There’s (almost literally) a hundred and one different sites online offering advice about how to price handmade crafts and objects.
The general rule of thumb appears to be:
(Time x wage) + Materials + Overhead + 10% profit margin = Price
I find materials pretty easy to calculate – how much clay did I use? How many different colours? And, of course, how much will it cost me to replace what I used?
Overhead is a little trickier – that’s Etsy listings, electricity (the oven to bake each item, plus lighting), tools, packaging (if the packaging is in addition to postage and handling).
The 10% profit margin calculates itself, once all other variables are understood. It should be noted that 10% is the absolute bare minimum advised for hobbyists who have other sources of income. The general advice if intending to make a living out of one’s craft is to add a 50% profit margin for wholesale/bulk quantities, and a 100% profit margin for retail quantities. Sounds huge, right? Except that most retail stores will add a 200% to 500% profit margin, in addition to their overhead costs.
The biggest challenge I find is pricing my own time. Do I pay myself standard minimum wage? (In Australia, at the time of writing, that’s AUD$15.51 per hour) Or do I underpay myself in order to make the prices more reasonable?
Take, for example, those “Cat & ivy” tiles. Each one took me a good four hours to make, not counting baking and glazing time (which is negligible impact on me). At minimum wage, that means that my time alone cost AUD$62.04.Sixty-twodollars.I sincerely doubt anyone will pay that much for a piece of polymer that’s 4cm square, made into a magnet, or a pendant.
So how much do I think people will pay, realistically? Well, some of my simpler silhouette tiles only took a couple of hours (see the next gallery post), and take very little clay or other supplies. So I’m happy to price them between $25.00 and $30.00, depending on the fitting someone chooses (a gold-plated brooch-back with pendant loop, for example, drives the prices up).
But these “Cat & ivy” tiles took twice that amount of time, and considerably more effort. So I’m comfortable pricing them between $35.00 and $40.00.
Those prices mean that my ‘hourly wage’ is just $5.00 an hour. Which is less than 15-year-olds get paid to work at Macca’s.
And yet, I’d be proud to make sales at this price – and in the long run, I don’t think I’d be too underpaid, because I really do love making these. The enjoyment I get out of that simple act is a kind of payment in and of itself.