Sunday, January 4, 2015

Are You Undervaluing Yourself?

Many of my clients make amigurumis from my patterns to sell in their own online storefronts, craft shows and to co-workers and friends - especially around the holidays for some extra holiday cash.  And one of the biggest questions that is always asked is "How much should I charge?"  I have a very close friend who sells her own dolls who asks me this from time to time also - and I ALWAYS tell her she is not charging NEARLY enough for her dolls!  and she's been selling her dolls for a few years now!

So for anyone just starting out - no it's not a dumb question and it is one that needs to be thought about and not just "oh, I'll slap a 14.99 price tag on it, because Target/Walmart/Kmart sells something close for that amount."

There are several things to consider before putting a price tag on the handmade item you've just made or are being asked to make or are listing in your shop for the first time.

1) What supplies do you need?
    - Generally, if you are making handmade items on a regular basis; this question isn't much of a question.  You have supplies.  For crochet, you have your hook, your yarn, your fil.  But what if your hook was to break or you can't find it and you are on an expedited timetable to get the project done? What if you run out of any specific color?  You want to make sure you have at least 2 of all items you will need for any given project.  2 skeins of any given color for a small project, 2 of the same sized hook, double the amount of fil that is needed, etc.  Each order you take needs to be treated as a single NEW project no matter how many similar items you are making or have made!

2) Do you already have the pattern from which you will be working from?  
    - Most likely, you do.  But sometimes you get that "oh, I saw this - can you make that for me??" and then you need to go purchase a pattern.  Patterns can be as inexpensive as "free" or as expensive as $20.  If it's in your pattern library or is free and you can make a profit by utilizing it - great.  If not, then you will have to put out of pocket for something that maybe only 1 or 2 people may wish to order finished items from!  How 'reusable' are the instructions?  Dogs, horses.. cats.. baby items.. things like that - they are always good.. but a $10. pattern for a doll from an 80's video game, is not likely to be utilized enough to cover the initial out of pocket price.

3) Will you need to 'design' or alter/modify an existing pattern to fill the request?
    - Modifications on the 'color' isn't a big deal; you just simply substitute one color for another.  But what if they want 'striping' or many different colors, which will require you to make many 'color changes' within the project.  Or let's say that someone asks you to make them a key chain from the KISS Sno Bunny Pattern. Although this is a small project to begin with (about 5 inches) - that is still pretty large for a key ring.  You will need smaller hooks and most likely a thinner weight yarn that you do not usually have in your supply.  The biggest issue with the modification is going to be the discomfort in working with a size unfamiliar to you.  In this example, the smallness of the item will most likely cause your hands to cramp easier - which will extend the overall time to complete the project.   Your (dis)comfort while working on a project should also be taken into consideration when pricing your work!
A simple straight up project with no modifications, a few simple colors or even all 1 solid color isn't much 'detail'.  But striping, making frequent color changes or adding embroidery, beading and other embellishments are very detailed and use more supplies.  This can become expensive and very time consuming.  All these extras need to be considered when setting a final price tag.

4) Is the client requesting a specific yarn to be used?
    - Next to the shipping costs, this is probably one of the biggest and easiest factors in your handmade item's price tag.. the material used!  Acrylic yarns like Red Heart Super Saver or some 'store brand' are going to definitely be less expensive than a project that consists of imported lamb's wool or hand dyed yarns.  You certainly wouldn't charge the same amount for a KISS Puppy made from Red Heart Worsted Weight Yarns as you would for one made from Vicuna Yarn (which is $299.75 a ball)

5Will the item need to be shipped to the client?
    - Shipping is probably the easiest part (price wise) to be considered in placing a monetary value to your work - YOU should never pay your own shipping!  Even if you 'advertise' free shipping, you always include it in your final price!  Customers want to feel like they are getting 'something' free - even when they are paying more for something handmade - especially when it is so much cheaper to buy 'factory made'.  But we all love a 'good deal' right?  Including shipping in your price and offering 'free shipping' is really a win/win for everyone in the transaction - you are still covering your costs, while allowing the buyer to feel like they are also not being raked over the coals with extra charges that a run to a local thrift store can prevent.
Also, remember, you are using your gasoline and time to get back and forth to the post office ... right? or you use a pick up service, but there are still packing materials that you will need to consider; such as packing tape to close the box, tissue paper to line the box, thank you note card, your business card, etc.

