If you're stumped on how to price your crocheted products,
then keep watching because today I'm giving you the five things.
You need to consider to keep your business profitable and making sales.
Hi, my name is Mei Pak. And I help makers, artists
and designers make a living from selling their handmade products online now crocheting in
terms of a production method is a hard business to run to begin with so,
you know, it might take you two hours to make a baby hat and even that's considered kind of fast,
but if you're making something like a sweater we could be talking
about dozens of hours to finish just one product.
Now. I have a standard pricing formula video and with the standard formula.
Usually you take your time
and your cost of materials
and multiply by 2 to get a wholesale price and then multiply It Again by 2 to get the retail price.
This is multiplying your original cost
by four or five times even depending on what you sell to get a final retail price.
So let's say you set your hourly wage to $20 an hour.
If we ran my standard pricing formula on a crocheted
hat and let's say it took five dollars worth of Arn my formula would
say that you would need to charge a hundred
and twenty-five dollars retail price for that hat but let's be real right.
That's probably not happening. I mean I could be wrong maybe you have amazing branding
and that price point works for you,
but for most of us that's not realistic and so this can lead to a bit of Despair right?
Does that mean you're destined to work for less than minimum wage not exactly.
If you can keep these five considerations in mind
when pricing your Max then you can absolutely make your crochet business work.
So let's dive in number one.
This is where you're going to have to do your research.
What are your competitors prices?
So this is where you really need to think about the value of the finished product
to the consumer not everything that you put equal amounts of time into is going to
yield the same value to the customer.
So let's say it takes about the same amount of time to crochet one Afghan as it does.
Five new wool hats which one of those products earns more.
You're only going to get so much money
for the Afghan that took you like a whole week to finish right,
but you can get a premium on those hats.
So think about what niches
or Niche has earned the most money and have the most value as the finished items.
This could be babies or special occasion items like for quincenera,
's maybe it's items for weddings
or items for your monthly photo shoot that you have with These
These are items that have high value right also,
customization can play a big role here
for example items with someone's name on it or items in someone's school colors.
All of these things have higher value to the customer.
They may be a little more complicated for you to do but not as much as the value that they will get.
So look around this is where you have to do your research on the
different kinds of items that you might want to offer
and then determine the top
and bottom brackets of what the Competitors are charging then write them down
because you're going to need this information to figure out what you should be charging.
Okay, number two. This kind of goes along with Point.
Number one. I want you to think about what you can do to add value.
So I already mentioned switching your Niche a little bit to those high value
items and also adding in customization or upping your materials a little bit.
So just as an example, if you used an organic cotton,
that was may be spun in the u.s. That might double Cost of your yarn,
right? But so let's say it raises the cost by five dollars,
but it would allow you to add maybe twenty or thirty dollars in value to the final retail price.
If you look up organic handmade
hats and then also comparing factory-produced ones and then look at those prices,
you'll find that you'll get a much higher bracket.
So it's certainly worth looking around
for where you can add additional value to your products
other places that you can add value that don't
necessarily have to do with the materials you use Might be
your packaging anything you can do to make
an item a little more luxurious can help you here.
Maybe it's about putting a real fur.
Pom pom on the top of the Hat. I mean those are expensive
but it might be the sort of thing that elevates your item to a completely luxury product
and I've seen those go for pretty high price points some other things you might
include to give you a leg up our maybe leather tags
or maybe hand engraved metal tags.
You can all of these are value adding items that you want to
think about that are Really increasing the
amount of time that you're spending to make per item number three.
This is a really big one. Can you afford to Outsource the making of your products?
So let's say you get Super Famous
and you get put in a magazine
and now you have hundreds even thousands of sales coming through the door.
This is like the best thing that could happen to your business right,
but if you can't scale up,
you're not running a sustainable business,
so I encourage you when you're working on your Pricing to check how much sample makers are charging.
So go to Ravelry go to Facebook discussion boards go forever
and just look around you want to look at what sample makers are talking about.
Typically this number is calculated in the order of numbers of cents or dozens of cents per yard.
Okay, so you can calculate using the most up-to-date numbers
what your items will cost to have a sample maker make them instead of you making them
and then if you do,
Strike it big your pricing will be ready to pay dozens
or hundreds of sample makers to make your products.
Now, you'll probably notice that sample makers aren't making large amounts of money per hour,
but from a business perspective, if you can't bring on more
staff and you can't get those items made then you can't scale
and your business isn't going to grow beyond what you can do in your eight or ten hours a day.
Okay. So that is super important that the cost of paying a sample maker
plaster profit is in your pricing number four.
How is your time being spent
so this is something that's really important to think about
when you're talking about a handmade item that is in a sense portable
and not tied down to a machine.
So I make polymer clay centered jewelry and it is really hard to take that places.
Like I can't take it on the subway and not lose a lot of things just rolling under the seat.
Right but crochet is fundamentally a different process.
You can actually do it while you're carpooling somewhere.
You can do it in the park. Right. It's so much easier to take on the go.
So I'm all about making a living wage.
But you also have to think about how this fits into the rest of your life in that pricing.
So when I started off talking about making $20 an hour,
well, if you make $20 an hour working,
let's say as a manager at Starbucks
and you're paying child care which On The Low End might be ten dollars an hour.
Then you're actually bringing home only the remaining ten dollars an hour right on the flip side.
Let's say That you're crocheting
and you're able to be at home
or you're able to be at the park or you're able to do it while commuting.
Is it important for you to make that twenty dollars an hour
or are you able to because of the flexibility of your craft realize that a
lower hourly rate rate is actually sustainable
for your business.
So really think about what you're able to do at the same time.
I know when I watch my friends crochet, they're actually able to watch TV shows
or chitchat or whatever they're doing.
Doing at the same time so it's not like they're creating an item that's taking 100% of their focus.
And that's something that needs to be considered as well.
If you're really a genius
and you can crochet while you're house-sitting you can actually massively
expand the amount of money that you're making per hour
and number five.
I want you to think about the other sources of income that you can
get besides just selling the finished item.
So an easy example that comes to mind is also selling the patterns,
right? So let's say someone is using a pattern of a well-known maker to make their patterns
and then compare that to someone who created their own
design and now has the appeal of having an exclusive design branded to them.
And then also selling the pattern in a downloadable format
for like five dollars or seven dollars per pattern.
So pattern sales are just one example of how these two businesses the production
and the design can be symbiotic with each other another item might be providing.
Almonds or renting out garments to photographers.
For example, you may make a product
and then rent it out to people who are using
them for photoshoots instead of just selling the finished items to end customers
and then you can have a sample
sale and sell that item at a discount but still have made more money overall.
So these are the opportunities where it works to get really creative
with what you're doing with your finished items.
And then how you're integrating that in terms of pricing your product now.
I have a bonus tip number. Six
for you when you look at my standard pricing formula realize that the hourly wage you set
for yourself is one of the two ways you get paid
when you sell a product that you've made you get paid
for the time you've taken to crochet the product
and you get paid an additional layer with your profits,
which is where we take your materials costs
and time multiplied by 2 and then multiply it by 2 again every time you multiply your costs.
You've got this cushion of profit
and as a serious business - this figure is really
what you should be paying attention to so not necessarily just the hourly wait.
So knowing this you can be a lot more flexible with using a lower
hourly rate in your pricing calculations
because in reality you'll actually get paid a much higher per hour dollar amount
because of your profits.
So those are the six key areas to think about
and it's not an exact formula
because I'll be honest an exact formula isn't going to work with a handmade item that is
as time-intensive as saying is you're gonna have to tweak it a little bit.