HOW much?

Ah, yes. This always seems to be a difficult issue to tackle. Why? Because most crafters undervalue their work. More specifically, the time and energy they put into their work. And then there is always the hobbyists vs. the artist debate (but I'll save that for another day).


There are a few formulas commonly used to figure out how much you should price an item. It looks a little like this: CoGS + overhead + labor + profit x 2 = Retail Price. There are other formulas too, and most are a variation of the one I just presented. For example, other industries may use a 2.3 multiplier rather than 2, etc.

CoGS is the cost of your materials. Simple.

Labor is the wage you pay yourself. Usually this is an hourly rate, but I suppose you could pay yourself a flat rate or by the piece. The important thing to note here is to be confident in your skills and workmanship and to pay yourself accordingly. All too often crafters and artists have the "my work isn't good enough to command $XX/hour" mentality. Humbug! YOU would gladly pay someone else $XX/hour to create a custom piece for you, so why should it be any different when you are the one doing the creating??

Profit is the money you make above your costs. This money is usually reinvested in the company for things like new equipment or new technology.

Overhead is one of those words many people use as a catch-all for every thing else that costs money in the business. Most overhead are expenses you incur on a monthly basis. Some of these items include: insurance, rent, office supplies, show fees, tools, software, display materials, packaging, travel expenses, promotional materials, etc.

A word of caution: when you first start making pieces, your labor time will be slightly higher because you may not be as efficient as you can be. This will change with time. Secondly, if you are not buying your supplies at true wholesale, rock-bottom prices, you will be priced out of the market by other sellers who do buy supplies for less. Shop around for low prices (but don't sacrifice quality). Some wholesalers will only sell to bona fide businesses. So, if you do not have a business license or a tax ID...get one!

Next: A little more on pricing.