Here's a question from a reader:

I am putting together gift baskets such as a "sweethearts basket" for Valentines consisting of candles, lotions, bath beads, etc. How do I decide how much to charge for them? Other people trying to sell crafts probably have the same problem.

Do you sell or have you ever sold any type of hand made item? How did you determine how to set the price?  Any other thoughts about it?

I can't help you about the price for crafts, but I did post the prices of tea breads like zucchini bread in the Foods section.

I priced the breads while I picked up my made to order almond pound cake. I'm slicing the cake into portions and I'm freezing it. My aunt paid for the cake because I was upset about Sunday's fire. The bottom oven element caught on fire.

 Many years ago... around 30, I think, I knitted a couple of Christmas stockings with children's names knitted into them, along with a pattern and charged $10 each. I would think something like that would go for $25 or more now, but I'm not sure. 

Later, I knitted special orders and tried to keep it within three times the cost of the yarn. I also sold some knitting patterns, but for that you get whatever they're willing to pay and the per hour wage is dismal. Crafting doesn't pay much per hour, no matter how you do it, but if you love what you're doing (and don't need to make a living doing it) it's a great job. 

 A general rule on pricing is that you charge 3 to 4 times what it cost you to make the item. One portion is to cover supplies, one to cover the wear and tear on tools, one for electricity or other utilities to make the item, and the 4th is your time.  Always the bug with selling crafts is finding a price that wil be acceptable to the buying public, and the 3 to 4 rule sometimes makes that craft unaffordable to most people. It also depends on whether you can buy your supplies wholesale or retail, or that the items you make are free to begin with, like using nature's bounty, or making things from scrounged and re-purposed items, for example a welder making yard art from old metal parts found along the road. Edey

Some of this depends on if your doing this for fundraising (and offering what you make for donation) or if you're trying to turn a profit for yourself. The market you want are those who don't have the time or talent to do what you do. Many other crafters will go around and see what's out there and duplicate your idea sometimes for less than what you can charge. People are always looking for a bargain so there's a fine line between a "fair price" and what will "discourage selling". You may want to give yourself some leeway so if you make a lot of baskets and don't want to bring them home, you can reduce the price to move them. When I buy hand made items, I gravitate toward things that are unusual and distinctive. I bought two long angels whose gowns were made from an old quilt and a cross stitched table cloth. I bought a one of a kind, 4 tile picture of an angel holding the earth in her hands . I'd never seen anything like these before or since. Some people go to craft shows knowing they are bound to find the standard things but you won't see me at tables with mass produced items.

Toni B.:

Some of this depends on if your doing this for fundraising (and offering what you make for donation) or if you're trying to turn a profit for yourself.

 

I agree.  Whenever I donate a cross stitched piece, I make sure to tally up the cost of the materials, the frame I put it in, etc. and then report that to the group selling it as a fundraiser.  It would be horrible, IMHO, if they charged only $10 for something that really cost $20 in materials alone.  If I were to sell my goods, I would charge a minimum of twice the materials cost.  My mom runs her own business and this is what she did in the very beginning; it really helped clients single her out for product b/c she had the cheapest rates in town.  She keeps her prices very competitive, but she has had to raise them over the years; I think now people pay about 3x the cost of the materials.

I got a lot of experience selling my handmade jewelry at craft shows and craft fairs and I learned that pretty much the worst thing you can do is price your items too low.  Not only do you cheat yourself, you make your goods look cheap.  People really do believe that something priced low isn't as good as the same item priced higher.  "There must be something wrong with it if it's this cheap."

I met a woman who had never sold her beaded earrings before and asked her why they were priced sooooo impossibly low.  She said that she was charging the cost of the beads!  You must pay yourself for your time!  Also, figure in every single expense: if you're at a craft show or fair, you have to factor in the amount you pay for your selling space; materials costs (beads, lotions, baskets, etc.); display materials; signage; tools, etc.  If you've driven any distance at all, factor in gas.  And you must pay yourself for your time!  You deserve it!  And don't forget to build in A PROFIT.

Expenses + Time + Profit = Price

Add up all your expenses and divide that number by the number of items you're selling:  that's your base price.  Then add your time, which will vary for each item because some take ten minutes and some take an hour and a half.  Add those and take a percentage of that figure for your profit, such as expenses $9,  plus time $15, equals $24, then add whatever percentage for profit, so a ten percent profit on $24 is $2.40, and the final price for that item is $26.40.  (I am not suggesting a ten percent profit, I just used it to make the example easier.)

Calculate the time rate on an hourly basis.  What are you worth?  $15 an hour?  $20? 

Perhaps the most important part of pricing your items is checking out the competition.   Once you have some information about the going rates, adjust your prices up or down until you feel comfortable.  Build in some wiggle room so that you can say "I can drop the price to.." if the price is making a buyer too hesitant, and you can offer "Two for $xxx" or "Three for $xxx" deals.

And be willing to change your prices as you get experience.  You'll find out along the way if your prices are too low, too high, or just right.