How much do you pay yourself?

[Former_Member]

I know it is not normally kosher to discuss money, but I think we handmade artists need to share in order to make sure we are being payed fairly for our work!

I am needing to up my prices recently so I have been going over the equation for pricing as seen here: http://www.etsy.com/blog/en/2012/a-simple-formula-for-pricing-your-work/

Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail

Materials and Expenses are easy to calculate.....but labor and profit......not so much!

Labor I see as (how much you pay yourself an hour + hours worked on the item). At the moment I pay myself about $10 (likely a tiny bit less), but I definitely not what my skill is worth.

And Profit I have NO IDEA what to put!

So if you don't mind sharing What do you pay yourself in labor and for profit?

[KatGurumi]

Good question. I have things that cost 17 dollars, but took me 3-5 hours to make. I can't justify charging 30-50+ for something so small, and I don't believe people would pay for it. Everyone OFF etsy (family and friends) cringe when I tell them the price as it is. I am so torn between these two worlds.

[Former_Member]

Hi Katie

I have friends and a boyfriend who while they love my pieces cringe at the prices I'd like to charge, but I also have to remember that they are cheap (lol) and not my market. My market are people who find my product to be very special and not a piece they will wear once for a party as many of my friends would. My market are of people who appreciate quality in what they would wear often and have great meaning to them!
I definitely think you can charge more for your pieces!! $30 doesnt sound crazy at all them seem very complicated!

[Former_Member]

I agree, I think that the equation for pricing is not a "one size fits all". I price by looking at what similar handmade items in my category are going for, and usually I get an idea of what the low end-high end ranges are. I go from there...based on what type of materials I used, the time etc. and use that as a scale to measure against.

**Edit to say I neglected to answer the question...lol, I usually pay myself around 10 bucks an hour for straightforward stuff...some of my more time consuming projects I just know I am making less on because it takes so long...if I paid myself hourly, no one would buy it...(I have a shawl not in my shop that I made which took me 40+ hours...400 dollar shawl anyone? LOL)...for something like that I would base my profit for a flat fee and still make a profit.

[Former_Member]

Thanks so much Genevieve! I am looking through those who have similar products and I can definitely raise prices if I am going off of them!

[Former_Member]

goodness... I tried figuring out that equation when I first saw it as well. It just seemed crazy at the time. I think it depends on what I am making to be honest. My eye pillows, I basically just figure out the cost of materials, and look at the final product and determine what a fair but honest price would be for it. But on the other hand, for my crocheted and knitted cowls and items, I definitely figure in how much time it took me to make. But, that being said, it really is only equaling out to be like $6-7/hour. But it is my time and I enjoy making this stuff.. so in the end it is all profit - materials for me.

[Former_Member]

Jillian, you definitely can raise the prices. I have seen similar types of hats at hot topic for even more than that and they are mass produced. I paid for a similar set of fuzzy ears at a festival for $75. They weren't made well and I actually repaired them myself.

I generally pay myself $10 an hour. Not sure with the profit..I have not thought about that.

[Former_Member]

Not enough, that's for sure! My prices are just marerials and about 5 $/hour for labor. Profit? No profit at all.

[Former_Member]

Jillian, I agree with Amanda Jayne. I've seen fuzzy ears and paws priced WAY higher than what you're asking. I know sewing with fur isn't easy, I've tried it. You definitely should charge more for your goods, but especially your time! I know many people who would pay $50 for paws and ears. People want great stuff. You have great stuff! Even if you think a higher price won't go over well, remember...Halloween is just around the corner.
I use the Etsy simple method for my pricing. I use the formula and then add on my time, $10/hr or $15 if it's difficult/time consuming...most of my items take an hour or less. I compare my prices to others as well, and also do what Genevieve does, with the low and high end. Making a comparison will give you an idea of what your ballpark may be, but also compare the sales numbers they have. If 50 people have paid $50 plus for something similar, they'll buy from you!

I know, tl;dr but I hope this helps! I've pinned one of your items for a friend to check out :)

[ohmyclumsyheart]

I don't know anything about the type of item you are selling in your shop but I would have to say that - and this is something I have noticed with Etsy - there are a lot of people selling under priced goods, which makes it a lot harder for people to sell their items and make a decent wage.

Although I know how much each item costs me to make, I still find it difficult to price my work. I often decide on a price that feels right and then look at similar items on Etsy to see what their prices are.

I think it is hard to come to a final figure that is double the wholesale price.

[TerraRhapsody]

Katie- I love your little critters and would gladly pay more than the list price for them as they are just so adorable and they do look like a lot of work has been put into them. My other half has seen them over my shoulder too, and has said exactly the same thing.

Jillian- I think your items are reasonable enough to add more cost too- I'm a huge hat fan and I have so many hats, so to see hoods for those prices makes me think it's a decent hat that I could wear until the end of time!

As for your question, I vary my labour costs to the difficulty and skill of the piece I'm making. Something simple will cost a lot less per hour than something complex. Profit is also worked out in a similar way for me- I vary the profit on each piece taking into consideration the time spent and the complexity of the piece. With the more specialised piece in my shop that have required metalwork and expensive equipment to create, the costs are higher still. Those pieces are made by my other half as a member of my shop and his time is expensive- such as 2 hours on a lathe making bullets out of solid brass. He charges around £10-20 per hour to create a piece like that, not including the expenses etc.
I don't think there is a problem with having items in your shop that are accurately priced to give you a fair deal- even when some of them appear to be expensive compared to the rest

[MelsCreativeWishes]

I know my prices aren't double the wholesale! I cost in my Expenses and materials and how much profit I would like but then it all gets fuzzy with including labour. Labour for me is a little under $10.00 on most items.

