Pricing handmade work is one of the biggest hurdles for an artist to jump when building a creative business. Making a profit doing what we love to do challenges our beliefs about what we, and our work, are worth; and because of this, many of us struggle with making enough to make a decent living.
My advice to new creative entrepreneurs has always been to structure your pricing so that, at your WHOLESALE price, you are covering all of your costs, expenses, profit, and more to run and grow your business. Then, to sell your work individually to the end customer, multiply your wholesale price by 2.5 to arrive at your true retail price*. Even if you plan to never sell to stores.
The true retail should be the price you're selling to the public (on Etsy, your website, etc.). Then when a wholesale buyer comes around, you can confidently tell them that your suggested retail pricing is actually 2.5 times your wholesale price.
*Note: My advice is very different than "keystone" or doubling your wholesale price which is the standard advice out there. In my current experience as a store owner, a 2x markup is simply not enough to keep a retail storefront business profitable. I'll cover this topic more deeply in another post, but for now, do yourself a huge favor and try to keep your markup at a MINIMUM of 2.2 to 2.5 (or more!) to gain a significant edge over others in your category and keep your wholesale buyers happy!
If you change your pricing structure and find that you're not making enough money selling what you make at wholesale prices, then you are simply not pricing your work correctly for long-term sustainability.
I've heard countless excuses trying to justify underpricing, but like anyone with a so-called, "real job", you need to make money to live. To do that, you must price your work to accommodate both true retail and wholesale if you want your business to take care of your needs.
For many creative businesses, this means raising your prices RIGHT NOW. Yes. I said RAISE your prices *RIGHT NOW*. I mean, why not? If you have been struggling every day wondering why you can't get ahead in your business, then you're not making enough to make a living. If you're not making enough to survive, then you need to do something very different even if it scares you.
Okay okay. Before you shut your eyes and cover your ears on this whole "selling your work for more than double your wholesale price" crazy advice, please consider this:
If you don't think your work will sell if you raise your prices, then it is likely that one of these three points applies to your business:
You are not your target market
You are not selling to the right market
Your work is not ready for the market you want to reach
(1) If you aren't your target market, then you must consider that perhaps you don't know what someone will pay for your work. Because you don't. You aren't your ideal customer for your work because you make you're the one making it! And guess what? You probably can't afford your work because you are underpricing it in the first place.
It's really, truly okay to market to a new group of people that has more disposable income than you do right now. If you make real efforts to grow your business, you'll need more money to grow so you need to aim higher if you are ever going to make a living at this.
(2) If you aren't selling to the right market, then no matter what you do, you will never grow your business. If you are underpricing your work and targeting a customer that buys things mostly on sale and "never full price", then I'll bet that you have been busy having blowout sales, giving away free shipping or free merchandise to the wrong group of people.
Think outside of your current audience and increase your business's perceived value not just to your customers, but mostly to yourself.
Match the customer you need to sell to. Appeal to their sensibilities and they will respond by buying what you make. If you change your thinking about who your customer is then you will be able to grow your business.
(3) If your work isn't ready for market, then you have work to do. Maybe you need to find a better supplier for your materials. Maybe you need to purchase some equipment to help you make your stuff better and faster.
And, sorry if this hurts your feelings, but it is entirely possible that you just aren't skilled enough to make a living making whatever it is you're making right now. The solution here is to keep practicing and keep moving forward. Experience and expertise are gained by sustained effort, not wishing and wanting, or spending time feeling jealous of those who have been at it longer.
Bottom line:
If you commit to pricing your work at wholesale prices that allow your business to grow and then sell it at true retail prices to the end customer, you will have the opportunity to find out what it's like to have a successful creative business.
Do your research, get better at making things, and price your work accordingly. You deserve to receive a fair price based on your time, materials, market research, and product viability.
An artist's true confidence always shows clearly in their pricing, so be confident, be brave, and do the work. It's the only way to find success.