickly, without cutting corners, or if you can find a way of doing things that is less labour-intensive.