I don't know what to do now. Please help me out, someone, because I don't want to be the jerk who rips off people for products that I don't feel are worth as much money as they should sell for. I need advice. I feel absolutely awful!
If anyone needs to know, I used the following formula:
Design of template(1$/hr) + material cost + production time(8$-10$/hr) + listing price(.20) + packaging(1$-6$) = lowest sale price * profit(20%-40%) = asking price
I am a college student as well and trust me, I know what it's like to feel terrible to charge so much in order to support my education. However, I've read in a book about Craft related businesses a typical formula that you may want to follow. I'd recommend Craft, Inc. if you're not sure.
Now, I may not follow their recommendations to tee, but here is what I usually consider when pricing:
1. cost of materials is of course, the first thing you consider
2. split up your labor: while others may set up labor costs as this amount/hour I like to take an extra step and really split up what I'm doing during production (bc really, this is what you'd be doing if there were teams of people working on a product). For example, I consider how intricate the composition/design is and charge based on that. If it's a pretty straightforward composition/design that is seen a lot with only a few minor tweaks, i might charge 50 cents an hour for that (or even less depending because I don't want to lie to myself about how long and how much thought I put into a design). If the composition/design is rather complicated and took a while to draw up a pattern/layout for, I would easily charge 1-2, maybe even more. This step requires quite a bit of honesty. Then with other steps such as sewing, beading, appliqueing, cutting paper, cutting out tags for your store logo, whatever you do, you charge depending on the difficulty of the task, and how much time you invested. Perhaps use a scale of 1-10 to rate the overall difficulty and go from there.
3. Next, overhead: paypal fee, if you're paying other workers, etc.
4. Add up all of these fees and this technically should be your wholesale cost.
5. This next step depends on how much profit you want to make. If you want to make double, multiply the wholesale cost by 2. I personally feel too bad to charge double so I multiply wholesale by 1.5.
6. After all that, you can either decide that that is your final price on the product, or you can look at other listings for similar products and see where you lie in that range. Ideally, right in b/w is a good spot to aim for. If you are waayyy too far out of the range, adjust your costs accordingly. I personally don't like having the cheapest price but I like to aim for something pretty darn close.
7. Most importantly, how many customers buy your products? Are they happy with them? Look at their reviews. If they are very happy with the products, don't feel too bad about if you consider yourself expensive or not. You made these things with your own two hands and are making people happy.
I'm sorry if you find things perhaps a little inaccurate about my process. I don't really feel that there is a right or wrong, simply what works for you.