[HN Gopher] How to Set Prices for Handmade Goods
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How to Set Prices for Handmade Goods
Author : WallyFunk
Score : 61 points
Date : 2022-03-16 17:19 UTC (5 hours ago)
(HTM) web link (www.workshopmag.com)
(TXT) w3m dump (www.workshopmag.com)
| bradly wrote:
| I do woodworking and I just use my hourly rate plus materials.
| There are a surprising number of people who will pay high prices
| for quality hand-made goods. What I've found works is to create
| the best product you can and have a story around it.
|
| For example, for my shaker trays I describe the process of
| picking out the wood, cutting the bands, boiling the wood,
| bending it around a hand made form, hammering in copper tacks
| over an anvil, hand finishing, and then applying multiple coats
| of hand made shellac. For larger furniture or slab work the story
| of the actual tree can really add to the value as well. People
| want a story.
|
| To lower the cost you can create router templates, jigs, or even
| CNC projects to lower the hours spent and reduce the overall
| cost, but these need to be balanced with the selling of bespoke
| goods.
| whoisburbansky wrote:
| I'm interested in how you adjust that for expertise; do you
| bump your hourly rate for items that took you longer to learn
| to make well? How do you figure out how much to bump by, if you
| do?
| bradly wrote:
| Nope, my hourly rate is my hourly rate. If something takes
| more time, it simply costs more.
| jotm wrote:
| Do you create content, then? Articles, pictures, videos
| (especially well produced ones) of the various processes would
| be very interesting and could supplement your income pretty
| well (ads, sales/orders, patreon/sponsors, etc).
| bradly wrote:
| No content yet from myself except some Twitch streaming. I do
| have some ideas in the hopper though...
|
| - A small e-book or online course for software engineers to
| learn woodworking. Working title "Burnout to Burn Box: How to
| quit tech and start woodworking"
|
| - I'd also like to create a software/hardwood shop where
| workers can choose to do either software engineering or
| woodworking any given day, but that will more than a garage
| shop. You would only need experience in one or the other to
| get started. Working title "Bits to Bits Studio". I'd also
| like to have a small coffee shop in the front to display
| goods.
|
| - I'd also like to start a community woodshop on Lopez Island
| to help islanders learn skills and start their own company.
| jimnotgym wrote:
| > Patrysha is a certified small business coach
|
| Is there a Chartered institute of small business coaches?
| OJFord wrote:
| Well they claimed 'certified', not chartered; yes I'm sure
| there are any number of small business coaching _certificates_
| available.
| renw0rp wrote:
| Can I get certified as a small business coaching certificate
| authority?
| rokhayakebe wrote:
| Is software handmade good?
| jnovek wrote:
| Something that the article glosses over that I often ask about
| these kinds of businesses is _how exactly_ one finds and
| documents their costs. The author gives examples --- keep track
| of your time, keep receipts, etc -- but often a creative process
| is so organic that it just doesn't feel as straightforward as
| that.
|
| In startups it's popular to use accrual accounting methods and,
| if you've ever had an opportunity to look at a startup's books,
| it can get complicated. Several years ago, I worked on an
| enterprise product that had a bunch of variables and a long sales
| cycle. Without good accounting practices it would've been easy
| for us to screw up pricing and take a loss.
|
| Maybe it's just me, but it seems like the variables that go into
| a creative process are nearly as complex but the scale is smaller
| and documentation slimmer.
| atrus wrote:
| I make and sell handcrafted goods. I essentially split my costs
| into two categories, manufacturing and research.
|
| The research budget covers the 'organic creative process' but
| isn't tied into the manufacturing costs. Once I've got the
| basic idea down, then I can start to purchase items to build X
| amount of something, and it's much easier to specify costs of a
| known item.
| jnovek wrote:
| This probably covers most of my time that I put into a thing.
|
| Do you try to budget time for research when you start? E.g.
| "I want to try to get to my first prototype within 80 hours."
|
| I think when I went into this I didn't think it would be very
| hard. I have experience pricing and selling software and
| experience pricing and selling my time as a consultant. What
| I'm finding in reality is that, although aspects of my
| experience apply, overall it's a new kind of thing for me.
