1999 Volunteer Leadership Training Guide
Pricing Your Crafts
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Introduction
• Objectives
• Target Audiences
• Teaching Points
• Handouts •
Suggested
Activities to Reinforce Learning
Introduction
Many people make craft items they feel they can sell. The problem is they do
not know how to price them to make a profit. Pricing is the most important
aspect of a craft business. It is the only activity that will make the business
money. Although it sounds silly to say, a major step toward making a profit in
retailing is selling merchandise for more than it cost you to make.
Suggestions
Introduce the topic for training.
Discuss the kind of craft items members produce for sale.
Approximate Time: 2 minutes
Objectives
A. To price items so a profit can be made from the sale of the craft items.
B. To understand what must be considered when pricing an item.
Target Audiences
EHC members
4-H leaders
Members of other organizations
Teaching Points
A. Items you make may be one-of-a-kind items, limited production items, or
production series items.
1. One-of-a-kind items are those things you design and make yourself of
which you only make one.
2. Limited production items are those things you design and make yourself
of which you only make a few (2 - 200).
3. Production series are those items you make and continue to make until
they no longer sell. Depending on the item, you might make 1,000 of them in
a career.
Suggestions
Have people bring an item they make to sell and discuss what kind of item
it is.
Approximate Time: 3 minutes.
B. The price you can sell an item for depends on what kind of item it is.
1. You can charge the most for a one-of-a-kind item. You have put your
heart and soul into this item and you should get paid more for your
intrinsic or artistic skills. Prices for one-of-a-kind items can be three,
four, or five times or more that of a production series item.
2. Since there are fewer limited production items than production series
items, you can charge more for them than you would production series, but
less than a one-of-a-kind item.
C. There are four ways of pricing -- pure guess, educated guess, market
comparison, and analysis.
1. Pure guess is what most people do. They just guess.
2. Educated guess is when you have an idea what the item should sell for.
3. Market comparison is making an item similar to an item in a store and
charging the same price.
4. Analysis is when you figure all your costs and figure the price from
that.
5. The last opinion, analysis, is the best way to price items.
Suggestions
Have these same people discuss the way they price their items.
Approximate time: 3 minutes
D. The correct way to determine the price of an items is to decide on the
costs of materials (how much you spent on the materials you used to make it),
labor ($5.15 per hour minimum wage), overhead (lights, heat, telephone, etc.),
and profit (this should be 20-30 percent of the price). Once these are
determined, you can decide on the price.
Suggestions
Use the visuals to enforce the factors involved in setting a price.
Analyze a small item as to the cost of these factors. For example, use a
small muslin pouch of potpourri with candlewicking on the front, lace around
the opening, and tied shut with candlewicking thread. Ask them how much they
would be willing to pay for the item.
If analyzed, the material costs are as follows: Muslin 6" x 9" = $.10
Candlewicking thread = $.20 Lace Trim = $.20 Potpourri = $.50 Total Cost of
Materials = $1.00 Labor = $7.75 (1 1/2 hours @ $5.15) Without adding
overhead and profit, the item costs $8.75, probably more than the audience
would have paid for it. Price calculates to be $14.00.
Approximate Time: 10 minutes
Finish the lesson with the following comments.
Approximate Time: 2 minutes
E. If after determining price, it is too high, you can lower production costs
or raise production. If you do nothing and lower the cost, it only means you cut
into your labor and profit.
F. If you lower production costs, that means you would not pay as much for
the materials. To do that, you could buy materials wholesale, find places that
might donate some of the supplies (if you are making things for charitable
causes), or buy in bigger volume to reduce the price of the materials.
G. If you raise production, that means you make more items in less time. To
do that instead of making one item start to finish, perform the same process on
several items before going on to the next process. For instance, if you were
making the potpourri pouches, cut several pieces of muslin at the same time, do
the candlewicking on all of those pieces, sew the seams of all of those pieces,
etc. When you don't have to change "gears" during the process, you can make more
items in the same time.
H. If people make things and sell them for less money than they have in them,
this may mean that they don't value their products or skills. These people offer
the excuse, "Oh, this old thing. It's not worth much." Or, they just don't want
to make money. "I just sell these so I can get more money for materials." Or,
they just wanted to make it to please people. "Oh, honey, I would give this
away, if it didn't sell."
I. Always price an item to make a profit. Those who are independently wealthy
or who can afford to subsidize the public threaten the existence of those who
are trying to make a living as full-time craft producers. Always price your work
as though you had to earn a living from its sale.
Handouts
Pricing Craft Items (Handout 1)
Suggested Activities
to Reinforce Learning
A. Have one or two people bring in a craft item they made. Ask them to
determine the cost of the materials in the items and to estimate the time it
took to make it before the meeting. Use this information as examples as you
decide how to price the item.
B. Plan an item that can be made by club members that can be sold for a
profit. Think about the various factors involved in pricing. Use the money made
by selling the item to support your club activities or to give to charity.
Sharon Heidingsfelder, Family and Consumer Sciences Specialist
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