I know that pricing your handmade products can be tricky. There are all kinds of formulas and advice out there about it, but when it comes down to it, many makers price their products way too low. Maybe you’re just starting out and think lower prices will lead to more sales. Or maybe you just weren’t sure that people would pay a higher price for your products. Whatever the reason, I’m going to share these 8 surprising reasons you should raise the prices of your handmade products.
- Most buyers equate price with quality. Yes, there are those people who want rock-bottom, WalMart-type prices. But most people who buy handmade goods know the time and effort that is put into making them, and they are willing to pay for it.
- You’re not taking everything into account. Maybe you priced your products based on your expense to make that product (supplies) and the time it takes you to make them. But are you also considering things like your overhead, your website expenses, how long it takes to photograph, edit, and list products in your shop (especially for one-of-a-kind products), your packaging expenses, or even the time it takes to market and/or pack and ship your products? You spend way more time on your business than just making products, and you should be taking that into account.
- Your can’t make money selling your products to wholesalers at your current price. Typically wholesale is 50% of your retail price. So if you’re selling a necklace in your Etsy shop for $30, can you sell that same necklace (in bulk) to a retail store for $15 and still make (a decent amount) of money? If not, you should probably raise your prices. I say “probably” because, if you’re not going to try to sell your products via wholesale, you may not need to take this into account. But I still think it’s a good pricing policy, whether or not you work with wholesalers.
- You’re paying yourself less than minimum wage. You didn’t start your business as a charity, right? (Even if you did, you’d still want to make money for that charity, right?!) This is your business, and you should be paying yourself a decent, living wage. I would say at least $20 an hour, because you’re a talented craftsperson. If you’re not even sure what you’re paying yourself, figure it out. At the bare minimum, find out your supplies cost and how long each product takes to make, and what you’re selling it for. From there you can figure out your hourly wage. Of course, this doesn’t even include the other factors I mentioned earlier, but it can give you a quick and general idea. If you’re not paying yourself a decent wage, raise your prices immediately.
- Your sales might actually increase! I cannot tell you how many makers I’ve heard from that said their sales actually went UP after raising their prices. It goes back to perceived value: customers don’t know your costs and how much time it takes to create your products. When you’re prices are higher, they get the idea that there is something extra special about what you make (and there IS!) Perceived value can also be increased by things like: great product photography, expedited shipping, gift wrap options, gift card options, organic, vegan, or other “healthy” materials, professional branding, personalization/customization, and more.
- Just because you can’t afford your own products, doesn’t mean someone else can’t. Maybe you’re a “starving artist” or a single mom, or you just don’t have room in your budget for a beautiful quilt, original art, splurging on tons of candles, bath and body products, or other handmade goods. But that doesn’t mean other people can’t afford them. You’re not (always) your own customer. So don’t think about pricing from your point of view, think of it from the perspective of your ideal client, who can afford your (higher) prices.
- People don’t like to give cheap gifts. If someone has the choice to buy a baby blanket for their brand new niece, do you think they’d rather pay $8.99 for the one made in China from the chain store or $30 (or more!) for an organic, handmade swaddle blanket from a real person? Do you think they’d prefer to give a dollar store candle, or your soy-based, eco friendly, hand-poured candle for $25?
- Sites lwho feature handmade sellers, might not feature you if your prices are too low. Generally, quality feature sites not interested in featuring people who’s prices are so low they can’t earn a living from what they make. By doing this, they are not only setting themselves up for failure, but they’re also undercutting the hard work of other makers in their niche. I want us all to succeed, and no one can succeed long-term if their prices are too low.
So what do you think of these 8 surprising reasons you should raise the prices of your handmade products? Will you be raising your prices? I’d love to hear your thoughts in the comments below. Even a small increase in price could be a great thing for your handmade business!