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~  Pricing Your Hand Crafted Work~

To sell at Art & Craft Shows, Fairs & Festivals

Formulas for Setting Your Retail Price

How Much is That Doggie In The Window?

Usually methods used to figure ‘retail’ sales price fall into the following categories: 

The Ad Hoc Method : (Making the price up as you go along.) They attempt to intuitively find the ‘right’ price as viewed by the market. At best, it’s a hit-or-miss method because: “I don’t know how much time it took to make it.” or “The shop-owner probably knows better than I do how much to charge.” 

Going Rate: (Seeing what an item sells for elsewhere, and following suit.) This 'method' disregards costs and other significant factors. If you let your price to be "market controlled" you’ll never know if customers will pay 10 or 15% more for a truly unique piece of work.

Rules of Thumb : These ‘rules’ contain phrases like: "Eight times my cost..." or "...four times my cost..." but usually, people who use these don't know their true cost in the first place, - and may not be counting their labor as a cost!

Cost-plus: Using this approach can be time-consuming, but revealing! It takes into account both cost of materials and the value of labor, then adds a fixed margin to arrive at the selling price .

By dividing the units of production (the number of products made in a month/year divided by the monthly/yearly overhead,) it is easy to estimate what the overhead factor in pricing should be. There are other methods of pricing, but these lend themselves well to handcrafted work.

The two types of expenses which you should track to come up with pricing information are direct and indirect costs : Direct costs are costs for materials and supplies, e.g.: glue, nails, thread, clay, etc., and shipping, etc. Indirect costs are subtle; many people never think to plug them into a formula!    

Consider  insurance: (you must have liability insurance in this litigious society!) If your insurance costs $350 a year, that's about $30 per month, whether you are in production and selling your work, or not! Cost of money invested : if you’ve invested $2000 in supplies, and it takes you 2 years to use it up, - the interest you could have earned on $2000 for two years, is an indirect cost! (@ 5% x $2000 x 2 yrs. = $100!)

The space to store your tools, your workspace, etc., - has a cost: you have to heat that space, provide light, and
supply electricity to your machinery.

Your machinery has a finite lifetime, 5-10 years: if your radial-arm saw cost $400, and you expect it to last 5 years, it costs you $80 per year to use it, for it will eventually need
repair or replacement! Your time is an indirect cost.  If you work for someone else, you want a certain amount of money per hour: how much? 

Packing up for a show, unpacking, setting up, and being present at a show is part of your time/labor cost, as well as the time to drive there and back, plus the time to design and create your product. Your time: do you track it? Do you tape a time page (a calendar works well) on the wall and log in for work, and log out for long phone calls, lunch, etc. After your initial (prototype) piece, - track your time to cut out 10 or 100 pieces, to assemble them, paint them, spray them, tag them, etc., then divide that figure by the number of pieces produced! That’s your time per unit!

(You must work in multiples . Working one-piece at a time takes too long and isn’t justified unless you create high-end one-of-a-kind products.)

Consider your time, your direct costs, indirect costs, plus a small profit percentage, - that’s your wholesale price! Double it, - that’s your retail price.

If it’s too high, - cut your costs by buying supplies / materials wholesale, sharing a wholesale order, cutting your production time by developing assembly-line techniques, and/or working in larger quantities!  

 If the price is still too high, it’s a loser!  A loser costs you more money to make and sell than the money it brings in. It’s important to identify ‘Losers’ in your line of product, and get rid of them. They are sapping the money right out of your wallet.

Understanding the cost of labor, and the time spent selling product at shows helps some people decide if it's better for them to sell at wholesale prices and let shop owners consumate  their sales!

   After going through the computations in a conscientious fashion, some people tear up the paperwork!   They grab a figure from the sky because they have no confidence that their work will sell at the price it should instead of working to lower their costs.  They are generating cash flow , but are they making a profit?

A few afterthoughts:  Artists who work in two-dimensions will find it difficult to apply the above formulas since usually they do not work in 'multiples'.  Still, things like applying gesso to canvas, framing, matting, etc. can and should be done several at a time.  They must still track their time, record it, and go about business in a 'business-like' way to take advantage of tax writeoffs, such as the room in which you work, and portion of the utilities and other expenses. 

   Fine art is dominated by the market, so here is a good reason to know the 'going rate' in a geographical location.  If you want more money, you may have to go to a nearby city to exhibit your work.  Usually artwork sold in a metropolitan area can command better prices. As skills improve, and subject matter becomes more sensitive/esoteric/imaginative and his style develops distinction, these elements too, influence the price range.

This article may not be reproduced or copied in any form or electronically without the express written permission of the author.
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