Top 5 mistakes to avoid when pricing your handmade products + what's wrong with the formula you use

[@MarkoPola]

Pricing was one of the hardest things for me to get right when I started my business. Many businesses fail when they don't figure it out properly. After 13 years building my own brand with my handmade products, I still struggle with it occasionally. After I found a good pricing level for my products, I got discouraged when a bunch of sellers on etsy started imitating my product designs and charging half my price. I saw my overall sales drop in half, but I used that competition to find inexpensive and creative ways to add more value to my product and overall shopping experience. Now my sales are growing again. I think you did an excellent job explaining the topic.

[@Tizzitco]

Thank you so much for sharing this with us! Very valuable insight. I am glad this helped and that you figured out how to use the competition to your advantage.

[@liz-annawaugh955]

This is the best pricing information so far that I have found on the internet. Thank you!

[@Tizzitco]

Glad it was helpful, Liz-Anna! - L

[@Tom-sc2vu]

Thank you for the information. It was a lot to absorb. I will need to watch this a couple of times and think about the info you gave, also to get the right questions to ask.

[@noraizuoka3315]

Thankyou so much for this useful video. Super informative and well explained! Really appreciate your time and effort x

[@Tizzitco]

Thank you so much Nora I appreciate it, it is such an important topic! I have a playlist just about pricing on my channel if you want to dive deeper into the topic :-)

[@kellymazzotta7153]

Love this! Thank you Deborah! One question, do you calculate website hosting cost into the overhead or do you keep that separate? For instance, I pay $175 to host my website through Wix for the year, so it works out to about $15 a month. Do I calculate that into the cost or would you leave that out along with marketing expenses?

[@elberthardy961]

And let's add a fourth would be Product Development. Let's say you come up with and idea on morning. From that day to your first sale can take days, weeks or months. Maybe years. This many times is a hidden or ignored costs. It always takes longer than we think. I use this formula: Total of all costs of doing business x 5 = What I must get to stay in business. Ferret out all the hidden costs, utilities, clothing, rent, signage, unforeseen events, labor, materials, transportation, packaging, handling, shipping, shrink-wrapping, printing, Internet, site maintenance, etc., then once I am sure I counted everything, I multiply x 5. That is what I must sell it for to stay alive.

[@GotuJoy]

I feel like if I use this method my items would be so expensive no one would buy them. =( is there a point where you just have to suck it up? I hand spin wool and it takes 2, 8 hour days from start to finish. On top of that there is the cost of the fiber. I use a spinning wheel I obtained 2and hand for $350. To buy a new one though would cost $800 to $1000 if this one was to break. Once I am done spinning I then use the yarn I spun to weave it into unique cowls and scarves. I have only been charging $90 a cowl yet material alone to spin usually costs around $50. Some sellers on etsy charge so little for their products I could never keep up price wise but also fear going so high that no one can afford them.

[@televisionkid7783]

savyhomeowner i think making your prices more expensive might actually subconsciously make the product seem better quality, or more high end, which could actually work out in your favor :D

[@naomikeiser4204]

Sometimes as artisans, we have to remember that we are NOT our customers....for someone who can't spin and knit, to them, your item is virtually priceless...so raise your prices and watch your sales increase...people will pay for quality

[@Eunaice1]

Thank you so much for your videos and free material on your website!! Very very very helpful for a beginner like me!

[@arlenemcfarlane9238]

As always, very informative and we'll delivered - thank you!

[@Tizzitco]

Thank you very much Arlene! I'm glad you found it useful!

[@neveenn-q9o]

All what you say and teach is very nice, but is some how, much more than normal ... yes i spend time and effort to make something beautiful and unique .. but no one will buy it .. i think it doesn't work with tricot pullovers as i spend about 53 hours working on it .... I need to attract people at first. Thanks for information and teaching. By the way, the excel sheets are very useful, it makes me know how far I am from selling products prices it tells.

[@Tizzitco]

Thanks for watching! Time-consuming products are indeed tricky as you have to account for it in the price, but they are (many) people ready to pay for it. You have to use perceived value and position your brand as a designer brand so that you can charge more and attract the right type of customers to your shop. That end of the "handmade market" (time-consuming, high-end products) can really be compared to "luxury items" and the same type of strategies apply. A great book to read => www.amazon.com/Meet-HENRYs-Millennials-Matter-Luxury-ebook/dp/B07KKNTDBV

[@nurulsurayarosli1677]

Thank you so much for your useful video. I have a question about the packaging. The packaging cost is included in the material cost?