| dazc wrote:
| > Maybe it's just me, but it seems like the variables that go
| into a creative process are nearly as complex but the scale is
| smaller and documentation slimmer.
|
| This may be true but a 'creator' only needs to make enough
| money to pay him/her self and to buy materials. Once this has
| been achieved then it's simply a case of increasing the selling
| price to whatever the market will bear.
| mdorazio wrote:
| On the financial cost side, use a credit card that is only for
| the side business. Then you can easily use that card whenever
| you buy something and look at the end of month totals. For
| time, I personally divide days into quarters instead of hours
| and think back to how many quarter days I spent on the
| activity. "That was two afternoons" = 4-5 hours.
| jnovek wrote:
| The credit card is a good idea. Thank you!
|
| Honestly, I think I'm just a bad time estimator. It's
| definitely something I miss from working together with people
| -- I know I'm a bad time estimator and I can ask for help.
| Maybe this is just a "learning to work solo" thing.
| ghaff wrote:
| A lot of it is experience in a space. Some things are less
| predictable than others but, over time, you develop
| heuristics that often work pretty well--at least for
| simpler tasks. Invariably you'll need to add some time for
| aspects of the business not directly connected to the
| output.
|
| Also learn to add some padding when you can if you're doing
| a job for someone. I really learned this when I was a
| consultant. Way better to underpromise and then come in
| early than the other way around.
| CharlesW wrote:
| > _The credit card is a good idea._
|
| As an alternative to a separate card, you can use a service
| like privacy.com to create one or more "virtual" cards.
| medion wrote:
| The article is a bit thin on two difficult and important factors
| for makers: How do you decide what your hourly rate is, when it
| is also unlikely you are making something so unique no one else
| makes something similar - ie. how do you create compelling
| arguments for differentiation.
|
| In the first instance, in a first world country, to cover the
| high cost of living and to also take retirement and other such
| things into account, I'd estimate $50/hr is the floor. Where I
| live a plumber will earn $80-120hr so even then it's on the low
| side if you are a skilled maker who has had to develop skills
| over years.
|
| In the compelling differentiation department, I think it comes
| down to storytelling and materials + workmanship. This trifecta
| has to be woven into a credible narrative to sell your product.
|
| After all that, you need to market it... and we'll that's
| something else entirely...
| quesera wrote:
| > in a first world country ... I'd estimate $50/hr is the floor
|
| That's $100K/yr, well above the median.
|
| My pricing strategy is to start with your needs. $50/hr might
| be reasonable, but it varies by person and life circumstances.
|
| Figure out how much time it takes to produce the _second_ (or
| later) work product. Do some hand wavy math over the
| amortization of research, design, and first product over the
| quantity you could produce in a few months, if that was your
| only product. This will be a larger factor in new work than in
| iterations on previous work.
|
| You now have a selling price, which the market may or may not
| bear. This can be tested, and you can use the results to inform
| your decision on whether to continue production. Most of this
| can be estimated early in the design phase.
|
| My premise is that starting from anywhere else (COGS, market
| price) and working backwards to compute valuation of your time
| is .. well .. _backwards_.
|
| Accepting a temporary, or introductory, devaluation is
| reasonable.
|
| Just know what your targets are, so you know when things are
| not working.
| rdtwo wrote:
| At 50$ an hour basically nothing is viable especially in the
| beginning so do you just do nothing?
| quesera wrote:
| No, initial devaluation of your time might make sense, as
| noted.
|
| But my larger point is that $50/hr is more than many people
| need. And not enough for others. This is important to
| decide before you start depending on the income.
| medion wrote:
| Wrong. You have to start somewhere and usually that will
| mean months or likely years working as a hobby or making
| next to nothing. You can't just setup shop and expect
| people to pay $50 an hour - bringing up the plumber as an
| example again: could a completely untrained plumber turn up
| at your doorstep and request $50/hr to do plumbing? You'd
| laugh. They work for peanuts for 4 years while doing a
| night class a week until they are qualified.
| vharuck wrote:
| >That's $100K/yr, well above the median.
