Monday, August 29, 2005

And the Winner is....; also, More About Pricing


Congratulations, Bonnie! Please take another look at the pictures here, and make your selection of any two of the sets shown. Send me e-mail through the link on the right under "Want to Contact Me?", and let me know your choices, and the snail mail address to send your prize to.

Many thanks to all who participated! As you must have guessed, this contest amounted to a bit of market survey for me. Since I've never bought beaded stitch markers, I had no idea what price a nicely made set could get.

I have a lot of experience in pricing my finished bead work, but as I explained in Friday's post, the final step always requires a reality check. This means matching up the price you think you have to get against the reality of "Will people actually pay that?" Ultimately, if your materials and labor add up, to pluck a number out of the air, to $10, but the item is usually readily available to the public for $7, you're going to have trouble selling any.

There are several things you need to do in this case. First, make absolutely sure your technique is good. The overall appearance of the finished piece must look as though it's worth what you're asking. If your wrapped loops are uneven, if your beads are supposed to be round and they're misshapen, if your pliers have scratched up the wire - they will look poorly, and people won't be willing to pay as much. If everything looks like perfection, though, people may pay more for an obviously better looking product.

Next, see if you can refine your technique to work more quickly, reducing the labor cost. The only way to do this is practice, practice, practice. If the technique is wrapped loops, as for the beaded stitch markers, get a bunch of cheap wire and make loops until you can turn them out almost without thinking. By the time I was done with the first ten sets of beaded stitch markers, I had my technique perfected to where I could turn out a set of five in about six minutes. Labor cost, at my standard rate of $15/hour - $1.50.

Finally, do what you can to reduce the cost of materials. Choose the best quality of materials you can afford, and find ways to purchase them less expensively. Most mail-order bead vendors offer significant discounts if you purchase in multiples. If you have beading friends, consider pooling an order and sharing the savings.

Once you've taken these steps, re-calculate your base price for your product again.
(Materials * 2) + Labor = base price.
In the case of my beaded stitch markers, if I make a set of five using beads and findings comparable to what I've used so far, that comes out to:

($0.75*2) + $1.50 = $3.00
And here's where the reality check comes in. I think we can all agree that, even for a wholesale price for a complete set of 5 markers, $3.00 is a little low. I'll probably mark that up to $5 wholesale - which allows retailers to do a standard mark-up and sell them for $10.00.

Keep in mind that I'll be adding in some sort of packaging, too - at least a small zip-top bag and maybe a printed card topper. That cost has to be added in to the final figure. In my example of beaded stitch markers, marking the wholesale price to $5 not only covers packaging materials well, but I clearly have some wiggle room to work a deal for quantity purchases, and still make a profit.

Given all this, if I were to sell these on eBay, I'd probably set a base price for bidding at $6.00, that being a price that gives me a comfortable profit, but can still give a bidder a nice bargain over retail. If I sell directly to someone at retail, I'll likely go for $9 - $12, depending on the market. If I were to use more expensive beads, such as Swarovski crystals, or vintage Czech, then prices go up accordingly. But that will already have been accounted for in my basic formula.

Keep in mind that you always want to set both a wholesale and a retail price for your goods. If you only have one basic price, and you sell to a craft gallery at that price, they'll be marking your product up to re-sell it at a profit. They're not going to want to learn that they marked the earrings they bought from you at $10 (or sometimes more, depending on their policies), but that you sold direct to the public at craft fairs for the same $5 price they paid. Consumers are smart; they won't buy from the gallery if they know they can get the item direct from you for cheaper. And you'll lock yourself out of the possibility of gallery sales.

The same is true if you put your crafts in a consignment-based gallery. You never want the portion that you get from the sale to be less than the wholesale price you have set. If you are asked to set the final selling price for the piece, be sure to check that you'll get that much after the gallery takes their percentage.

There are other factors that can be considered, too - for instance, if the price you set is too low when compared to the going market, even if you're making a fair profit at that level, people may perceive your pieces as cheap, even if they're not. You never want to leave the consumer wondering that the price is so low, it may have been made in a sweatshop in a Third World country.

The examples I've used here are for pricing beadwork, but the same principles will work for any handcraft. All it takes to apply them is to 1) perfect your technique, 2) know your materials (and shop carefully for them!) and 3) know your market.

I hope this little guide to pricing - and my first post about it, here - have been of some help. Pricing is often intimidating to crafters who are trying to break into selling their goods, but it doesn't have to be. With a little information and thought, there's no need to ever worry that you're undervaluing - or overpricing - the work of your hands.