[@Tizzitco]

Yes 😊 good question, Nurul! Packaging should be covered by material costs (including shipping fees to get the packaging material delivered to the buyer). - L

[@marceldeac1876]

Great video!! makes perfect sense!! 👍👍

[@lovelyalitiny5834]

Thank you so much for making this video

[@Tizzitco]

You're so welcome! Glad it's helpful! :-)

[@metalforever1949]

1. You talk about time. How do you price it? I am a lawyer, charging 3-500 per hour in my daily business, but i am also a carpenter doing some custom work from time to time. Carpentry being as labor intensive as it is I quickly have 80-120 hours in a product. Should i value my time according to my d2d business rates I would not be able to ever sell that product, so, the proper way of pricing your time is to use the replacement cost, that is what you would pay someone to do it for you, in an employee capacity, even if the perceived value of your time is 10 times as much. 2. Using a multiplier for profit is also wrong, as, and i am still talking about my PARTICULAR case, sometimes i use really "cheap" timber, really beautiful, but very labor intensive, and sometimes i use very expensive timber, also labor intensive, for the same product, according to what my customer chooses. Would i use the same multiplier, as it is the same amount of work, the same design and the same amount of time, i would quickly triple my price for the same product, whereas the difference in material cost is not as much. Feel free to correct me if you want! :)

[@KR-ou2qo]

Thanks for the info. Where is the cost of the tools/training included?

[@Tizzitco]

This link is available in the description ➡️ www.hq.tizzit.co/handmade-pricing-masterclass/ ☺️ hope this helps! - L

[@KR-ou2qo]

@@Tizzitco Thank you, I appreciate it!

[@amanda32817]

If you are making your products at home where you live why should that calculation for rent be added? I understand for the lighting etc

[@metalforever1949]

I always advise people to calculate for rent in their pricing, even if they are working from their own studio, as they may find themselves further down the road in a position where they need to move shop, for whatever reasons, and the cost should be already comprised in the final price.

[@calieandco]

Do you have any tips on how to price things like stickers or art prints? I find this especially confusing because who knows how many you'll sell... Or a video on this would be great! (:

[@karenbradford4314]

I was unable to see or download the calculator. I clicked on the link; it took me to your website with courses to join etc. Is there an actual calculator or do I need to join, etc. Thank you.

[@Tizzitco]

Hi Karen! Thank you for letting me know! Here's a link to the calculator - you'll be prompted to sign up for my email list in exchange but it's 100% free - tizzit.co/handmade-pricing-calculator/ Enjoy!

[@amyslifelocsandmakeup8731]

So for the overhead I should only be including the price of the program I pay for in order to create the design? How do I know how to break that cost down into each project or do I just charge the full subscription amount?

[@denisevaz4501]

What happens when you purchased some of your supplies about 10 years ago and you do not remember what you paid for them and where you got them so you do not even know if there was shipping. Help!

[@moniqlyons6118]

Possibly consider calculating for the cost of the materials now because that's how much it will cost you to re-produce the item later?

[@rolansly5078]

Hi, my name is rolan and i do hand paint tees from home and i have these same problems. Would love your help price my work.

[@hansdegroot8549]

I only found your video today. Points 1 to 4 are clear to me but point 5 is not. I thought that the time x hourly rate is the profit you make. Does the multiplier factor refer to the material costs, to the overhead, to the time or to all of them? Handmade products can be bigger or smaller, is the formula always the same? Pricing is always delicate because you literally can put any price for a product, only you need to find customers for it who want to pay that price.

[@Tizzitco]

Hi there! The profit multiplier is what you would call "Profit Margin". It is what sits on top of all your costs (time, supplies, overhead) so that you can well...make a profit :-) Time X Hourly Rate doesn't give you a profit - it just covers your labor costs. You are right about "finding the customers who want to pay the price", that's why it's very important to understand exactly who your ideal customers are. I have a full playlist with pricing videos, you should check it out I am sure you'll find them helpful. Have a lovely day!

[@ChellejonPaperBeadRollers]

You said not to include your marketing into your price calculation, that it comes from a portion of your sales. But if you don't include it in the price, there is no portion of the sales to take from. Can you explain that a little more?

[@Tizzitco]

It would come out of the healthy profit margin you build into your prices :-)

[@clapadamclap]

what do things like platform fees ie squarespace, shopify etc and online payment fees fall under, can they be considered overheads?

[@bunnywhite6513]

I have the same question.

