One of the challenges that artisans face when starting an arts and crafts business such as selling handmade cards (or any handmade items) is setting the price. The price of the card needs to reflect the work and the materials used and also return a profit for the maker, yet also needs to ensure that the card is affordable for the customer. Selling cards too cheaply devalue the work of the card maker and can actually end up leaving them out of pocket which is not the basis for a sustainable business, while cards that are too highly priced will not sell. At the very best this might involve wasted time, at the worst, it could also result in lost money that has been spent buying supplies and in lost business opportunities.
You can use a PDF price calculator, which will help you price your cards. If you want to figure it on your own, there are three key factors that need to be taken into account.
Factoring Costs Into Your Price
The cost of making the card is broken down into the following areas:
- Cost of materials: This includes everything that is used to make the cards such as rubber stamps, inks, embellishments, packaging and card blanks
- Cost of labor: Working out the cost of labor is a vital part of getting the cost right. It is essential that you cover the cost of your time. This should include the time it takes to make the cards, as well as the time involved in marketing and promoting the business, creating new designs, administration, and other day-to-day aspects of running a card business.
- Overheads: The cost of overheads will include the cost of light and heat, any transport costs, telephone and Internet charges, stationery and any other costs that are incurred when making and selling the cards.
- Trade prices and commissions: Remember that when you are selling cards through third parties, they will generally expect either a trade price, which will be less than the normal retail price or they will take a commission on the sale. Either way, the amount that you receive will be less than the amount that you receive if you sell the cards directly. This cost will need to be taken into account when budgeting.
The Market Factor
The other key factor when pricing handmade cards are what the market will bear. If, after pricing all the individual elements of making the card, the cost is much too high for the chosen market, then the cards will fail to sell. Taking a good look at the price of cards already available will help to determine a good price level.
- If the prices are too high: Take another look at the card designs and see if there is anything that can be adjusted. There is little point in proceeding with the cards if they are overpriced in the marketplace. This might include looking for cheaper materials, cutting out some embellishments or looking for time-saving techniques.
If you really don't want to change the design or the materials used, then the other option is to look for a market where higher priced cards are acceptable.
- If the prices are too low: This might seem like less of a problem, however, if the costs of the cards are perceived as being low, then the cards might be seen as being 'cheap'. This in itself might put off potential customers. While finding that the potential costs of handmade cards are too low is extremely rare, it is also worth checking and double checking your figures!
Turning a Profit
In order to run a successful and sustainable business, you need to factor in a profit. This helps you build your business, allowing you to reinvest in the business with advertising and marketing. It also gives you margin for offering sales and discounts on your selling price.
The Formula for Pricing Handmade Cards
There are many formulas for pricing your handmade goods. One of the most popular with Etsy sellers is as follows:
Supplies cost + time cost + overheads x 2 = wholesale price x 2 = retail price
If you consider selling your cards through wholesalers, such as Etsy Wholesale or others, you will need to factor in a margin as shown above as many wholesale buyers expect a discount of up to 50 percent. If the above formula leaves you reeling, don't worry! This is a guiding formula only and you can tweak it to represent your own needs.
Correctly pricing cards are part of the foundations required on which to build a profitable and successful handmade card business.