SilkFair

How to decide a price for your handmade products

Posted on: March 19, 2009

Deciding the right price for your product is indeed important. You cannot afford to overcharge your customer and yet you cannot undervalue your own efforts either. There’s a very thin line there. So what do you need to do to fix the right price for your product? Here are a few tips:

1. First of all, calculate the price of the raw materials that you have purchased. It would be an excellent idea to make a database of a spread sheet for this. Also, add in any overhead charges you wish to take in to account, such as taxes, bills maintenance costs. You can use www.plunderhere.com to get your hands on some cheap raw materials.

2. Now you need to estimate your hourly rate – this comes from the opportunity cost of your time. To calculate this, consider the following questions. If you were working, how much would you be making? How many things do you have to sacrifice to take that time out – what non-monetary price do you have to pay. Once you have the hourly value, multiply it by the approximate amount of time it took you to make that product (including the initial brainstorming or idea generation time). http://shareme.com/images/large/13144-jdatagrid_spreadsheet_edition.gif

3. If you make things in batches, then add up all the costs and then divide them by the total number of products made during that period. Add your desired profit margin to it and viola you have your ballpark figure.

4. Is your product unique or one that is available freely. If you think that your product has an element of exclusivity to it, then you might want to charge it higher than what is the average price. The customer would still be attracted to it.

5. On the other hand, if your product is not that exclusive, you must not charge it more than the market price. You’ll have to reduce costs to still be able to earn some profit. If you’re selling handmade items, then the non-exclusivity will be become a non-issue. You can compare prices on www.pricegrabber.com . Or you might want to check out the category of hand made products being offered on other websites, such as www.silkfair.com where there is an entire section on handmade items you can use to compare prices.

6. If you are donating money to a charity fund or such social cause from the price of your product, make sure you highlight that as well. Such offers always help attract customers. For example, you can market it up on https://www.gocharity.com .

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