If you sell your work, you’ll undoubtedly have questions about pricing. How much should you charge for a small pair of earrings or a covered journal?
If you follow the advice of many, many sources you should follow a pricing formula. There are many of them, most of which ask you to calculate all your costs (including paying yourself) to come up with a base cost. Then you do a variety of calculations to arrive at a wholesale cost which is (again, another calculation) a fraction of the final retail cost of your item.
If you are building a business, it is absolutely imperative that you make a profit and these calculations are necessary to know what your product costs to create. You have to know this number, and you have to charge a price high enough to cover it. But pricing formulas have very little to do with setting your price.
Why? Because the price a customer is willing/expecting to pay has nothing to do with how much it costs you to make the item. If that were true, a bottle of Coca-Cola would cost the same as a bottle of cheap dollar store soda. And the price would be the same at the beach on a hot day as it is at Costco. Of course, that’s not true. Perceived value (name brands), trendiness, location, and marketing play a huge role in the price a customer will pay for something.
Earrings sold at a Comic-Con or church craft fair might only bring $10 per pair (which means your cost would have to be quite low to make a profit). But another pair of earrings with a similar cost basis might easily bring $75 in a trendy boutique in an upscale area. Charging the same price in those two venues would be foolish.
Far more important to when finding the right price is to have a good fit with the customer and the market. You won’t be able to sell frosted doughnut earrings at an upscale boutique, but they’ll sell like…doughnuts…at a craft fair. Unfortunately, there are no formulas for this. You have to do marketing research. You have to know your customer base and what they want. And you need to be able to make the right product for the right market. It is an art, and it’s not easy.
And don’t fall into the trap of assuming that something which doesn’t sell is overpriced. It could be true, but more likely the item is just placed in the wrong market. Those doughnuts won’t sell for $75 at the upscale boutique, and marking them down won’t help. If you’ve tried reducing prices and nothing sells, you don’t have a good product/market match. This isn’t a pricing issue, it’s a marketing one.