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Topic: Wholesale Pricing  (Read 6664 times)
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cdsommer
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« on: April 15, 2004 07:56:50 AM »

Hi there oh mighty crafters! I am beginning to get some wholesale inquiries, which is nice! BUT, (there's always a but, isn't there?) I'm unsure how to go about pricing. I have kept my pricing at a reasonable level on my website to build up my reputation and clientele. The profit margin is slim and I don't really want to cut it any further. A web friend of mine who sells handcrafted wares like myself is in the same boat and offers a discount to boutiques instead of a lower price. What are your thoughts on this? Discount? Lower Pricing? Martini?

Thanks in advance!
Carrie Undecided
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amareluna
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« Reply #1 on: April 15, 2004 08:09:34 AM »

This is a problem we've been discussing for some time in another thread: http://www.craftster.org/yabbse/index.php?board=58;action=display;threadid=4655

Basically, what we've come up with is that none of us can seem to come up with is that none of us can come up with the answer...lol

However, I've been surfing and came across this site:
http://wire-sculpture.com/price.html

It's aimed at those who make wire jewelry, but I think the theory behind the statements holds true for any handmade item.
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amareluna
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« Reply #2 on: April 15, 2004 08:42:37 AM »

I just found this website and it ROCKS - FULL of information on how to price your products, even how to price slow moving product, etc.

Each month has a different pricing topic, so make sure you look for them!

http://www.casa-chia.org/Craft-talk/craftalk.html

also, this site has a printable worksheet for figuring out your pricing:
http://www.louisianavoices.org/Unit7/edu_unit7w_pric_crafts_p1.html
« Last Edit: April 15, 2004 08:45:42 AM by amareluna » THIS ROCKS   Logged
cdsommer
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« Reply #3 on: April 15, 2004 09:54:38 AM »

Thanks ~ I'll check those sites! I haven't broken down how much each piece actually costs me due to the small percentage of each...thing! I mean, a piece of webbing, a piece of interfacing, a piece of fabric, etc. times the amount per yard....ugh. Plus, I want to charge a flat amount for my bags, not price them according to how much a certain fabric cost.

Thanks again!
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« Reply #4 on: April 18, 2004 06:31:22 AM »

I understand that feeling that breaking it down is hard to do with fabric, and wanting to have a flat price for your pieces.

For my creatures I figured out the median or average cost of the fur and fabric I use. I divided it by how many creatures I could get out of each 1/2yd of fabric and fur. Added the costs together added about a dollar more for thread, felt and other supplies I use in the process (like cardstock for pattern making) and came up with a basic cost of materials for each creature. I know that some cost more to make than others but by using the median price I have a flat cost to work with.

When I wholesale I double the cost of materials and drop out the labor, (since I am the labor I don't mind!). For my own retail I triple the cost of materials.

The other consideration is when you are selling wholesale keep in mind that the store will double the price you sell your item to them for. So make sure it is going to be a price you feel comfortable with.

Sorry for blabbing on...but there ya go! I hope it helps.
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Christie
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« Reply #5 on: August 19, 2004 08:37:48 PM »

I have a question that hopefully you crafty people can help me with.  How do you figure your wholesale pricing?  I know your retail is a markup of 3 times cost of supplies plus labor - but what about wholesale?  I have someone who has an online store that is interested in carrying some of my items and I want to sound at least a little knowledgeable about wholesale before getting into any agreements.
any help would be greatly appreciated!!!
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kitschykoo
« Reply #6 on: August 19, 2004 09:34:21 PM »

I have been working on a craft pricing guide. Below is a rough draft of some basic ideas. I have been making jewelry for 5 years and finding the right wholesale and retail price is a challenge. My first year in  business I undercharged, then I overcharged, and now I have found a happy middle. So, don't sell yourelf short, don't charge over the top, and don't be afraid to change your price after you have had some customer feedback. If a return customer gets upset because they paid too much, offer them a bargain on their next purchase. If a return customer comes back and doesn't understand why you raised your prices let them know how lucky they are that they got a bargain when they could!


