How to set prices for handmade goods #Makers @workshopmagCA
Setting prices is a big challenge for any business. If they’re too low, you can’t make a profit; if they’re too high, it can be hard to make a sale. So what goes into a smart pricing strategy? Workshop asked Patrysha Korchinski, a certified small business coach in Whitecourt, Alberta, to share her tips.
Workshop: What do makers need to think about when it comes to pricing?
Patrysha Korchinski: Let me start with one of the biggest mistakes that I see small business owners making when it comes to pricing handcrafted items. One of the first things they tend to do is to look at pricing guidelines that are geared towards people who are buying products and reselling them. And the prices, if you follow those models, often end up seeming outrageous.
The handcrafter should first figure out what they are spending: their production costs. Then add in some of the overhead costs, which often get overlooked: packaging and things like tags that you buy in order to sell the products.
Another mistake that small business owners often make is that they price too low. That’s how hobby businesses stay a hobby, because they’re not building enough of a profit in.
The best way to go about it is a combination of art and science, figuring out what it is that you need to make in terms of hard dollars, and also who your customers are and what they are currently paying [for similar products]. Handcrafters often fall into the idea that well, I wouldn’t pay that for this. But we have to remember that our customers can’t do what we can do. And that’s why they’re paying us to do it.
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