6) Is there a expedited time frame in which the client has set you to work?
    - Are you putting your 'life' on hold to fill an order for a special event and the client needs their handmade item by?   Will your item need to be shipped via special carrier such as Fed Ex to get it there overnight?  I tend to work in straight forward numbers - small expedited items (time table cut to 2/3 wks) I keep it low $10-15.  depending on complexity - expedited of a day or two?? yeah, that's going to cost quite a bit more.

7) How much of your time will the project take to complete?
    - How much time each day do you commit to working on your handmade projects?  If you are working a normal 9-5 job, have children and/or a husband to care for - have an animal that needs to be walked, fed, etc; then you are probably only able to work on your craft for a few hours each evening.  You know what you are capable of doing in what sort of time frame - whereas I can complete almost any KISS Series animal in about 3 or 4 hours, it takes some clients a day or 2; some even longer due to their schedules.

You put all these factors together ... and yeah, there is NO WAY you are going to sell a blessed thing. *grin* well, okay - but you won't sell a whole lot.. how's that?!
But, it doesn't mean that you have to completely undervalue yourself by compromising your own price tag.   You need to find a happy medium between what someone is seriously willing to pay and what you are worth as an artist.  (Unless, of course, you become as sought after as an Andy Warhol or Jeffrey Koons; then you can charge whatever your heart desires and most likely receive it!)

Someone who is looking for handmade, already knows in advance, they are not buying some factory pre-cut, sloppily stitched and most likely poor quality item - they are already expecting to 'pay more' and in most cases are happy to do so.  
So when you go to price your handmade item - take #'s 1, 5 & 7 above into consideration to create a 'base price', leaving #'s 2, 3, 4 & 6 for the 'add-ons' to your base price.

Let's work it up.. with an actual handmade I sold, as an example:

Client: Can you make me a KISS Puppy?
(okay, yes, I was tempted to just write back with a *poof* you're a KISS Puppy - but I resisted)

K4TT:  Sure, normal turn around for a small/medium handmade item such as the KISS Puppy is 3 to 4 wks. Is that acceptable?
(This is setting a 'relaxed time frame' for myself and it was after the 'holiday rush' and charity work was completed.  If I have other orders on the books that were placed before this order inquiry which needed to be completed first, I have enough time to complete those items first and still work on hers within the 3 to 4 wk time frame.)

Client: Wow that long?

K4TT: That is an average.  Most projects are done in a shorter time frame, but I have orders currently on my hooks at the moment.  Did you need it by a specific date?  I can expedite your order to ensure it is done and shipped in time to meet your needs; however there is an extra charge of $10.00-$25.00 to the finished item's overall price, to put you ahead of current orders - depending on how quickly you need the turnaround on the item.

(Expedition of the order. To be honest, I hate rushing... always have.  But when a client absolutely needs something in a short period of time, it's a necessary evil -someone is going to have to be put on hold while I work completely on this one order.  For smaller to medium sized items like the KISS line, expedited service is a flat fee of $15 with a 2 week window.)

Client: Okay, that sounds good.  I need it in 2 weeks for my son's birthday.
(2 weeks might sound like a lot of time, however, I have really only given myself a 6 days to finish her KISS Puppy. I always allow for at least one week for the USPS to deliver my item to the client and USPS doesn't work on Sundays .)

K4TT: Do you wish to have one similar to the KISS Puppy in the photograph or did you wish for any sort of specialty yarns to be used?  This can make the item more costly due to the price in yarns however, but I can make to fit your specifications.  Do you want any color modifications?  Color changes are minor changes and are generally no additional charge.
(While I am promoting the use of materials I am comfortable working with for my own 'ease', I am also relaying that I can make it differently if the client wants, while simultaneously acknowledging that this transaction COULD cost much more .  Generally, when a someone wants to purchase something they have "seen", they want it made with the same materials and exactly the same way as it appears in the photograph.)

Client: Oh can I have him look more like Snoopy?  You know black ears and mostly white?  My son loves Snoopy!
(Color modifications are very minimal, but again, most clients want what they visually see in the photo.)

