October 6, 2008

What to charge for your handcrafted items

One of the most discussed aspects of selling anything you make or design is setting the selling price. I often hear that you just take the raw materials of the item and simply double it for the selling price. That method would quickly put almost every business I know in the red immediately.

Here is how I price my items. I have one item that costs me $5.00 in materials to make. The item is a piece of equipment for the horseback riding industry. If I simply sold the item for double the cost of materials I would be short changing myself because similar items that other companies make sell for $25.00 and up. You have to price your item to keep in line with what the rest of your industry charges. I almost always price my items just under the lowest price I can find, but only by a few cents. I don’t want to look like a cut rate cheap manufacturer but by a low cost manufacturer that has everything 100% made in the USA.

If you designed and made wedding dresses you would know that the time spent on the fitting, design and actual customer service would also have to be figured into your costs. That is why you need to pick out an item to make and sell that will bring in enough income so that you will not be short changing your labor. If you plan on making money from your sewing you need to treat it as a business from day one and keep in mind your labor and expertise must factor into the selling cost of any item you sell.

I always go one step further and make a chart which lists my items at cost, wholesale price and retail price. This comes in handy when local businesses, small stores or specialty shops ask if I can supply a small bulk order at wholesale. If your business grows at a level that is faster than you anticipated then listing the wholesale price will come in handy. As your costs rise make sure you always keep your lists updated.

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