Sunday, February 27, 2011

Setting Your Price Points....

As a small business person (and what work at home mom isn't), figuring out your pricing can be one of the hardest things to do. I know that I have a hard time....

What is your time worth?

What is the materials worth?

What will the market handle?

Is there even a market?

When I first started out about 3 years ago, I really just priced it for what I thought I would pay... Only thing is, I wasn't really covering the price of the materials much less for my time and talent! I figured out really quick that I needed to find a better way to price my stuff.

Over the last three years, I have found numerous formulas and strategies of pricing ones work, but I really haven't come up with a fool-proof way... Go figure!

With hair bows, it's been fairly simple. For every inch of a finished, plain bow, it's $1. So a 3 inch pinwheel is the same as a 3 inch boutique bow. The fancier the bow, the higher the price. The only one that I have had a hard time getting is the Funky Loopy bow... I mean, those suckers can be simple, or very ornate. I did stick a $7 price on the first one I ever made and it sold at a craft show!

Headbands, I just really started with the smallest that I made and began to add $1 for every increase in size. Now I have started to make a more complex weave and so I am forced to decide... Do I sell it for a little more money because it takes twice as long to make?

The hardest thing to figure out is my sewn items. I have heard many ways to price: Decide how much you want to get paid an hour and take that on to the cost of materials, take the price of materials and triple it, take the price of the materials and double it.

I have often taken the doubling or doubling plus 10% approach.

It works sometimes and sometimes it seems like my prices are too high. I often struggle with the thought "My products are just like what people go to fancy boutiques to find and my price is WAY cheaper, why don't they save some money?" Well, it's been pointed out that a lot of people look at the price as the worth of the product... The more money you spend in the product, the better the quality. What most people don't realize is that when you buy from the designer/maker/creator personally, you are cutting out the middle man. They can charge a little less because they don't have the overhead that a boutique does....

This, of course, doesn't hold for the big box chains! They buy from overseas countries in such bulk that they get rock bottom prices and can charge pennies and make a huge profit.

What it really comes down to, I think, is educating the public about handmade and that you ARE getting quality for a good price...

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