The work done the materials used and then make up a number!
I pick up this piece of furniture I've made and I turn it around and around in my hands, its only small. I don't love it I don't hate it but I have no real connection to it apart from the fact that I made it. Made from its component parts and fused them together in some way to make a table. I want to sell it but therein lies the problem.
I know what it cost me in materials, I know how long it took me to make it but I have no idea what someone will pay for it. How do I price it? There is a formula that Etsy puts up which they make out is simple. Materials plus time plus profit equals price. That is all well and good but if I tried to implement that in some cases my time is like 40 hours and even if i cut my rate down to almost nothing the price is still way too high, Then I think ok ill get faster as i learn more and that is certainly true. Starting out and to some extent even now after five years of doing this I'm still embarrassed to ask for what I think an item is worth.
Embarrassed? why, do you not have faith in what you do?
Of course I have faith in my abilities up to a point but I'm not arrogant about it all. If I don't have faith in something in as much it is not in my wheel house or something I've not sold before I get nervous that people will not want it or want to pay the price I'm going to ask.
What's the answer?
Put up on your social media that you want to sell an item and ask your customers to make offers. You know what this genuinely owes you so, just be honest with yourself and let the item go to someone who offers you an amount you are comfortable with.
I did exactly that with a butchers block small table. I didn't know what to charge and I was not sure I wanted it on my website as it didn't fit. I made it simply because I wanted to. I posted it and was offered, more or less immediately a number that fit in with my expectations as well as covering my costs. If you do not know what to sell something for ask your customers and it may well sell itself.
Pricing is a mine field but remember this. People do not buy on price from makers. If they want cheap they go to IKEA and buy flat pack furniture. If they want handmade and fall in love with something then price is not the first issue. People buy with their heart, if they want it they will pay for it.
The most important thing about pricing is to recognise that your core market is not everyone! You cannot sell to all.
I know that my market place is people from 25 to 55 who are high earners or have disposable income as far as the furniture making is concerned. That being said I also sell smalls like my tablet stands and wine racks. My main business is the furniture making so my furniture is aimed to my core market. The smalls are open to everyone as that gives me an in with as many people as possible without compromising my commitment to quality.
The system I use now to price things is this. I cost out what it costs me totally and by that I mean everything. Time, holes drilled, wood joined, metal welded and products used to finish the item. All of these things have a cost. Don't forget the electric bill and a little in to cover the rent to. Mostly you can decide on a number that covers all your builds in different categories. so there will be a cost for a side table a huge table and a bookcase. After a while you know what these cost you. Be honest with yourself and do not be greedy. Cover your costs on materials and you have to decide an hourly rate you are comfortable charging for your time when building then stick to it.
Those core items are now covered but you also need to make profit on each build to give you the money for tools and to develop new items to sell as well as covering the costs you incur in leaner times.
Once you have discovered who you are aiming your items to and you have a knowledge of material costs, the profit you need to carry on and keep the lights on then you have a price that works. If you think its too high at this point it does not really matter what you think as that is what you need to make ends meet.
Have a look around and see what others are selling things for in a comparable marketplace. As long as you are in the same ball park then you know you are not making terrible mistakes. YOU DO NOT HAVE TO BE THE CHEAPEST. Remember you are not selling to everyone and the aim of the game is to get what you need for items. If you try to beat everyone's prices you will do two things. Go broke and go mad!
How do I feel about pricing after all this time? Well, a customer of mine said just last week that I looked embarrassed about the price I was asking and that I should not be! The reason they come back to me time and time again is that they love what I make and its reasonable in price.
I second guess myself all the time which keeps me honest and in check as far as money goes. I have been told many occasions that I am expensive to but by people that are not my core market. We all have to remember that we cannot make the world happy and we are not mass producers making things by machine. I make handmade bespoke furniture and it is not going to be the cheapest table, bench or bookcase you can buy.
I still struggle to be ok with all of this after five years so. I get it, its hard when you start. Have the courage to charge what you need to, remember to be realistic and not greedy and most of all have confidence in the product that you made with your own two hands because if you do not love what you make how can you expect others to?
One last point before I jump down off my soap box. Do not ever discount your prices. If you want to continue to sell the same products do not be tempted to discount them. You may get one extra sale or two but in the long run once the price has gone down the only direction that can go in the future is down further. It is a short term solution but provides long term problems.
Have a look at my products and you can decide if they seem value for money to you or if you just love them you do not care what the price is. If you sell things yourself I hope my words have helped you through a very real problem. How much is that worth?