Friday, October 27, 2017
Pricing on Etsy ✽ How do You Decide What Your Product is Worth?
Pricing. It's the probably the one thing that most sellers get wrong, and are afraid to change. SEO is wrong? We work on it. Photos need work? We'll take them again and again and again. Shop needs a better cohesive branding? We'll do that too. Price needs changed? We're leery of that.
Honestly, finding the right price is not that hard. Asking people to pay that price? That's when we cringe.
Some of us charge too much for our work, and just don't want to go lower, even if doing so would create more buyers. But more of us don't charge enough, or just don't know if what we are charging is enough or not.
There are quite a few formulas different sellers have suggested using; One of the common ones is Time + Cost x 2 = Retail.
Another very common one is Time + Cost x 2 = Wholesale and then Wholesale x 2 = Retail.
Some people charge Cost x 2 + Flat Rate = Retail
There are sellers who charge minimum wage for their time; there are others who just charge what they feel like for their time.
Then there is shipping. Unless you use calculated shipping (I'm so glad that that is a thing now!!!), you have to decide what to charge. We usually feel worse about charging for shipping then the price of our item, because it feels like an additional fee, not a necessary part of your purchase. It's nice to have a tool that lets people know the exact price, to their exact location, without you having to be the one to tell them what it costs, haha... especially if you ship internationally ;).
It makes it intimidating to decide your own price, especially as a beginner, when you aren't even confident that people will want what you create. So, what price should you set your items for?
General Costs: Take your supplies into account, and double that. Cost is everything that you use -supplies, shipping boxes, packing materials, shipping labels, Etsy listing fees - divided between how many items you can make out of the amount each item comes in. Do your materials altogether cost 5 dollars? Then charge $10 for supplies. That way your sale will pay for itself, and the replacement (or new product) you make after it's sale.
Shipping: I suggest using calculated shipping; you won't have to worry about that price at all, haha. Yay! ;)
Profit: This is where you have some wiggle room, and often not a clue where to start working from.
Question: What do you want your time to be worth? Do you want to make $8 an hour? Would you like to make $15 an item? Would you like to use a formula such as 2.5 times the general cost? There are so many questions!
Answer: There is no steadfast right or wrong answer! So don't worry so much about it; just find that price that will compete well while making it worth it to you! Consider what you would like to sell it for (NOT what you would like to buy it for!), and then go research what your competitors sell their product for. Take the items that are just like yours: not more basic, and not any more detailed. Look at those similar items, add 10 or more of them up and find the average cost.
Is the average price significantly higher than yours? You'll definitely want to up your price. You can sell for lower than those around you do; it will give you the advantage of being the most "frugal" seller. Don't go too low though, because you can both cause people to distrust your item (what are they hiding to make it so cheap?) and you can undersell yourself!
Is your pricing far higher? You'll probably want to lower the price. You don't want to go so low that you aren't making profit, but you don't want to scare people off by being priced too far above the surrounding items. Can you cut costs or time to make it more worth while for you?
Is your price within a couple dollars of that average price? Then you are probably just about where you should be to start fine tuning your cost, and from here you have the ability to adjust as you see fit, while knowing exactly where to work from!
And one more thing to consider... what will you charge for Wholesale pricing? This needs to be significantly lower than your retail price, but above your price of general costs. Right at halfway between your costs and your retail should be right, but just take it into account when you set your retail. And yes, you want to consider it now. I didn't think I had to when I first started, but I do see the wisdom in it now!
Pricing is hard because we know that with a little time, we can make a gift for $5. But remember, your customers either don't know how or do not want to take the time to do what you do... they are happy to pay that price for the extra time or abilities it offers to them. So the best advice I have? Don't overprice... but DON'T view your product's worth through your eyes as the crafter who knows "how easy" it is, either!
Have you researched your prices? Do you aim for higher or lower than the average competing listing? Do you charge an hour rate, or a set fee? Is it hard for you to charge for something you know can be done with just a little bit of craft learning ;)?