Friday, October 25, 2013

Tips & Tricks: Pricing

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In this little transition we're making in our business, pricing has been kind of tricky. With all the new products, we've been having to spend a lot to invest in product testing and making sure all the products are up to par with what we want to do. That, combined with the slow season that is summer, business has definitely been suffering. Part of it has been a result of my own problems, resistances, and what not, which I've been dealing with, but another part of it is figuring out our new pricing strategy. These new, handmade products are a whole different ball game for me and figuring out how to price them according to the costs of making them and earning a profit while still being competitive has proven quite difficult for me.

I mentioned in this post that I was raising the prices of my products to represent the time I spend on each of them and the quality of all the ingredients. I finally sat down today and spent a few hours narrowing down all of my costs and figuring out a fair price for my goods. I'm still experimenting and tweeking but I'm finally happy to be able to price my products fairly for me. I actually found out today that some of my products were priced so low that I was losing money by selling them! And that's no way to run a successful business. 

Anyways, I wanted to share some of the resources I found helpful to figure out how to price handmade goods because I feel like this is something a lot of entrepreneurs deal with. And with that, here are three websites I found most useful: 

Pricing for a profit
Etsy's simple formula for pricing your work
Pricing calculator

The most valuable thing I picked up is to pay close attention to the costs of making your products. This includes the ingredients that go in them but also any type of fees you incur, your estimated labor costs, and office/shipping supplies. All of this will play a big role in how you ultimately price your product. And once you've figured that out, you can use the formulas or pricing calculator in the above links to figure out a final price. 

I think it'll take me a bit of tinkering and market experimenting to figure out if the price is right. I'm also still working on suppliers and lowering the costs of making my products which I think will help with overall profitability. But I guess we'll just have to wait and see! Just learning as I go here. It's almost like starting from scratch again except this time, I have a slightly better idea of what I'm getting myself into ;) 
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