There are two things to consider when pricing one’s crafts:

1. Cost of Materials and Supplies
2. Labor

For example, if you have made an appliqué handbag. You can make 4 handbags from one yard of fabric and the fabric was 12.99/yard. The cost of the fabric is 3.25 per bag. The appliqué on the front of the bag uses a little bit of  5 different kinds of fabrics. You spent 50.00 total on the fabrics for the appliqué each at different prices and you can get 50 applique designs from these fabrics. The cost of the appliqué is 1.00 per bag.
The appliqué also has embellishments of sequins buttons, and ric rac The cost of the embellishments is  .75 per bag.
The cost of your thread per bag is minimal. .25 cents per bag.

Fabric 3.25
Appliqué1.00
Embellishments.75
Thread.25
 
Total materials cost for the bag is 5.25

Labor
To figure out your labor cost you need to know how long it takes to make one bag from beginning to end. Start by breaking down the different steps in making your handbag

Cut out the fabric for the bag
Cut out the fabric for the appliqué
Sew on the appliqué
Embellish the applique
Sew the bag together

Some processes you might do all at once, while others you may do one at a time.
It takes 5 hours to cut out the fabric for twenty bags.  That’s 4 bags per hour or 15 minutes per bag. It takes another 5 hours to cut out the appliqué for 20 bags. So that is another 15 minutes per bag.  It takes about  15 minutes to pin and sew on the appliqué to the front panel of the bag. The embellishment takes another  15 minutes per bag.  It takes   5 hours to sew the twenty bags together. That’s 4 bags per hour.

Cut out the fabric for the bag:   15 minutes
Cut out the fabric for the appliqué: 15 minutes
Sew on the appliqué: 15 minutes
Embellish the appliqué: 15 minutes
Sew the bag together: 15 minutes.

Total labor time per bag is 1.25 hours.
 
How much is your labor worth.   Calculate your labor cost at the hourly wage you would pay to hire someone else other than yourself to make the bag.   

Hourly wage = 10.00/hour.
1.25 hours/bag=  12.50 per bag.

Now add your materials and labor cost together.

Cost of materials per bag = $5.25
Cost of Labor per bag = $12.50

Materials and Labor Cost per Bag = 17.75

(If you have overhead costs, like you rent a studio outside your home, you may want to figure this in to your wholesale price as well.) 

17.75 is your wholesale price for your bag.
A wholesale price is typically half or 50 % of what your retail price is. The wholesale price is how much money you would charge a store or gallery to purchase your work. Stores have to charge 100-125% more than the wholesale price of an item to cover the cost of running a store which includes the store owner and the store employees salaries. It is a symbiotic relationship. One cannot have one without the other.

To find your retail price double your wholesale price

Wholesale price x 2 = retail price
17.75 x 2 = 35.5

The retail price is what you would charge for a customer to buy work directly from you at a craft fair (or on your own personal  web-site). The reason you sell your work at retail price is that the extra money you get from the retail price goes to cover the cost of doing the craft show: the  fees, transportation to and from the craft show, your valuable time spent at the craft show, etc.

When you are at a craft show ( or on your web-site)  it is as if you have a store front and you have to sell your work at retail price to cover these extra costs. If you sell your crafts at wholesale price at a craft show or on your own web-site you are selling yourself short because you are never being compensated for the extra cost of being in a "marketplace" instead of your studio making more crafts.

There are other things to consider too like perception of value and price averaging.

Hope you find this helpful! 



 
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« Reply #7 on: August 21, 2004 01:26:29 PM »

kitschykoo,

While I didn't ask the original question myself, I still want to thank you for your answer!  I've been having pricing issues myself lately as my one-time hobby (coincedentally, I make jewelry, too) has steadily grown into a small business. 
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Christie
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« Reply #8 on: August 21, 2004 06:32:26 PM »

Thanks kitschykoo!  Cheesy That was a great help!  I appreciate your answer - cleared up some issues for me.
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Cixxi_Beth
« Reply #9 on: August 22, 2004 05:01:33 PM »

Kitschykoo, thank you so much for the detailed response!
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