How Do You Set Prices for Handmade Goods?

So you want to sell your work at a craft market. One of the most common questions that new makers ask is how to set prices. We all know that everything has a price, but we seldom think about why something costs what it does–until we suddenly find ourselves having to write a figure on that price tag ourselves!

Sometimes artists and crafters are averse to thinking about their work in terms of dollars at all. It can seem so crass to put a dollar amount on a work of art, even if you do need to sell your work to pay the bills. How do YOU know what your unique work is really worth? Who knows how much another person would pay to own it?

There Are Two Ways to Set Prices

Way #1 is to use a simple calculation: Labor + Materials = Price. Pay yourself an hourly rate, add any materials costs, and calculate accordingly. Let’s say you are making wooden picture frames. It could be minimum wage, but you are a skilled worker. So find out the standard wage for a skilled laborer in your region. If, say, an auto mechanic gets paid $25/hr., and you can make a picture frame in three hours, and if the materials cost you $10, then you need to price your work at $85.

Commercial shops use similar calculations, although they have to take many other costs into consideration–everything from utilities and administrative costs to insurance and wear-and-tear on tools. You may well be running a small business, but these are (probably) not costs you need to think about–at least not right now. When starting out, keep your calculations as simple as possible.

Way #2 is to just look at what comparable work is priced at locally or online, and stay in the ballpark. So if a handmade picture frame at a local arts-and-crafts market is priced at $90, and then you find a comparable one online for $75, then maybe $85 is a fair price.

The above figures are all arbitrary, but hopefully they’ll send you in the right direction.

You should also consider that prices will vary a lot by region. If you are in an affluent area where median income is fairly high, your work should command a higher price. But if you’re in an economically depressed region, you’ll need to price your work lower.

Beware Comparison

If you choose Way #2, you must beware of comparing your work to mass-produced products. Mass production has its place in the modern economy, but that is not the kind of work you are doing. There are good reasons that nice, tailored suits cost many times what mass-produced suits off the rack cost. Grigorio Armani is not competing with Kohl’s. Don’t ever try to compete price-wise with mass-produced goods of any kind!

Also be cautious when looking at prices online. Even when it comes to handmade goods, prices on the internet are often insanely low. Websites like Etsy have exerted a downward pressure on prices for handmade goods (often because the goods aren’t actually handmade in any meaningful sense), so where possible you should do your comparison-shopping in person in your local region, rather than online. Visit a couple craft markets and eyeball the prices for handmade goods of all kinds. You will soon get a good sense of what price range would be appropriate for your work.

Don’t Undersell Yourself

In the end, don’t worry too much about setting exactly the “right” price at first. You can always change your prices! If you price too low initially, you can just raise the price a little at the next market, until you find that sweet spot where your supply matches local demand. People expect inflation these days, so it’s okay to set your prices on the lower end and plan to raise prices as time goes on–and as your skills improve. Or if you set your initial prices too high, you can always reduce prices later, or even have an end-of-the-year sale to get rid of unsold pieces.

However, in my experience, artists and crafters often undervalue their work because of basic insecurity. You look at what you’ve made, and all you can see are the flaws. You need to know that those flaws are visible only to you, and that what your customers see is a unique, handcrafted work of art. Trust me: nobody will ever be as critical of your work as you are! Price accordingly.

Plus, many crafters and artists are used to living on a shoestring budget, so they really can’t imagine plopping down a large amount of money for the kinds of things they make for themselves. You have to accept the fact that your primary market is not other crafters and artists, but people who have more money and fewer skills than you do.

It’s crazy, I know. But there really are more people in this world who can afford to pay you well for your work than there are people who can do the quality of work that you do.

A Third Way

Which brings me to the final way you can set your prices. Just ask yourself what you honestly think your work is worth–what you would pay for it yourself on the open market.

Then double that figure.

Or triple it.

At that point, you’re probably getting close to the real market value of the things you make.

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3 Responses to How Do You Set Prices for Handmade Goods?

  1. Jim Dillon says:

    Thanks for this sound, sane starting point on this topic. Pricing is endlessly interesting to me. If you ever sell through a gallery, they typically take 50% of the sale price as a commission: which means, I suppose, that one calculates one’s Time + Materials price, and doubles that, to get a retail/gallery price. If you sell the same items yourself, then you’ll need to charge what the gallery charges, so you don’t undercut their price and kill their sales.

    Recently I was reading one of Richard Raffan’s books from the ’80’s or ’90’s and saw this tidbit on how he priced turned bowls: Multiply the width of the bowl by its depth (in inches), and that’s how many minutes it should take you to make that bowl. Multiply that by your hourly rate (divided by 60 to convert hours to minutes) to get your price. Obviously, his method doesn’t add up to a fair price unless your hourly rate includes overhead plus the time it takes to source and prep your wood. Which is a good place to start thinking about “billing efficiency,” a crucial concept if one is doing this full time for their daily bread. Very few self-employed makers, working alone, can get in 40 “billable” hours a week. Admin, fetching materials, delivering finished goods, etc. all have to happen too.

    • Quite so! I’ve been asked by one or two local shops over the years if I’d consider selling retail, but like you said, markup is at least 50%. If I continued to sell my wares on my own as well, I’d be undercutting them by that much. But the bigger issue is simply production. I can’t cut costs by increasing the scale of production. It takes me twice as long to make two spoons as it does to make one. If I supplied my wares at a wholesale price to shops that marked them up for retail sales, I would be both working more AND making less money. Like I said in the post, we’re not competing with mass-produced goods, either in production scale or in price!

  2. Dan says:

    “It’s crazy, I know. But there really are more people in this world who can afford to pay you well for your work than there are people who can do the quality of work that you do.”

    This is a very wise and informative statement. It’s an interesting fact that most artists and craftspersons cannot “afford” their own work if they were buying and not producing. I suspect this isn’t a new situation. I doubt that the cabinet makers of the 18th century were able to afford the shop’s products either.

    Do not compare prices with IKEA either.

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