Pricing?

[SweetSomeday]

I'm interested in opinions on pricing from my lovely teammates! I have to start out by saying that I jumped into my Etsy shop a couple months ago without a lot of knowledge, but I've been learning as I go...

I recently read this article on pricing: http://www.etsy.com/blog/en/2012/a-simple-formula-for-pricing-your-work/ I think there is a online lab on pricing soonish as well, but it didn't fit into my schedule.

Anyway, the formula for pricing given in the article was: Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail. As upcyclers, I assume most of us get our materials fairly cheap, but I do incorporate what I pay, as well as my labor and expenses. However, I definitely haven't been incorporating any additional profit or multiplying my entire total by 2 to get a retail price. I can't imagine charging twice what I am currently charging for my items! Maybe it's just the bargain shopper in me, but I'm always looking for the best deal, and want to give my customers the best deal I can as well.

I don't have a specific question, just looking for thoughts and input....

[Former_Member]

I totally see your point too Sarah. This is a question I wonder too, because I know first off that since our materials are pre-owned, they come farily cheap to us. (when I use them from my family, heck, there is no cost!!! ) - but I do add in the cost of the effort involved in creating something new. And the effort at times is even more in upcycling than in creating something new from scratch. So, even though in my heart my upcycled scarves are priceless; I do feel that buyers may not want to spend much more on upcycled items, when they get 'new' (and at times, mass produced) for much less.

But, yeah, I totally agree that this formula doesn't really apply to 'upcyclers'.

[Former_Member]

The formula I always knew was cost of materials + labor + expenses x 2 for wholesale and x2.5-3 for retail. Remember that your expenses include the cost of listing the item, the cut that Etsy takes, the cut that Paypal or any other payment processing takes, and any taxes you will pay. Being upcyclers our material costs should be low, but don't shortchange yourself on labor or anything like that. By the time all the accounting is done, you need to be able to show a profit. I know it sounds cold, especially when I had this discussion going about direct checkout and how the higher fees for payment processing might affect my costs and how I do not want to raise my prices and right now I won't. Going forward we will see. It is always a last resort though. :(

[SweetSomeday]

Marbha - Good point that sometimes upcycling takes even more effort than making something from scratch. That's definitely something to keep in mind! I think I'll need to keep better track of the labor time involved in each of my items... I always seem to be estimating after the fact, which probably isn't that accurate.

Luci - thanks for sharing your formula. That seems to make a little more sense to me than the other one. (I'm still a little bothered by multiplying my total by 2 or 3, but I'm sure it is just a mindset to get used to!) Keep in touch about if you do direct checkout and how it goes for you!

[Former_Member]

Sarah - I did sign up for it yesterday. We will see how it goes. So far no sales on it. Paypal still seems to be the preferred method for the moment. Until they do something like make it so you can shop several shops at once and only have to pay one time by using direct checkout (instead of paying at every shop with Paypal). If they come up with that formula I think we will all be using it for good or ill, but I haven't seen or heard any talk of that yet. It seems like something they could functionally build into the back end, but like I said, not a whisper of it... yet. ;)

[SweetSomeday]

Ooh, good point about a possible future option of using multiple shops at once and paying through Etsy. From a customer's point of view, I think that would be nice. But it's too bad the fees are higher than paypal's. I guess we'll see!

[Former_Member]

I can't think of any other reason for them to do this and I worked in tech world for years. Yeah, they get the fees, but they wouldn't pocket that full 3% (there is a processing company -usually a bank- that is actually doing the payment processing for them) and they have to figure there are shops that will not sign up for it because of the fees. The having to pay at each shop individually has always been a poor feature for Etsy, as far as I am concerned. If they couldn't work out a way to do it with Paypal, and my guess is they couldn't, they would almost need to find a way to fix that inconvenience themselves. This could be that fix. I could be way off and totally wrong about this, but I am betting they are working on that part of the build right now. Like we have all said though, we will see. :)