[Former_Member]

I make minimum wage from the 90's. :-(

but I love doing what I do so I'm happy! :-)

[Chanchala]

I will probably re-consider my finances come January 2013 because I'm pretty sure I'm under-charging for everything. It's just so difficult to price your products especially when they're one-off pieces. I hope all Etsy sellers do this at short intervals because a lot of shops on here under-charge.

[Former_Member]

No, I dont pay myself a profit either. :( Just way too many people underpricing their items in the crochet category. I mentioned the other day about a pumpkin hat i saw that was priced at $5.76 that just made me sad as to buy the three colors of yarn to make the hat are more than that.

[Former_Member]

I go with a $100 / day pay plan. I just try to figure how many days I will spend on the big pieces or how many of the smaller ones I can don in a day and go from there..

[ModernHermine]

I wouldn't mind working on a salary..... I like the 100 a day plan but if I can make more I want to. I have been raising prices slowly since JAN, and it hasn't hurt me yet, in the beginning it helped actually which was crazy to me.

I'm still slowly raising my prices I have also left out labor time on most of my items, But my mother says this to me all the time.....

"Not everyone is as broke as you, actually most shopping online are probably not even poor at all." You might not understand what it is like to have extra right now in life but many do, and I bet they are not as concerned about shipping rates as you are."

Sooooo again I raised a good deal of goods and charged the right shipping rates (cause I'm sick of getting stuck with extra charges). I know when something was sold for too little. I get kinda like gezzz that took along time to make and feel like I wish I got more.

Honestly I was in Kohl's the other day and a lot of Halloween decor was more expensive then mine!! That made me super uncomfortable, mass produced factory made in china goods are prices better then me. People were buying that so I should be charging a whole lot more really.... Then again at Macys $55.00 for gloves by Ralph Lauren... They didn't have fancy fabric they weren't hand-made in fact they seemed very thin feeling and they were on sale!! LOL

I did want to make things affordable but if it's too affordable for everyone then I can't live on it either. I am not a machine and when I try and run like one I get burnt out.

[Former_Member]

Jillian- I'm thrilled that you asked this question!! I finally sat down this weekend and began really looking at the equation and putting in my figures. I charge $10/hr. for simpler and $15/hr for more intricate pieces. I agree with the other posts..raise those prices:) Do you want to sell more (work more) for less money; or do you want to sell less (less work) for more money- (I think that was Danielle's quote when she worked for Etsy.) The profit is tough for me...but the wholesale x 2 = retail....... I have a hard time wrapping my mind around that one! I think for me, I have to charge what I'm comfortable with, and that may change when my confidence rises:) Best of luck to all of you!

[Former_Member]

Personally, I only charge $12 and hour, but I live in a small town where the living wage is only $8. (you can find your living wage here: http://livingwage.mit.edu/) I had NO clue what to do either so I decided to just do 25% of my materials + labor. Seems to have worked out so far, but I wouldn't say I have perfected my own pricing formula yet.

@Genevieve, you say that like no one has ever purchased a $400 shawl before. Chanel shawl anyone? http://www.farfetch.com/shopping/women/chanel-vintage-print-scarf-item-10224821.aspx

I know none of us are super famous *yet* but let's not forget that we ARE designers, our items are unique and made by hand, and people have traditionally paid more for handmade/handcrafted items.

[Former_Member]

I don't go by hour as that varies on my products. Most of my products take 4-5 hours to make but 3-4 of those hours are hands off. Or a few take 2 weeks but it's all hands off time. So it's not right for me to charge hourly. I do it by percentage. My markup is X% ... That X% breaks into 60% business profit and 40% personal profit.

[Former_Member]

@Kori: you can just use a stop watch to time your hands on hours.

[Former_Member]

Good question...not enough I'm sure...haahaa :)

[Former_Member]

I pay myself $15 an hr. My paintings take anywhere from 3 to 5 hrs to create, sometimes more. If I followed the Etsy formula exactly, an 8x10 painting would cost $125. I charge $75. The reason for this is that I have really researched my "competition" (hate calling them that) and more than half of the 8x10 original watercolor paintings on Etsy are less than $50. There are artists that charge much more than the price I am asking but they don't seem to have many, if any, sales. So that is how I arrived at what I charge. I literally cringe anytime anyone tells me I don't charge enough.

[EntwineKnitwear]

I try to pay myself 7 dollars per hour. My craft (knitting) is sooooo time consuming, I can't imagine how I would have to price my items if I would carge 10-15

I have raised my prices, I used to charge even less to get those first sales.
Really hope this will be my season and I will sell many items! :)

[Former_Member]

OMG I'm about to be that person, but I actually pay myself 50$ an hour for labor. My overhead rate is much less of course. I have profit built into my items. The amount of profit varies per type of item and my items are a little bit lower than the price I'd like them to be. Since I give 50% to charity, I have to be able to profit at the wholesale level, so the equation is a huge starting point for me. I think I need to charge 15$ an hour to live according to Freelance Switch's Hourly Rate Calculator: http://freelanceswitch.com/rates/
But I have goals that I want to meet sooner than later, like owning an office space. And if my income isn't right, I can't do that.

Yes, the equation is not one size fits all, but at least you get a good picture of where you might need to fall. And if the price is way too high, that could be an indicator that your process isn't refined as much as it should be---or that your supplies are SUPER expensive.

PS: no person can live on minimum wage in America. so if you want your craft to eventually be your full time job, keep that in mind.