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Topic: What a Rip Off!  (Read 2669 times)
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Sparkle Motion Dreamer
« on: March 06, 2010 11:32:15 AM »

As if hospitalization wasn't bad enough, now I feel like a jerk after going over the numbers of what I should charge for my items with my father. I end up charging something like 50 dollars for a bag I wouldn't pay more than 30 for, or 12 dollars for a 5 dollar pair of earrings. This formula is the most effecient I've used as of yet because it really catches all the significant ways money adds up, and I feel like I'd be ripping people off if stayed with the prices I got from my calculations. Undecided

I charge 10$ per hour for sewing and 8$ per hour for jewelry-making, and the bags seriously add up fast! I also feel like I'm stealing business from the crafters who craft as their primary source of income, while I'm only crafting to get some extra funds to pay for college.

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! Cry

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

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Hi! I'm Alyssa, 18, a film-maker in college, & a non-traditional fantasy novelist online. I bake, create, & dream, & I enjoy all things secret, surrealist & sleep-related.
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Maggiedoll
« Reply #1 on: March 12, 2010 08:22:27 AM »

I think only your customers can answer that question.  
If you're giving honest and accurate descriptions of products, taking good pictures, and people want to buy those items and are happy with their purchases, then you haven't ripped anybody off.  
A college student doesn't have much money, and and crafters are generally DIY-type people.  For most things, you would rather invest time than money.  There are a lot of things that you look at and think "I could make that pretty easily, why would someone want to buy it?"  Lots of people say that only someone with "more money than brains" would buy something that they could make, but that's not true.  The people who buy things that they could make are people with more money than time.  The recession has decreased the numbers of those people, but they still exist.  Just because you, as a crafter, wouldn't buy something for a certain price, doesn't mean that a person who works a zillion hours a week in a decent career wouldn't buy it.  Those people can afford the money, but can't afford the time that you put into your one-of-a-kind items.  

I started This Thread over in the "Discussion About Craftster" section after I noticed ads for jersey infinity dresses (marketed as versatile "twist" dresses) for $200 each..  And while I don't really think that there is any excuse for selling a polyester jersey infinity dress for $200, it should at least put the idea of a $50 handmade purse into perspective.. 
« Last Edit: March 12, 2010 04:27:32 PM by Maggiedoll - Reason: edited to add that last paragraph.. » THIS ROCKS   Logged

lorizathm
« Reply #2 on: March 12, 2010 05:14:08 PM »

I think saving for college is a worthy goal and you shouldn't feel badly about selling your crafts to accomplish that goal. As long as you price your products fairly, there shouldn't be a worry that you're undercutting other crafters. If you make something and then turn around and try to sell it at a price one would find at Wal-Mart just to make a sale, then yes, these things can be looked down on. Pricing is hard to figure out. Not all formulas work for all things. Let's say you tried to use that same formula for selling coasters or hair scrunchies. Yeah, probably wouldn't work.

There's a lot to consider when pricing. The most obvious are how much your materials are, how long it took you to make it x what your hourly rate is + listing/paypal fees (if applicable). The profit part is up to you. Look at how much you want to save for college and then work backwards.

I admit I struggle with the profit end when it comes to pricing. The formula I remember seeing the most was: materials + labor + overhead (listing/paypal fees/web hosting/packaging - all those "indirect" costs would fall under overhead) + profit = wholesale price x one hundred = retail price. (retail being double the wholesale price). If I could just plug those numbers in and feel good about what came after the equals sign, all would be dandy. But, there's other things to consider like who your target market is, what the market will bear, perceived value (some crafters have seen that if they actually raise their prices, they get more business, because people see higher prices as higher value/quality).

All in all, I think it's important to feel good about what you're selling and how much it is, but if you're doing this for something other than just supporting a hobby, you need to be able to make money and you won't do that if you price yourself below what you're worth.

Hope this helps.
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« Reply #3 on: March 14, 2010 08:01:33 AM »

I'm guessing you're not taking into consideration the time it takes for photos, preparing photos, and listing stuff in a shop.

Basically, if you were the boss and you had to pay someone else to do everything you do to get an item up for sale, there would be a price tag on everything that takes time. I, for example, could make a whole bag in the time it takes to take photos, tweak them in Photoshop, upload to my online store, and add a product to the store with descriptions and tags and everything. So there's a loss there that has to be made up.
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« Reply #4 on: March 14, 2010 05:11:25 PM »

I do the same thing with my jewelry as well,but you have to think about the work you put into it. I believe that handmade goods are much more valuable than anything you can buy in a department store for $50. You put time, love and though into creating something. If people don't like your price then they don't have to buy it and they probably don't apreciated everything you did to make it. I have just learned this myself. Granted, I'm still very new to this selling-my-crafts game, but just think about it. I know this may sound stupid, but it takes about $2 to make a pair of nikes which are made by people in a sweat shop who barely get paid anything. They sell them for anywhere between $50 to $ 200. Why shouldn't yours go for what it's worth. Even if you make 3 of each item, it's still a unique item. Only 3 people in the world will have it. I say it's very much worth what you ask for it <3
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fiberartist219
« Reply #5 on: August 01, 2010 12:35:49 PM »

Keep in mind, there are two types of pricing structures. You have wholesale, and then you have retail. Wholesale is typically half of what retail is. Your prices would most likely be wholesale prices if you are not paying yourself for the time it takes to photograph and upload onto your site, or peddle your wares at a show.