[@ArtistRebeccaLS]

I find though that no one will buy when prices give me some profit

[@Tizzitco]

Sorry to hear, Rebecca! It sounds like you may want to go back and reexamine your Ideal Customer profile and strategize your targeted marketing efforts accordingly. Hope this helps! - L

[@ArtistRebeccaLS]

@@Tizzitco thank you ☺️ it’s a frustrating place Etsy. Also confusion about whether or not to include invoices in the orders and do you get annoyed by the Etsy warning labels that appear when setting postage prices? Etsy try to make me feel I’m ripping my customer off by even daring to charge for postage…. It costs €5.90 to send tracked letter that weighs 20g to 100g from France to USA or UK for example - Etsy warning message appears stating that people know I’m charging too much postage 😱 my orders weight start from 44g…….. I try my best and love your videos.

[@calieandco]

I'm still confused about how to calculate overhead. I have a list of things that I would need per month. Are you supposed to guess how much you'll sell per month and add that onto the cost of the products? I'm not sure, it sounds odd

[@tsjohnson5]

Most formulas suggest taking ten or fifteen percent of the retail and making that your overhead. So if you figure your retail price is 20$ x it by 10% and your final retail is $22.

[@BeUBeauty1]

Think I'm confused are we suppose to use this sheet to figure out the price of each soap product? Don't understand how to add for example the oil and butters where I buy in bulk only want to calculate how much it cost per recipe.

[@warmandbright6525]

it would be used to figure out the price of each item you sell. for your materials cost, you would need to figure out how much you spend on your materials and then how much of that material is used in your product (for example, oil at $6/oz, you use 1oz in your recipe, so your cost for the oil is $6, if you use .5oz then your cost is $3, etc). you would need to figure out the cost for each ingredient per recipe (oil, lye, butter, dye, etc) and it would probably change depending on the recipe.

[@onehearttemple.lilywolf]

Thank you so much!!

[@angelicgirl84]

Does one need a License to sell handmade products??

[@warmandbright6525]

that depends on where you live and where you're trying to sell. if you're looking at craft fairs/farmer's markets, try talking to sellers there and asking them questions.

[@jaise2018]

too overwhelming for someone who is just starting!

[@Tizzitco]

Hi Jolene, I am sorry you felt overwhelmed. I tried to break down the topic as simply as possible but pricing is a complicated topic. If you let me know what you didn't understand, I'd be more than happy to help.

[@angelastrickland2472]

@@Tizzitco I appreciate your information. Maybe providing a visual example of each step will bring more clarity; possibly seperate tutorials for each step, with visual examples would be better. If time allows.

[@sepposoini8130]

thänks

[@courtneytwait3351]

You can't charge your customers for your marketing costs when deciding your pricing formula? I disagree...

[@Tizzitco]

Thanks for watching Courtney! Your marketing costs should always be covered by your prices in the sense that the profit you make from your sales should cover those expenses and allow you to have a "marketing budget", but that's coming out of your profit margin - your marketing costs are not part of the 'cost of creation' of your product, by definition. It also would be really difficult in practice. The costs of your marketing campaigns can vary month by month - you would constantly be re-adjusting your prices. I hope that helps :-)

[@cutecrafts79]

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[@acidicmarisa3755]

I feel like the "overhead" part shouldn't be included..,. I don't understand how your technology is at all involved with making what youre going to sell? My mind is my computer and its for free for creativity.

[@jaiyana73]

... if you produce work for sale on a computer and one day your computer dies or is stolen or something then how would you replace it at the drop of a hat...it has a cost, no? unless your computer/equipment is free..

[@charathedesigner1117]

No. Money is money and cost is cost. Whatever costs that u incurred in the creation of whatever u make is a business expense and should be treated as such.

[@skullgamming2910]

but every computer is programed so it depends over quality of your software

[@MsZoraToYou]

Your overhead is your fixed costs each month, ie rent on the space where you do your work (or a percentage of your rent/mortgage if you are working out of your apartment/home), electricity, internet (if you are selling products on an online shop or using the web for video tutorials on a new product) and other relevant utility costs (a percentage based on how much is used for your work opposed to how much is used for "regular" life). Divide your rent/mortgage and utility bill each by 30 days, divide that by 24 hours and it will give you the amount each hour of work costs--$120/month electric breaks down to 16 cents per hour...$650/month rent breaks down to 90 cents per hour, so if you spend two hours on a piece, add $2.12 for "fixed costs", $45/month internet charge adds an extra 12 cents to the piece.

[@tamadheral-sabaei9241]

Tomi Posey Brilliant! Thank you

[@yasengichev]

You are way too smart for such a beautiful girl. Thank you for sharing your knowledge!

[@TamunoOpuboCooksCookeyGam]

Creepy much?

[@bunnywhite6513]

Beautiful and smart are not mutually exclusive. I hope you can take a second look at your comment and see how insulting it is.