K4TT: Sure I can do that!  The price for the KISS Puppy is $45.00 and includes free shipping to the lower 48 of the United States.  Are you in the lower 48?  (Not Alaska or Hawaii)  Did you wish to purchase Insurance for the item?  Insurance is an additional $2.50 to be added to the final price.
(It is more expensive to ship items to Alaska and Hawaii although they are considered "the United States" if the client says that they are from outside the continental United States, of course shipping charges would have to be modified to reflect the increase in the USPS delivery costs -  surprises on either side could lead to hard feelings - make sure that everything is discussed.)

Client: Yes.  I am in Florida.   No, no insurance I don't think.

K4TT: Okay sounds good.  Let me send you an invoice to your eMail - please read it over and soon as I receive your approval on everything we've discussed here and receive your good faith payment, I will begin working on your KISS Puppy and keep you updated as to when I am ready to ship so I can provide you with a tracking number once it is in route.  At that point, I will bill you for the balance of the invoice.  Sound good?
(I never ship a package that I cannot track - I also make sure that I am insured whether the client requests it or not - let's face it, if something happens to the package, the client is going to want their $$ back or have it remade.  I am still out my time and materials - I do not wish to suffer a complete loss after I have spent time and materials on an item.  If the client requests insurance on the item, I double the insurance I am already paying for.  I also never start working on a project that I am not going to get paid for.  I take a "good faith payment" (deposit) up front with the balance to be paid upon completion.)

Now some of you might be thinking.. $45. for the KISS Puppy?  That is not what I would charge, it's only 12 inches tall!  That is way too much!
Well, why??  

I actually charge more for a finished KISS Puppy now.

Average Price per skein of yarn - $2.89 - project will need 2 skeins (one ea color) $5.78
Average Price Polyfil stuffing per bag - $9.99 =  subtotal  $15.77

Average Price packing materials (box, tissue paper, etc) - $5.00  = subtotal $20.77
Average Price shipping with Minimal Insurance = $12.50 = subtotal $33.27
Profit for making item/your (value) time?  $12.00 (rounded to nearest whole dollar)
so lets say for someone like me who CAN make an item in a few hours and who devotes the majority of time to "crafting" that's an average of $3.00/per hour for labor!  
(*prices based on CURRENT materials costs)

Really?!  $3.00 an hour?  Minimum Wage pays more than that!

Of course, you can cut some corners here and there in the supplies and or shipping and this did not include the expedited fee associated with this order - find materials on sale (like there is ever really a sale when you NEED there to be a sale - but we'll go with it!), however, this is just a ballpark estimate - to let you SEE where you are falling on your own 'value scale' when you price a handmade item.  
And remember, my short list above is not even taking into consideration any fees associated with Paypal for handling the transaction, the storefront venue where the client may have viewed your listing, etc.  (they will all want their cut as well for 'helping you with your sale') or the purchasing of the pattern to work from.
(and don't forget at the end of the tax season, Uncle Sam will want his cut of the profit you just made - but that is another whole can of worms we shall not dive into in this post!)

Will you have left over materials from your project?  Sure.. probably even enough to create another whole doll; but you cannot count on using those specific materials again before needing to purchase new materials for a different handmade request - you count each item as 'new materials' needed and price accordingly. 

So what happens if no one buys it?
You can ALWAYS have a "sale".  If you have a quality item that is not being sold or is sitting around longer than you like and you really need the funds generated from the sale of the item - then discount it!  It's that simple!  

Remember, you can't un-ring the bell of a "low price tag"..  Sure someone would buy a KISS Puppy at $14.99 in a heartbeat... free shipping to boot?!  You betcha!  I don't know how many orders I've had to cancel because someone thought they were buying a finished doll at PATTERN PRICE.  (really??! - $4.80USD for a finished doll with free shipping??? $4.80 doesn't even cover the shipping costs!)
But then not only have you not made a profit, you have actually LOST money in the transaction!  Almost a TWENTY DOLLAR loss...  so that means you've just payed someone $20, for you to make them a doll ... 

  So... do you still want to make and sell a KISS Puppy for $15?