|
| The median is gross personal income. It doesn't include
| insurance plans, unemployment insurance, taxes, or any other
| costs of doing business beyond materials. I haven't done the
| self-employed thing like others on HN, so I'll leave it to
| them to say if $100k/year is enough to earn the equivalent of
| a median salary. But anyone who aims to rake in that median
| is in for a rude surprise.
|
| Edit: I'm not saying you'll be paying all those costs
| yourself. You don't have to budget for HR training on not
| stealing from your own supply cabinet. My point is that
| companies pay a _lot_ more per employee than just salary.
| quesera wrote:
| > My point is that companies pay a lot more per employee
| than just salary
|
| Of course, but the person who is paid $50/hr is also paid
| $100k/yr for a 2000 hour work year.
| medion wrote:
| You are multiplying the hourly rate as if it were a fixed
| salary, while also forgetting about taxes etc. I don't know a
| single craftsman that works 8-9 hours a day, 5-6 days a week
| on "chargeable hours" - most craftsman can realistically work
| perhaps half that on full-concentration crafts, not only
| because of the attention and detail required, but also
| because there are so many other things to do in a single day
| for a solo craftsman in todays craft market - customer
| enquiries, marketing, shipping, etc. 100 years ago the
| Japanese swordsman was not inundated with much other than
| making swords. Today it's much different.
| quesera wrote:
| Agreed, but this is effectively true of all self-employed
| people. So the administrative work has to be billed also.
| panzagl wrote:
| Generally salary is about a third of billed rate- the plumber
| billing $120/hr is making $80K, someone billing $50/hr would
| be in the $30K range.
| quesera wrote:
| > someone billing $50/hr would be in the $30K range.
|
| This might make sense for the service industry. It doesn't
| sound right, but I don't know the math there.
|
| But it is not the same for producers. If you can do
| productive work (i.e. resulting in a product) at a full-
| time equivalent level, the math is straightforward.
|
| Of course like all self-employment you need to "bill" for
| the administrative work as well. And you need to make sure
| there is a market for your time/production.
| medion wrote:
| Also, another factor in pricing is 'brand power' or in this
| case 'artisan power' - pricing based on materials and time
| alone is no different than being a tradesmen. In the luxury
| goods sector much of the price is based on brand power and are
| almost in no way related to manufacturing costs (although at
| the high end the goods being made are also being produced by
| skilled artisans with expensive materials in the first world,
| ie. Hermes). So a maker must also consider brand building too,
| and the value in that over time - again connected to
| storytelling.
| Vixel wrote:
| I agree with all of this. I don't think people that sell their
| own goods realize that every situation has different COGS. So you
| can't price the product based on the market. Especially
| considering non-handmade items that can be made for pennies in
| bulk.
| cenazoic wrote:
| Not sure how useful this is for many handmade items; for candles,
| as they mention, sure.
|
| But - I quilt (not to sell). Quilting is expensive in terms of
| both supplies (typically 100% cotton fabric, thread, batting,
| machine, etc.) and especially time.
|
| It's difficult to convince people that the relatively simple
| (looking) quilt made by a skilled quilter, which 'only' took
| 20-30 hours to make is worth $500-$1000+.
|
| Couple of interesting articles here:-
|
| - https://sewingreport.com/2016/02/quiltonomics-the-real-cost-...
|
| - https://sewingiscool.com/handmade-quilt-prices/
|
| - https://quiltdom.com/price-handmade-quilts/
| detaro wrote:
| Yeah, the time aspect is something people very quickly ignore
| or underestimate. And in reverse often interesting to see what
| kind of thing crafters/artists/... offer cheaply, because it is
| a variant that can be done relatively quickly.
| ghaff wrote:
| Of course, valuing your time for something you're doing on
| the side is not straightforward. Most well-paid people with
| day jobs can't just work some more hours for the same hourly
| rate. A lot also depends on whether it's something you
| actively like doing vs. you find it a real chore you're just
| doing for the bucks.
| s0rce wrote:
| Pretty much, I'm salaried, I can work more but I don't get
| paid more and I don't think people would really notice that
| I'm getting more done. Incremental time is basically
| worthless. Sure, I could find some hourly part time gig but
| it wouldn't make enough to be worth it unless I built a
| real freelance technical consulting business or something
| that I could bill more for.
