If you’re serious about growing your craft business, determining a price for your handmade goods requires a little homework. The crafter who prices her goods without considering all her expenses will lose money. The crafter who forgets to include a profit margin won’t be able to grow her business.
Smart pricing considers the of cost of goods, labor, overhead, and profit margin.
Cost of Goods (COG)
This is the cost of the materials you use in a finished piece. If you make quilts, this figure would include the fabric, batting, and thread used in one quilt. It would not include your sewing machine or your iron.
Labor
Labor is the money you pay yourself to make a finished piece. It is usually based on an hourly wage and calculated by multiplying your hourly wage by the amount of time it takes to make a finished piece.
Overhead
Overhead covers the things that make your business run, but aren’t directly related to a finished piece. It might include things like booth fees, utilities, and promotional materials.
Profit Margin
Your profit margin is the money your business makes. Don’t confuse “labor” with “profit margin.” You need both.
To help you determine your prices, I’ve created The Crafter’s Smart Pricing Worksheet that’s free for you to download. The simple one-page worksheet is easy to follow and works for both wholesale and retail prices.
If you’d like your own copy, just sign up to receive your free download, and I’ll send it to you right away. My mom taught me to share, but I never share my toothbrush, my oatmeal cookie recipe, or your email address. Never!