If you were going to sell your items in a large quantity to a retailer, who does all the work of finding buyers for you and displaying your work, your pricing structure would be perfect.

However, if you are marketing the work yourself, you should be paying yourself for that time as well.
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kraixinxthexdark
« Reply #6 on: August 07, 2010 12:30:34 AM »

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! Cry

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.
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itsina
« Reply #7 on: March 08, 2011 08:43:57 PM »

I'm sorry, kraixinxthexdark, but I think I misunderstand you; 50 cents an hour? That is ridiculous. You should be making at least minimum wage for what you are doing, if not more. Just because large corporations get away with worker exploitation does not mean you should do the same thing to yourself, especially if your goal is to save for college.

I am a student as well, and I know that as students we are poor and don't have a lot of money to spend on expensive handmade items. But there are people who do, and pretty much all of Etsy is an example.

People wouldn't buy your merchandise if they thought they were being ripped off.

Besides, I read somewhere that cheaply priced merchandise is a turn-off to buyers, which might seem at first counter-intuitive. But a cheap item implies cheap materials, or sub-par craftsmanship, or even a "too good to be true" scam.

OP, I think your formula is a good formula. You are charging what you deserve for your work, and you shouldn't charge any less than what you deserve.
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« Reply #8 on: March 09, 2011 04:34:29 PM »

I'm new to the whole figuring cost out and I'm feeling the same challenges that have been posted.  I'll save the emotional issues for another post.  Or add it at the end.

But there's a reason that formulas are used to price items.  There needs to be some kind of logic and standard we apply to things other than what feels like the right thing.  I know there are pieces that I would fork over big $ for, but the same item in a different color, I wouldn't even notice.  But that's not how anything is priced.

You are creators whether professionals, hobbyists or some blend of the two.  Widgets in a box is one pay scale, brain surgery another.  Just because it feels like a "just crafting" does not reduce the price.  The brain surgeon's 1000's surgery is not cheaper than the first one.

If you're going to sell, use a basic formula that the industry uses.  If you want to adjust your prices to accommodate feelings, let that come into play in the % mark-up for the profit.  Whether it's because you don't want to charge friends/family as much or because you feel like you're going to be stealing from folks, that's when the profit gets adjusted.

I love making things a whole lot more than I like selling them.  I'm OK with the profit level sinking to zero.  I also like donating things which really comes out as a cost rather than a break even.  And that is why I have a job that pays the bills and the crafting $ is gravy.

On the emotional end of feeling like we're ripping folks off, keep in mind that we are crafters.  Our instinct is to see something and figure out how to make it, usually by starting with the simplest, easiest and cheapest ways.  But there are a lot of folks who will only buy something if it has whatever their personal favorite label is.  Most humans are somewhere between those two.  Because we're at one end of that balance, it's sometimes harder to recognize that the other end is also out there. Just because its instinctual, easy, fun and relaxing to us, does not make it any less valuable.  Obviously to some of us, it increases the value.
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Chris in VT
« Reply #9 on: March 10, 2011 04:38:04 AM »

First, let me say I do not sell on Etsy or anyplace like that. I sell at art and craft shows, and have my website. That's it.

About charging by the hour. I have NEVER done that. Because if you charge by the hour, you must include EVERY MINUTE you work on your product. And that includes shipping and traveling to and from shows. You'll find that you don't make a lot per hour.

What you must do is find a way to LOWER YOUR COSTS, not charge an hourly rate. If you make one piece at a time you'll never make any money. You must make 100 pieces at a time in steps.  Cut all the material at once. form every piece at once, and find ways to form multiple pieces at once. Like 10 at a time.

You must become efficient at what you do. If you work with cloth, you find ways to cut multiple layers at a time. You can charge $10 per hour cutting one piece at a time, or charge $10 per hour cutting 10 pieces at a time. Which is the lower cost?

If you're an artist making one of a kind work, you cannot charge by the hour, you charge what the market will bear. And sometimes you realize what you have is too expensive for what it is.

So if I don't charge by the hour for my product, how do I know what to charge? Trial and error. First, everybody knows the general price range of what they make is.  So that's your target. And you find ways to lower your costs so the PROFIT is your pay.

Another method is to take the retail prices of your supplies, and triple that to arrive at your prices. Then you find a way to purchase that material at a lower cost and in turn, you make a greater profit.

And remember, profit is NOT a dirty word.
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