| jnovek wrote:
| This is the hardest part for me. I undervalue my time and I
| know that customers do, too.
| metamet wrote:
| When I was in college, a friend of mine knitted me a scarf as a
| birthday present. I adored it (and still do).
|
| But the economics of it is interesting to reflect on. We were
| both poor college students, with no real family support,
| working 30-40hr weeks at coffee shops in order to pay rent and
| buy food, pulling $8/hr plus tips.
|
| The cost of yarn was a half an hour's worth of work, and the
| hours it took her to knit it were done while relaxing and
| watching shows. So labor was considered a write-off, in terms
| of labor. To her, the gift only cost was the yarn. Time and
| opportunity at work for more hours were scarce, so it wasn't
| like we could just work more instead.
|
| Quantifying the value of the scarf didn't really change in my
| mind. To me, the fact that she spent all that time on it meant
| it was special and invaluable to me. Especially since it
| wouldn't make economic sense for her to try starting a business
| selling them.
| ghaff wrote:
| I periodically think of getting a "tshirt quilt" made with a
| bunch of my tshirts. But whenever I look at the pricing of what
| look like proper ones, I sit down until the temptation goes
| away.
| cenazoic wrote:
| Ha! Tshirt quilts are a bit more labor intensive then they
| seem.
|
| Because of the knit fabric most are made from, each shirt has
| to be a) cut (the graphic you want to use) and then b) that
| cut piece needs to be stabilized, which typically means using
| something called 'fusible web' - a material which adheres to
| the shirting via ironing. Otherwise, you wouldn't be able to
| sew the pieces together very well.
|
| So in some ways they're simpler, but they can require more
| initial prep.
| ghaff wrote:
| Oh I'm sure they're labor intensive. And a number of the
| companies that make them out there seem to cut a lot of
| corners.
| mauvehaus wrote:
| As someone who builds furniture professionally, this article
| wasn't as useful as I'd hoped. As other folks have pointed out,
| one of the hardest things to figure out is what to value your own
| time at, and the article doesn't really touch that beyond "the
| customer is paying you to do it because they can't do it
| themselves".
|
| One of the trade offs I find myself making is when I'm doing
| something new. There's a certain amount of inefficiency, and
| sometimes you end up having to pay yourself less hourly to hit a
| more-or-less established price point for something.
|
| Sometimes that's worth accepting for the sake of doing something
| new or developing a new set of skills, but you don't want to do
| too much of that either!
| will_walker wrote:
| This is such a helpful post, but it also doesn't factor in the
| cost of R&D to make a new or unusual product. For example, I
| spent years figuring out how to make a specific kind of porcelain
| planter for succulents that would be self watering. Nothing else
| exists like it on the market, and customers like it but there's a
| ceiling to how high I can price. Now I have a lot of sunk costs
| that I'll probably never recoup on sales. Also selling isn't
| trivial in terms of cost - figuring out packaging and shipping
| loss rate can be a double digit portion of sales for fragile
| handmade goods.
|
| Of course this is on me as a designer and maker - it's a labor of
| love - but it keeps my work from becoming a serious business that
| I might try to go out and count on for income.
| ghaff wrote:
| One of the things the post just touches on glancingly is that
| many handcrafted items may just not be worth it as a business if
| you set a reasonable market price. If something takes you a day
| to make/sell and the biggest profit you can reasonably make is
| $50, it may just not be worth it. At least, unless it's something
| you would do for free anyway and just let the pottery or whatever
| pile up in your house.
|
| I write fairly well and fairly quickly but my ghostwriting price
| for an article/blog has a definite floor. I _might_ come down a
| bit if the work is interesting and the client is being
| professional /easy to work with but I won't come down that much.
| boppo1 wrote:
| How does one get into ghostwriting?
| detaro wrote:
| Or becomes a businesses targeting a different niche than first
| intended. It's sad to see how often people get nasty because
| "XYZ is only making things for rich people" when really if you
| think about the work involved, XYZ is pricing that way because
| they'd like to make at least minimum wage. Many couldn't afford
| their own products.
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