Pricing driving me bonkers!!

[Seahorse]

Im trying to price some necklaces.I try to work out what the parts cost then the final price from that but I seem to have got in a pickle.

Im trying to not be greedy(as i know i can be)and price them fairly.

Ive found Im charging the same price for a mostly wooden necklace with leaf, that Id charge for a swarovski necklace with leaf, surely thats not right.
Drastic price changes approach!!!

What do you take into account when you price yuor goodies?

[swirlyarts]

It's tricky - I think it's one of the hardest things to do. I add up how much my items have actually cost me to make and then I have a look around to see what similar items are selling for. It's always worth remembering that your profit margin on each item doesn't need to be the same. Some people use the formula of materials x2 plus 50%. But it varies a lot!

On the plus side it only took me a week to work out my wholesale prices!!

[Tip Top]

Eeekkk!
Hope its not me thats set this dilemma off?!!

[caketopper]

Im rubbish at pricing too, its hard when you have to take in clay cost, time taken to make them, oven baking costs and the list goes on.....

[MrSwirl]

Think of a number and double it.

[icecreamgirl]

Hmmm priceing is quite hard..
I add up what the item has cost in materials then at least double it, sometimes triple it.
It's right that all your items don't need to have the same profit margin, so if when you work something out it seems like a lot, i would charge less for that one but soak up the cost in another, cheaper to make item..
I agree that i wouldn't want to charge the same for a necklace with wooden beads to one with swaroski beads, if someone looked at these items back to back they would either question whether it was swaroski, or question why wooden was so expensive, does that make sense?

[Bren]

I have a problem with pricing up too. I add up the cost of materials and then add a little for my time and labour. However, I don't think I am adding enough for the amount of work I actually do. Might have a rethink and increase prices on new items. I live and learn!

[Poppy4lee]

I know this looks complicated but, believe me, in the long run it has saved me SO much time....I was advised by a business advisor at my local Business Link to come up with a 'gross margin profit figure' - sounds very grand but it wasn't too hard to work out...Basically, I was told to take several items as a representative sample of my work, then work out the cost of the raw materials for each item, then look at the market & make a note of what similar items are selling for & from that, decide how much I wanted to sell each item for.
So, for example if the cost of the materials (for one item) is £2.50 and the market selling price is £6.40 - to work out the gross margin profit...
1) take the cost of the materials....................................2.50
2)divide it by the selling price.......................................2.50/6.40 = 0.39
3)multiply the result by 100.............................................0. 39 x 100 = 39
4)deduct that figure from 100........................100-39=61

Result - your gross margin profit = 61% (and your materials = 39% of the selling price))

If you do this for a range of items you can either calculate an average gross margin profit, which you can use for all your items, or, if there is a wide variation, you could decide, for example, that for swarovski you'll add 61% gross margin profit and for wood you'll add 49%.

That's the hard bit over...once you have decided on your gross margin profit figure (eg 61%) all you have to do in future is add up the cost of the raw materials for an item, divide it by 39 and multiply by 100
e.g. 2.50/39 x100 = £6.40 (Well £6.41 to be precise).

It also means that if you sell £150 worth of goods, you'll know that £91.50 (i.e. 61%) is the gross margin profit figure and £58.50 (39%) was the cost of the raw materials (& that's, roughly the amount you'd need to spend to replace the stock). The profit figure needs to cover your overheads etc. so it's useful to be able to calculate it & to check that you are making a viable profit.