Friday, January 16, 2009

On Pricing

Now, I am clearly not an expert on this matter. Considering the 3 sales I've made thus far are to family and my boyfriend's mother (these are still much appreciated and very exciting, but I still feel like I have to prove myself to the outside world), perhaps I'm completely off on my pricing.

Anyway, a recent thread on the etsy forums got me thinking. Someone asked how everyone else priced. For those that have a concrete formula, good for you! There is so much to take into account that I can't seem to follow any one. There is a whole SERIES of articles on etsy titled "The Art of Pricing," all of which seem to tell me something slightly different. Or, rather, they build on each other to create a complex equation for your business. You start with wage + cost of materials, then add in competitive pricing, but don't forget to price the item for what it's worth (don't lowball yourself!), discounts and bundling and tiered pricing oh my! I admit I haven't read all of these. I start to panic a little bit only a few sentences in because it's all too much for my brain to comprehend at the moment.

Instead of me badly summarizing this, I will share the link with you.
The series is here: http://www.etsy.com/storque/search/tags/art-of-pricing/ and I encourage reading it to any interested in pricing. And to any that are brave enough.

When setting all of this up, I agonized over pricing my pieces. I didn't want to price them too high, but not too low either, but I still felt the time and effort being put in was worth a lot, and I do have to make a certain amount of money if I want to continue this instead of finding a 4th job to juggle, and it went on.

So, I decided to round. I hate numbers. I hate the business of accounting and such. There is no way in hell you could convince me that I should spend hours of my time figuring out the exact direct and indirect costs, the exact wage I need (want? I will think about need when this is actually pulling in the money of a part-time job), and then factor in what I should actually charge in order to stay competitive, etc.

Once upon a time a local successful jeweler told me to charge materials + an hourly wage I thought my time was worth. While I think my time is worth much more than Walmart would, had I used this equation I'd never have a sale in my life because the prices would be so over the top. There are a LOT of hours put into many of these pieces. At $15/hour some of my chains would be starting at $180...before cost of materials. As cool as I think they are, I'm not so sure others would agree.

So, I use a little bit of this and a little bit of that and...it seems to work for me. Cost of materials + time spent/difficulty of piece + considering prices of similar pieces in etsyland + comparing it to other pieces in my shop + is it OOAK? = my equation. Roughly. Because then I have to think about taxes/etsy/paypal fees/and most recently paid advertising. I haven't really factored those things in yet, I mostly just take them out. Packaging is figured into shipping prices. And that's how I've done it so far. I really do try to price accordingly with every piece. The higher priced pieces? Took me hours of finishing. The lower priced? A fraction of that time from start to finish.

When I sell a piece, it gets to be even more fun. Then I have Price of sale - paypal fees - etsy fees - cost of materials = Price B. I take Price B and go from there...50% to income, 20% to savings, 10% to my investor (aka dad) to pay him back for materials, 10% more to go towards buying tools and silver and such. Depending on what my exact needs are this 10% may be more of a saving for a big item in the future.

And that's my novel on pricing and my business plan that may or may not work out in the long run. It kind of reminds me when you're a kid and you like to play teacher when you don't know what you're doing. Or you are pretending to run a store. That's kind of what I'm doing...pretending to run a store. It's like playtime...I get to make stuff that I love making. And then as an added bonus, people give me money for it!

1 comment:

Sara Mathewson said...

Pricing items is difficult. I think your price are quite reasonable. i know that painters often use a formula, o much a square inch plus materials and framing added etc. Some try to price by looking at what others are selling their pieces for etc. Like here for example. If you are selling at the Arivaca Artists Co=op, you would price it lower than if you were selling at a Gallery in Tubac. Some people say to put a price on a painting and keep it that price no matter where you are selling it. And while I agree with that more than the others, sometimes the reality is that you might have to have lower prices at one place and higher somewhere else. Of course you are selling online right now so some of this doesn't apply. But, in the future you may have different venues and you will have to decide how you are going to handle that as far as pricing goes. And, as you get more well known and sell more pieces, I expect that the pricing will go up. i know this doesn't help much does it? guess I'm rambling. hehehe Good Luck!

Mom