Pricing 101

Figuring out how to price your items is often one of the biggest challengers we see small businesses face. It's perfectly normally to feel a little overwhelmed. While there is no one-size-fits-all solution when it comes to pricing, there are some basic tips you can follow.

 

One of the first rules is you should be at least covering your costs, otherwise this is just a hobby.

 

There are two types of costs, direct and indirect. Your direct costs would be the materials to make your product, packaging and any fees associated with selling.  Your indirect costs are the ones you don't typically associate with the actual product. You also need to factor in your time, and this is where many people undersell themselves! How much time do you spend making the product? Designing it? Photographing it? Listing it? Packaging it?

 

You deserve to be paid for your time, and if you aren't accounting for your time properly, you'll never be able to leave your day job. Don't forget there is far more than the actual creation of the product! Running a business is a full-time job, so it's sometimes easier to instead consider the hourly rate you need to get paid to make a living, as if this was your full-time.

 

The simplest formula is: 

 

Cost of materials (direct and indirect)

plus

Your time (or hourly rate)

take that sum and,

 

Multiply by 2 for wholesale...

and again multiply by 2 for retail.



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