[update and disclaimer] This post has received a lot of feedback in the comments section which is great! I'm glad we're all talking about this difficult topic. But I do want to add - this formula wasn't meant to be perscriptive, merely a guide. Adapt it to suit your situation. I've added more comments below in red :)
It's crazy how often the topic of pricing comes up in conversation around here.
- It might be triggered by our frustrations with a comment on a blog about how such-and-such beautiful, bespoke, handmade item is 'too expensive'.
- We might be throwing around business ideas & offering advice to a intern or friend who wants to start a small business.
- Or we might be discussing a new venture for our own business (such as Inklet), trying to figure out if a product is actually viable to produce and sell at a reasonable price.
The thing is, pricing yourself correctly is HARD. there are so many things working against you when you're a small, local business trying to sell your wares. Like the fact that 99% of the products in your marketplace are manufactured overseas with poor ethical & enviromental standards and sold at a price that you'll never be able to match. And the fact that in your own community there are people who will operate at a loss on a hobby basis because they don't depend on the income from the business. And because people as whole have a mindset that cheaper is better and haven't been educated about the 'real cost' of their purchase.
Since the very beginning, we've always tried to price our textiles correctly. If it wasn't for the wonderful book Craft Inc., we might never have known about The Formula (as we have dubbed it), and by now we would have worked ourselves into the ground.
But fortunately we did know about The Formula (said with a reverent tone) and would like to share it with you today:
The Formula (guided by this book) and made pretty by me
What do you reckon? Sounds pretty full on, huh? All those x2's! Well let me tell you, those x2's are there for a reason and without them we wouldn't be here writing this post to you today.
Let's break it down: