As a crafter I didn’t set out to sell my stuff. I just wanted something to do, a hobby with my hands. I’d been crocheting but would up in physical therapy for hand/wrist pain. Between using a keyboard and crocheting I wasn’t getting enough variety of hand movement. So I took up beading. I became addicted. It didn’t long for everyone I knew to have several things I’d made and I was filling boxes with finished projects. Fellow beadaholics and friends Paul and Jean had the same issue. Our idea was to sell them at craft fairs. Only problem was I had no idea about pricing.
I’m going to share my pricing journey. If you gain something from it that will help you in your crafting GREAT! If not I hope that I don’t bore you.
Pricing was a guessing game for at first. How much mark-up? First time out I priced too high listening to the “craft is art!” crowd. I considered pricing lower but heard a chorus of ‘if you price too low people think it’s junk’ crowd. Well I decided to turn to my business degree and make pricing a function of cost and margin.
The first hurdle was knowing cost of material. Sounds simple but I started out as a hobby not intending to sell the stuff. So I didn’t keep records. I bought what I liked and made what I liked. So I had to do some research into material costs and obtain average cost for basic materials. I used those averages to extrapolate backwards the cost of materials in the hobby made goods. Thank goodness for the internet where I could easily do research at bead and crafting sites for prices of materials.
From that point on I started keep records of purchases and figuring out the cost of each bead, inch of wire, focal item, finding, price tag, and display card. I now have a book of material costs and put a note in the bag of the bead as to item #, name, and individual costs. Let’s say I buy a string of 10 beads for $1. I’ll assign a number to that receipt. My receipts are assigned 100s as numbers you’ll see why in a minute. So this is receipt 700. Then this string of beads is the 12th item on that receipt so the item number for these beads is 712 (get it receipt + item). In my material log on Receipt 700 page I’ll list 712 8mm clear beads 10/1.00=10¢ ea. I’ll put that on a small post it and when I unstring the beads into a storage bag I’ll tuck the note in there. I also note on the receipt next to the item listed the number I assigned it. All nice and traceable should I ever need to prove my costs for the taxman.
Next was looking at margin. How much mark up did I want? Honestly I want to be fair. I’m not out to make money in this beyond wanting to support the habit. Yet honestly I’d like to do some work in more expensive supplies that means each piece has to pay for itself and earn a bit more so I can later work in more silver and semiprecious stones and custom made beads. I looked at the spread of the cost of material in each type of item. For example say it costs between $1 -$5 to make a pair of earrings. (Please note these aren’t my real figures just made up ones for examples) I knew I needed a pricing structure so that equal margin was made from the $1 earring and $5 earring. Also I knew we’d be running sales, I still wanted to make a few pennies extra toward those better materials so final price had to be so that if you marked it 50% I still got something more than just cost. This was a puzzle but working several fairs and thinking about what are my goals I came up with a chart for each item I made earrings, bracelet, and necklaces. The chart meets my requirements and now makes pricing a breeze well worth the effort put into making it.
So now when I finish making a product I go to a new ledger – my goods ledger. Each piece gets a number. It’s a simple consecutive numbering system. I tried keeping earrings separate from necklaces from bracelets but found there was no reason to do that. It was just adding complication to the system. Now I go to my goods ledger and take the next number for the item. I enter the type of item it is. So I get say item 564 – earrings. Then I start listing components used to make those earrings and the number of them along with their item number and cost. Some basic things that always cost the same I don’t have a stock number to them – hooks, backs, pins, crimps, etc. Instead I have a chart there that tells me item cost. But for the beads it’d be listed 712 8mm clear beads 2 x 10¢ = .20 as a line and so on. Then I total it up know the cost of materials in that pair look to my chart and there is the price. I then put on the price tag the number for the earring set 564 and the price. When I sell the set I’ll keep the price tag and that’s how I know what sold.
I don’t want to gouge my customers I want it to be a fair equitable sale that hopefully has them come back to buy more. I work very hard to find materials on sale. I pass that on to my customers. I always use what I paid as the price of materials. If I get a great deal for things on e-bay then my customers get a great deal on their finished product. I don’t use the before sale price. I know many people do because they say – that’s what it’ll cost me to replace that. For me I’m looking for beads I didn’t have before so chances are I won’t replace THAT one with the same thing. I’ll get something new that is exciting for me to work with and keeps my booth fresh. Findings (that’s clasps, wire, crimps, hooks, posts, backs, pins, rings etc.) I can always find a deal on those in bulk especially if I surf e-bay. So I’m not worried on those.
As for my wares – I hope sometime in the next year to have a little on-line store set up. Until then if you see something you like you can contact me I’m sure we can work something out. My contact information is on the Contact page there under “Who Is Mary Louise?” on the right.
Hope this helped or was at least interesting to see what I came up with that worked for me. Next I need to figure out how to get decent pictures of finished product. None of these suit me I can tear them up photographically!