How Do I Price My Products to Sell Online?
Last Updated on April 8, 2016
Whether you are selling handmade quilts, children’s toys or cloth diapers, it can be difficult to determine the right pricing for handmade crafts. You do not want to overprice your items and not have any sales, but you also do not want to underprice your items and end up losing money. Follow these six steps and find the right price every time.
1. Calculate the Cost of Materials
Start by calculating how much you need to make to cover your expenses. Your materials will probably be your biggest expense, and the cost may vary slightly if you use different materials for different projects. You can calculate an average cost or calculate the highest cost you will generally pay.
2. Consider the Time Involved
Next, consider the time it takes you to make your product. An item that takes hours to make should cost more than items that you can make in just a few minutes. Calculate how many hours it takes to make your item and multiple by what you wish to earn per hour. Add this amount to the amount from step one.
3. Add in Shipping and Shipping Materials
Since you will be selling online, your price will need to cover shipping and shipping materials, which can get pretty pricey if you are selling large or heavy items. Include the cost of shipping materials such as boxes, envelopes or poly-mailers. If you need special tape, tissue paper, packing slips or packing peanuts, add those in as well.
4. Do Not Forget Extra Fees and Charges
Many people do not realize how many fees come with selling online. You may also have PayPal fees, stocking or membership fees from the site you are selling on and possibly taxes. Certain products, such as cloth diapers, are required by law to have labels, which is another expense you will need to consider.
5. Consider Your Product’s Uniqueness and Necessity
Pricing for handmade crafts does not just depend on what the item costs to make; it also depends on what people are willing to pay for them. People will generally spend more for a product that they need or that they cannot buy elsewhere. If many people sell your same product, you will have to lower your prices or set your product apart in some way to compete.
6. Compare to Similar Items Online
Lastly, once you have figured out your price, compare it to the price of similar items that others are selling online. If you want people to buy your product over your competitors, your price should be comparable to theirs. This may mean you have to find your materials for less or you reduce your profit.
Do not be discouraged if your items are not selling as quickly as you would like or if you are not making the money you had hoped. It takes time to build a fan base, and you can always raise or lower your prices as needed to get the most sales and the best profits.