pricing

4 Pricing Mistakes Handmade Sellers Make

We show you 4 common mistakes handmade sellers make when pricing their products.

Handmade craft sellers, when first starting out, often make a handful of common mistakes with their pricing. We show you how to identify these mistakes and, most importantly, how to fix them so you can be sure you are making the money you need to grow your business.

The main causes of pricing mistakes are: undervaluing your work, misunderestimating the time it takes you to make your products, and incorrectly calculating your costs of making your items. Let’s take a closer look at these reasons now.

Pricing Mistake 1 - Pricing because it “Feels Right”

The first common mistake is to randomly pick a price based on what “feels right”. This can be a personal decision, or it might be the result of asking friends and family what they think you should charge.

This, of course, does not factor in your material and labor costs so its a really risky strategy - you can very quickly end up in a situation where you are selling your products for less than you made them for.

Learn more about how to properly calculate your handmade labor costs »

Pricing Mistake 2 - What would I pay?

Another common error is to ask yourself what you would pay if you were the customer. This is a similar strategy to Pricing Mistake 1 above, in that it does not account for any base costs to produce your item.

It’s also a really flawed strategy as it assumes that your customers are exactly the same as you in terms of what they find expensive or cheap.

Essentially the phrase to remember here is “You Are Not Your Customer”. You might well be able to afford to purchase your own products, however there are many handmade sellers that cannot possibly justify the expense of purchasing their own products…and this is completely okay!

Pricing Mistake 3 - Competitor Price Match

One other common strategy used by first time sellers is to look at your established competitors and price under what they are selling similar items for.

The issue with this is that you don’t know their internal production processes: how they make their items and what materials they purchase makes a huge difference to profit margins.

At the worst, they could be “loss leading” on the products you are looking at: having a negative profit margin on a couple of products in order to drive traffic to other products in their range. Replicating these prices without also understanding their strategy is a recipe for disaster!

Another reason why this pricing strategy is dangerous is that you are also assuming that you are making the same items exactly the same way: what if they have figured out a way to make your item in half the time with cheaper materials, and this is why they have set this price?

Pricing Mistake 4 - Low prices to get your initial sales

The final flaw is to assume that all small craft businesses make losses in the start in order to “get established” and noticed: it is only later when you are successful that you should start to see any profits.

Unless you have generous and patient investors behind you that are fine to see losses in your first couple of years, making a loss at the start puts you at a significant disadvantage and can be the difference between you being in business in a years time or not.

Your aim is to try and make a profit on your very first sale onwards! Every dollar you make on top of your internal labor and materials is profits you can reinvest into your business to make it even better.

Related: How to use Buyer Psychology to improve your handmade prices »

So, with these tips in mind, take a look at your current pricing and see how you can improve - keep in mind also that pricing is something you evolve and tweak as you learn more about your own operations and what your target customers are like. Experiment, experiment, experiment!

Nicole Pascoe Nicole Pascoe - Profile

Written by Nicole Pascoe

Nicole is the co-founder of Craftybase, an inventory and bookkeeping software product designed specifically for handmade sellers. She has been working with, and writing articles for, Etsy sellers for the last 12 years. Her passion is to help handmade sellers to become more successful with their online endeavors by empowering them with the knowledge they need to take their business to the next level.

Want to learn how to price your handmade products?

Pricing strategy is often one of the hardest parts of running a craft business - once you have made your product, how do you know what to charge for it? Our eBook introduces online craft sellers to the theories around pricing, in an easy to understand way: giving you the knowledge and confidence to begin planning your strategy.

Pricing strategies for handmade sellers including Etsy eBook cover