Wednesday, June 10, 2015

How to Know When to Raise your Prices

Pricing is hard.  I get asked all the time how to price handmade items correctly.  You can find all kinds of different online calculators that can help you get an idea of how to price your items.  Here is a great one on Etsy and here is another one with less explanation.  The problem with these calculators and methods is that they don't take into account the specific market you sell in.  Some may say that doesn't matter but I think it does.

Either way the number one thing you must be doing if you are running your own handmade business is tracking your sales and expenses.  You must know what you are earning.  If you find that you are not earning the wage you want to be earning, or if you find that it has lowered over time, it is time to re-examine your pricing.

I have been watching my profits closely for months and have realized that while my work hours have increased my profit has not increased at an equal rate.  I've come to realize that the cost of importing most of my materials, as well as the artistic evolution of my dolls, have resulted in a lower profit margin.

Why am I telling you this?  Well because I've decided to raise the prices of my dolls.  I want my customers to know why, as some have followed me for many years, and have become accustomed to my pricing.

The evolution of my dolls has resulted in spending more time per doll.  When I started out my dolls were pretty basic.  Here are a couple of examples.

I still love these older dolls for their simplicity but today my dolls are much more detailed.  I spend much more time researching expressions as well as painting details that are just right.  Here are some recent dolls.

The problem is my pricing has not changed in the last nearly 8 years.  In addition to the extra time I am putting into the dolls, I also am now importing most of my supplies from the US.  This has increased my expenses quite a bit, and while I do need to look into lower cost supply options, the reality is that right now it's not possible.  

So as of today my new pricing scale for one of a kind dolls will be:

1”-5” $70 
6”-10” $80
11”-21” $145
22-26” $170
27”-32” $195

This of course is a rough estimate and is subject to change with custom orders or extra details.  Also this only applies to one of a kind dolls as my pricing on my play dolls will not change at this time.

The other topic I want to mention that I eluded to above, is that many online pricing calculators do not take into account the market you are in.  While the calculators can give you a great starting point you also need to take into consideration what others in your market are doing.  Especially pay close attention to other makers who have as much time and experience as you do in your market.  While you shouldn't base your pricing on other people, if you see that a similar maker is way over or way under your pricing you might take that into consideration.

For example I feel that in the one of a kind doll market my prices are on the lower end.  I see very similar sized dolls, with similar work involved, starting at $200 and up.  I would like my prices to be a little more comparable.

Anyway I hope this advice has been helpful and I hope all you loyal BeBe fans will understand the reasons for the increase.  

No comments:

Post a Comment