Marketing (part 2)

Pricing a handmade item really shouldn’t be hard but it is. I’ve struggled with pricing, and judging from the amount of posts on the subject other sellers have as well. My struggles come from wanting to make Ruggles as affordable as possible. I’d like everyone to be able to afford one, but I know realistically that’s not possible, since I’d also like to afford to make them.

My first Ruggle sold for $25. That was too low, even given I was using Velboa fur (less expensive than Minky) and they were a tad smaller than the ones I make now. I’ll never know for sure because I didn’t do the math. I just looked at it, thought “$25 sounds pretty good” and went with it. Very scientific, I know. When I finally did do the math, I choked on my coke. At that point “doing the math” meant coming up with a loose materials cost. Then I used the standard formula that most blogs, businesses and even Etsy recommend – materials x 2 = wholesale; wholesale x 2 = retail.

My very first sold Ruggle.

That number really did make me choke. It was north of $120 for a standard Ruggle. I wondered if people would even pay the wholesale price that equation had given me, but I did slowly start to raise prices trying to get to the point where my materials would be covered.

I still wasn’t paying myself for my time. I think it’s utterly ridiculous now, but like many other handmade artisans I didn’t think my time was worth anything. Of course, your time is the most important part of the materials equation. You can have a bunch of materials lying around, but without your time and talent it won’t amount to anything other than a stack of stuff.

The second time I did the math, I got serious about it. I factored in (almost) everything. Not just the things I’d taken into account before (fabric, thread, batting, etc.) but all the things I hadn’t (my time, pins, printer ink, and a ton of other stuff). I choked again. Then I turned to the Attack of the Craft forums and got several gems of advice that really helped me in pricing.

First, I am selling a luxury item. It’s not food or shelter and it’s not going to negatively impact the life of anyone who can’t afford it. Second, I am not my target market. My target market exists in an income bracket above myself, so just because *I* can’t pay that much for it, doesn’t mean it’s not worth the amount. Third, you have to trust the math. If you aren’t making enough money to make the process worth your time you will come to resent it. This is supposed to be fun and rewarding, not a pain in the budgetary ass.

And last, but not least, wholesale makes absolutely no sense for handmade. To be profitable in wholesale, you need an economy of scale that you just aren’t going to get with handmade. It doesn’t matter if you’re selling 1 or 100, you’re still doing the same amount of work. There are no savings for handmade in wholesale because there’s no automation in handmade. This lesson actually took me a while to really sink in. I had to do a few wholesale orders (losing money on each piece) and kill myself in the process before it hit home. I think for the longest time I equated wholesale with success. But it’s just not.

Wholesale orders were good for introducing new animals like this wombat.

I try to review my costs once a quarter, or whenever I know something I use is going up in price (like postage or fabric or what have you). My materials include fabric, thread, batting, stuffing, labor, fleece, pins, tags (which includes fabric, thread and printer ink), shipping envelopes (I pay a bit more for compostable/recyclable, reusable eco enclose mailers), business cards, thank you cards, ribbon and postage. I don’t include the cost of shipping materials to me, photography costs, internet access and website costs, licenses, gas and other things like that.

I’m pretty happy with where my prices are right now. I make enough to cover my time and materials plus about $10 in profit (sometimes less) on each Ruggle I sell, but because of those other expenses I don’t factor into pricing I haven’t made a profit overall yet. I have hopes for this year, but we’ll see. I have never charged what that original formula told me to, not even the wholesale cost and I don’t really ever intend to use it as a real pricing tool again. It may make sense for others, but not for me.

Writing this made me realize that I don’t have pricing on my website. That’s one of my big pet peeves – not being able to find out how much something is going to cost. So here’s a quick breakdown with a more detailed pricing structure to come on the main site…

Standard Ruggles $50 + $5 shipping (most animals who are simple, i.e., have two ears and a tail.)

Horned Ruggles $55 + $5 shipping (animals with ears and horns and maybe a fleece muzzle like this moose.)

Involved Ruggles $60 + $5 shipping (anything that is more involved than horns and ears. Critters with ridges down the back or wings fall into this category)

Pieced Ruggles $65 + $5 shipping (any animal with two or more colors of fur pieced together, like this fox.)

Mini Ruggles $25 + $5 shipping (I only do animals that fall into the “standard ruggle” category as minis, and they are always ready to ship. No customs.)

Giant Ruggles $135 and up + $20 shipping (final cost dependent on the critter, but most “standard ruggle” animals will be $135 as giants.)

Even though it should be simple math, and easy, pricing just isn’t. There’s always an emotional component when you put a price on something you’ve made, as well as other factors that make it more difficult. But starting with the math is a smart way to go. As always, questions and comments welcome! Next up in the marketing series: placement.

Advertisements

6 Comments (+add yours?)

  1. Rene
    May 02, 2012 @ 13:21:25

    Thank you for stating that issue so concisely. The pricing is the exact reason I got out of selling and only make crafts for myself or gifts now. The resentment of losing time and money was too much! Of course, I say this as I am trying to ramp up another business idea I have. :). Good luck with your endeavors. Your ruggles are adorable! (unfortunately, I am not in target income bracket either).

    Reply

    • bewhiskered
      May 02, 2012 @ 15:51:37

      It’s always a struggle. I try to do giveaways regularly, just so people like you and me have a chance at owning a Ruggle. That’s the whole reason behind the minis as well. It became a little easier when I realized that this is my creative outlet and makes me feel good. In order to continue with it, I had to at least cover the majority of the costs. Otherwise my main investor (my husband) would have cut me off! 😀

      Reply

  2. Pili
    May 02, 2012 @ 18:02:36

    I’m going to go through a lot of that very same process when trying to price my cupcakes for further development, than just baking them for fun… but in my case, I do have to factor the competition, cause cupcakes are common, not an unique item like your ruggles!

    Reply

    • bewhiskered
      May 02, 2012 @ 18:59:41

      Oh Pili. You bring up an excellent point about competitve pricing. I could write another entire blog post on competition (and after the marketing series, I just might!) Remember that if your product is unique enough – even within a large category like jewelry – your pricing can be a bit “off” from competitors. The trick is to brand yourself in a different market so you have no direct competitors. If you must have direct competitors, then pricing in line with them becomes a bigger factor. If that’s the case, it’s all about mitigating your material costs.

      And foodstuffs, well, that’s a whole other kettle of fish. One I have absolutely no experience with beyond selling popcorn at the movie theater where I worked in high school. And I didn’t even do that for long. I would imagine that finding a mentor in the baking industry would be quite important in that scenario.

      I do wish that cupcakes travelled well enough to make the trip here from spain though! Yours look delicious. 😀

      Reply

  3. Viv Hilton (@softTOMtweets)
    May 03, 2012 @ 19:54:10

    I so identify with this

    Reply

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: