In the forums, both Etsy and EtsyKids there are always questions about wholesale pricing. As a rule shop owners expect to pay half of your retail. Now - if your retail price is very low then half of that sounds ludicrous... I hope that this post will encourage everyone to take a look at how much their work is really worth. And also let consumers understand the value of hand made goods!
The wholesale price is figured from adding the cost of materials, cost of labor and hourly cost of doing business.. (Many sellers use a wholesale price for the retail price - which makes it impossible for them to maneuver in the wholesale market).
For example lets say you weave rag rugs and want to know what your wholesale price should be. Materials for rags and thread are $5.25. Next add cost of labor - we'll say you pay yourself $15/hr and it takes you 2 hours per rug for a total of $30. Now you add your hourly cost of doing business (also known as overhead) - include etsy fees, PayPal fees, electricity, etc..(if you don't include all of your indirect costs in figuring your prices, any financial projection you make about your business will be unrealistic.) For this example will say our hourly overhead is $8.81. This gives us a wholesale cost of $44.06 per rug. To get your retail price, in most cases you double your wholesale price. Most shop and gallery owners mark up 50%-60% - so if you double yours then you will be close to the shop price. (the reason for this is a shop owner cant sell what she bought from you for $80 if your selling it in your shop for $40.)
This is just a spring board for pricing. You have to know your market and know if the market will bear your prices AND LET ME SAY THIS- Your market IS NOT Walmart . Hand made things should never be in competition with Walmart or large chain stores like that. When people are shopping for hand made items they expect to pay boutique prices, not discount store prices. If your prices are cheap they expect that the quality is as well. Your market should be consistent with what you see in high end boutiques. Educate yourself about your market, research, never stop learning!
The BIGGEST mistake new Etsy vendors make is setting prices too low. And I did the same thing in the beginning. I sold dresses for $10 for 3 years. And I wish 100 times over that I could get all those dresses back - I actually had one honest customer email me later that she had sold 2 of my $10 dresses for $75 each at a swap meet! That email changed my life - as you can imagine! LOL! I unlisted everything in my shop - re-priced and re-listed and felt much better about selling. Granted stuff didn't sell as fast as it was at $10 (of course) but when I sold something I didn't fell like I was giving my time away.
Just thoughts from my head to yours! I hope everyone enjoys this fab weekend! XO
