August 27, 2010

Pricing (in case any other Etsy or online seller is interested)

Today was a bit of a boring day. I did a lot of organizing, mainly. I made a spread sheet to calculate prices, expenses and profit. I then realized that most of my prices were wrong, so I re-did all the pricing. Then I hung out in the forums on Etsy for a while, got some feedback and did some more editing. I still haven't gotten around to retaking the photos that need to be redone, so that's on the list for tomorrow.

For those who are curious about my pricing scheme/want to know how to price their own items, here is my current equation:

cost of materials + (time x 10) + packaging/fees

same thing, multiplied by 1.5

Some people multiply by 2, 3 or 4, but I'm not sure people would buy anything from me if I charged that much for the things I'm currently making. Some people complain that the sellers on Etsy multiply the equation at all - apparently home businesses are supposed to sell wholesale (who gave them that idea?). But really, if you think about it, most companies are charging you 2-10 times what it costs them to produce something. When you buy a can of pop from a machine, you sometimes pay $2 and you know that can only costs the company maybe 10 cents.

As home business owners, we need that extra money. The 10 that my time is multiplied by is my salary - it goes towards my living expenses. The 1.5 that the whole equation is multiplied by goes back into the business. It's essential for me to continue making more products, grow my inventory and make my little online business into the much larger business (possibly with an actual storefront) that I hope to eventually have.

The wholesale price is meant for selling to boutiques and stores in the area that might be interested in my products. I'm a little far from that point at the moment, but maybe in the next year or so it will be a possibility.

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