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An honest look at pricing

Writer's picture: Rebecca (a yarn enthusiast)Rebecca (a yarn enthusiast)

I come from a family tradition of artists. My father is a scientific glassblower who supported our family for a number of years as an artistic glassblower in the 1970's as he was getting his start This meant that my sister and I spent many Summer days running around at juried arts festivals all over the Greater Ohio Valley.

Those memories are priceless, and that era long gone in more ways than just the passage of time. Back then, long before the days of online ANYTHING, but especially online shopping and a more open global marketplace, people were open, willing and even excited to buy unique pieces of art or craft items that someone made. There was an appreciation for the artist, and a desire to spend their money (keep in mind that the 1970's was an era of "stagflation") on items of value. My parents were able to survive for several years with this as a main stay of the family income.


Fast forward to the 21st century, and a few years back, I found myself feeling wistful for the past. In that nostalgic moment I got this wild idea to teach my grandchildren, who were around 8 and 10 at the time, about the nuts and bolts of a home-grown business. I decided to focus on a small niche of personal care-related items and chose a few low-key craft venues where I anticipated these items would sell.


As part of this "teaching" exercise, I wanted to instill in my grandkids the importance of assigning an appropriate and fair value to the items. I did time studies, kept records of supplies purchases, kept precise records, and here's where it got interesting.


My first lesson was that as humans, we tend to UNDERESTIMATE how long it takes us to do things, especially simple things. I did multiple time studies for making the lip balm holders and the fastest I could crochet only netted me 3 completed lip balm holders in one hour.


NOTE: I did not consider them COMPLETE until they were ready to sell, so I was strict about how many I could truly make in an hour.


I then added up the supplies, including unraveling a finished one to measure the amount of yarn, and calculating the individual cost of the clip, or button if one was included. Then I did some soul-searching around what my time was worth.


I ended up pricing them at $3/each for ones that had no button or charm on them, and $4/ each if they had a charm. Let's pause here and see what that is in terms of GROSS profit:

  • 3 lip balm holders x $3 = $9/hour (before costs)

  • 3 lip balm holders x $4 = $12/hour (before costs)


For the plain holders (no buttons or charms), the supply costs were between 7-cents and 15-cents per item and when I made one with a button or a charm, the supply costs were between 57-cents and 72-cents per item. This made the NET profit as follows:

  • 3 lip balm holders x $3 = $9/hour - 33-cents (avg cost x3) = $8.66/hour

  • 3 lip balm holders x $3.99 = $12/hour - $1.94 (avg cost x 3) = $10.06/hour


My costs-per-item were admittedly minor but there's not much of a margin when you're only making around $10 an hour. THEN, you have to add in the time that you sit at the craft show, and the costs associated there.


NOTE: I also offered a generic lip balm (optional) for $1.00 each but will leave those costs out of these calculations today, for simplicity.


While these costs hover just above minimum wage, it's important to NOT lose sight of the fact that the hourly costs above DO NOT INCLUDE the hours sitting at the show, or the setup/take down at the end OR the cost of the table at the venue.


Some people may say that if I'm crafting with the intent of making money, I'm doing it for the wrong reasons. In this case, I wasn't doing it to make money, per se, but to a) pass on a family legacy, and b) teach my young grandchildren about small business. It ended up that I learned a lot more than they did.


At our first show, we sat next to someone with crocheted hats, scarves and similar items. Her prices were well-received by the crowds and she was selling out! She sold a complete crocheted hat for between $5 and $8 and scarves were $10 - $15 each.


To be clear: I have NO BEEF with someone who wants to take that approach to their business, but at those prices, all she's doing is (maybe!) subsidizing SOME of her yarn purchases. She is not making money to contribute to her income or family budget. As hard a day as it is to sit at a craft show, I have to wonder if she (and others with similar price points) were fully aware that they were not really making money.


NOTE: these were her creations - she sat there and crocheted all day and the items she was working on looked exactly like the items she was selling, so this was not a reseller operation.


We ended up selling a handful of lip balm holders, but the LESSONS I gleaned from the experience were invaluable! I heard people talking amongst themselves as they mingled, and one person said to her child (who wanted one of the lip balm holders really badly!) "...if it was only $1.00 I'd buy it."



That's when I realized that we were not in Kansas any more as it relates to crafting as a business and I think I know a few reasons why.


One BIG reason is the availability of cheap goods from online sellers that source items from areas of the world where there is a proliferation of cheap (and exploited) labor. Think about all the things you can get in MULTIPLES from Amazon and other sellers for next to nothing. Gone are the days when consumers appreciate the single, hand-created piece. Why settle for one when you can order 10 of something similar for HALF the price (or less)!


I believe that issue to be the BIGGEST factor in what I saw at that first craft show (as well as subsequent ones).


Some may read this and ask why I didn't take that as feedback and pivot my pricing. Fair question, but I have an immediate answer: I'm worth more than $3.00/hour and if that's all the market is going to support, I'm OUT!


I love to knit and crochet, but I will not subject myself to the devaluation of my skills and time by losing money just to say I have my own business. Since I have a professional career, it's not a business that I needed to pay my bills, but here's what upsets me: there ARE people out there trying to add money to their household budgets via craft shows, and I just don't think that in the knitting and crocheting areas it's a viable option.

Again, let me reiterate that if someone is knitting and/or crocheting and selling their items and enjoying their life, they should keep doing what they love! Still, they should take care not to assume that they're "making money" because there's an exchange of money and goods in a craft show venue because it is very likely that they are actually LOSING money.


For those wanting to test out the craft show market, here's a simple process for seeing how much your COSTS are so that you can begin to price your products fairly.


  1. Make a sample of a finished item (ready to sell)

  2. Gather all the supplies you need and clear your calendar (make time to focus on this exercise)

  3. Set a timer and make another (single) piece, start to finish. Stop the timer when the piece is complete (ready to sell).

  4. Note the TIME it took you ta make the item and divide that into a single hour

    1. EXAMPLE: it took me 18.5 minutes to start from scratch and make one complete lip balm holder which meant that I could anticipate my production average to be ~3 lip balm holders per hour

      1. NOTE: while I could crochet the lip balm holder in about 15 minutes, finishing the piece (weaving ends, securing the loop for the lanyard piece, adding any buttons or charms, etc.) so that it was ready to sell took longer.

    2. I recommend doing several tests across a couple days to make sure you have an accurate assessment of the time it will take

  5. List all the supplies that went into making the item

    1. calculate the price of the piece or supplies that make that 1 item

    2. EXAMPLE: if 10 lanyard hooks cost $1.00 - a single one is 10-cents

  6. Calculate what the SUPPLY cost is for each piece.

  7. Assign a price point and calculate how much you will make - after supply costs are subtracted - for an hour of your work.

  8. Ask yourself - and answer HONESTLY - if your work, expertise, skill ,creativity (etc.) is worth that amount.

  9. Ask yourself if this effort is going to help you achieve your financial goals for this endeavor.



I share my journey on this NOT to discourage anyone from crafting as a business, but to encourage them to VALUE their time, skill, and creativity enough to look HONESTLY at their Return on Investment (ROI).


Today, I still crochet lip balm holders, but I add a lip balm to them and tie them on to gifts/packages as a little "extra", hand them out to the homeless folks that stand along stopped traffic, or donate them to charity events.


We should all do what brings us joy and a sense of satisfaction, but should take care to also respect and honor ourselves along the way. I learned a significant life lesson about that, as well as a few other things, on this crafting journey.


I wish you all the best on your own journeys in fabric and yarn!

 

(C) 2024 Stitch 'n Dish





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