How to price craft work is probably the single hardest issue for anyone in the craft business whether just starting out and selling the first few pieces or having been running a business for many years it is something we all struggle with.
How should you put a price on your work?
I hope this advice will help you through the minefield and also help you feel better about the price you end up putting on your work.
When I was a kid computers were just coming in, the first very simple computer I saw had a game called “lemonade”. It was all about supply and demand with a few variables thrown in. You were running a lemonade business, each day you looked at the weather forecast and decided how much lemonade to make, next day you were told what the weather was really like and either you sold out by 10am and wished you’d made more or you were left with a pile of unsold stock and wasted raw materials. Many commodities have a simple supply and demand relationship.
The supply curve works like this, if the price goes up supply goes up, in the world say fo potatoes if the price goes up farmers switch to growing them, if the price drops supply drops. Demand works the other way as the price goes up demand falls off. There is a point where supply meets demand which gives us the normal price for the product. This works with potatoes where increasing supply is easy, it doesn’t work for Ferraris, Saville Row suits or unique hand crafted goods because supply is very limited and can not go up.
If supply is very limited then when price goes up perhaps surprisingly demand goes up too. This only works if your product is sexy and desirable or if there are no easy alternatives. so it works say for oil and old art paintings, it may not work for a relatively ordinary stoneware mug unless you can convince people there is something extra special about your mugs. If people really want one of yours then price becomes less relevant The other key thing to note is that price is always dependant on context and this a key one for craftspeople.
Context is crucial, we all know that work looks better and sells for more if it is on a white cube under a spotlight in a gallery than if it is dumped on an wrinkled tablecloth at the local craft market. Think also about beautiful covetable objects you have bought, whether an apple computer or food from a high end organic retailer. Think about how it was packaged, think about how you felt unwrapping that packaging, think how you send your work out and how your customers might feel when they unwrap it. Will they feel that this is something that you love and value from the way you treated it? A website is part of context, it tells the story behind the object and is part of the brand that is you and your work, it doesn’t have to be flashy, clean and simple is best. The clothes you wear when you present your work are part of context. We don’t have to aim to be apple, slick design type packaging is not appropriate for much craftwork, many of us aim to present a wholesome, authentic image so a nice plain cardboard box full of woodshavings perhaps with our logo hand stamped can present us well. All of this is context and price can not be separated from context. If you want to get a better price for your work then looking at all these areas of context will help.
If you are looking to price a product for the first time or new in business here is a simple way to get a price.
Add up all your fixed expenses for the year and divide down to give a day rate including vehicle, workshop rent, electricity rates etc These are your fixed costs.
How much do you want to earn?
Here are some UK average pay scales based on years experience source
So maybe if you are starting out you could aspire to earn £20,000 and if you have 20 years experience you might aspire to earn £40,000. Divide your wage down to an hourly rate so £20,000 is £10 per hour but you will do well if you are actually making for more than 50% of your working time so double it to £20 work out the time it should take to make the piece add material cost and this gives you the bare minimum cost price you can afford to make the piece for. It just pays your wages and your bills, it includes no contingency and no sales cost. If all your customers arrived at the workshop paid up front took whatever stock you had and took none of your time this price would give you the wage you were aiming for. This never happens. All sales cost time whether time spent at the craft fair, time spent on the website for mail order or time dealing with retailers or gallery owners. You need to add a significant amount in for your sales cost, I think many craftspeople cost in their workshop time but not the time they spend preparing for and standing at craft fairs, if we did probably fewer of us would sell that way. Some would advise doubling the basic cost price to arrive at sales price and I think that is not a bad idea. If you do this then you are far more likely to hit your targeted wage. It gives you a little leeway when someone wants to bulk buy for resale and gives you the margin to spend a little time getting all those other parts of the sales context looking good, to look after your customers a little better.
People who have come through the arts schools say furniture makers, silversmiths and jewellers are much better at this sort of thing than green woodworkers. We need to be able to offer our customers a great service and we can’t do that if we are always screwing ourselves on price.
It’s important to be realistic however, I do see people just starting out asking the same price for work as well established makers. I spent many years turning out bowls and plates and selling them very cheap just to pay the bills, I don’t begrudge it, that serious production work honed my skills and the work is all the better for it. My bowls are better now and I am spending more time on the context. They are still good value. Like a great pair of jeans or boots they cost a little more when new but they will last for years and get nicer over time. People who go out of their way to find such work do not mind paying a fair price for it. One piece of advice I was given years ago when I was still always struggling to make enough stock to sell was this, “if you doubled your price would you sell half as many?” I was never brave enough to double my price to find out but you get the picture. I did up the price 30% the result was I sold just a few less but took more money and I took a little stock home so it was not such a desperate rush for the next event.
The difficulty many craftspeople have with price is this. You put your heart and soul into your work, when you offer it for sale it is not like selling potatoes or lemonade, it’s not just business, it is more like asking the public to pass judgement on you as a human being. If you put a high price and people sneer it feels terrible but if you undervalue your work that is no better for your soul. The trick is to find a fair price for the work and skill and then to find people who value and appreciate it.
Feel free to comment or add links to other information that you have found helpful on this topic.
I should say part of this advice is based on personal experience, the basic pricing method is from Richard Raffan’s superb book “turned bowl design” and the more advanced branding and context advice comes from Alistair Hughes of Savoir Beds who gave us advice as part of the crafted mentorship program.
Two last titbits from personal experience; if you make a piece that you think is just that bit better than the rest, do not feel you have to put the same price on it as the others that took the same time, it’s OK to put the price up, if someone else likes it too they will be happy to pay the bit extra and you can compliment them on their clearly excellent taste. If you have something you like so much you don’t really want to sell it then crank the price right up, you may find someone that loves it and buys it and you will both be happy, if it doesn’t sell it’s nice to have it around, it elevates your other work. If you make things in standard production runs and one of them just comes out as the best example of that type you have made so far, pull it out and don’t sell it. Keep it as inspiration for the next batch until you can make them all that good or maybe even better.
for more on context and some interesting experiements see this post