One of the biggest challenges faced by artisans starting an arts and crafts business, such as selling handmade cards, is determining the right price point. The price of a card needs to reflect the materials and labor involved while also ensuring that the card is affordable for customers.
Pricing cards too low can undervalue the work of the card maker and result in lost profits, making it difficult to sustain a business. On the other hand, pricing cards too high can lead to fewer sales, wasted time, and lost opportunities.
To determine the right price for your cards, there are three key factors to consider when determining your prices. By taking these factors into account and calculating your prices carefully, you can ensure that your cards are priced fairly and competitively while still allowing you to make a profit and sustain your business.
Factors to Take Into Account When Pricing Handmade Cards
When pricing handmade cards, there are several key elements to consider. These include:
- Materials: This refers to the cost of all the materials used to make the card, such as cardstock, embellishments, envelopes, and any other supplies needed.
- Labor: The cost of labor includes the time it takes to design, cut, assemble, package, and market the card. It’s important to factor in the value of your time and set a price that allows you to make a reasonable profit.
- Overheads: Overheads are the indirect costs associated with running a business, such as rent, utilities, internet fees, phone bills, and other administrative expenses.
- Graphics and illustrations: If you use graphics or illustrations in your card designs, you may need to purchase them from artists or graphics stores, which will add to your costs.
- Software: If you use design software or other programs to manage your business, you may need to pay for a software license, which will also add to your expenses.
- Trade prices and commissions: If you sell your cards through third-party platforms or stores, they may expect a trade price or take a commission on sales, which will impact your profits – plus payment processing fees charged by payment platforms such as PayPal and Stripe.
It’s important to note that there may be other costs specific to your business that should also be factored in when determining the price of your cards. By carefully calculating all of these costs and setting a fair and competitive price, you can ensure that your handmade cards are profitable and sustainable.
Don’t Forget The Profit!
It’s not a hobby! It’s important to factor in a profit when pricing handmade cards because a profitable business is essential to its sustainability. Without a profit, a business cannot grow or invest in new products or marketing. In addition, pricing cards too low may lead to undervaluing your time and materials, and ultimately may make it difficult to keep your business running in the long term. By setting a fair price that covers the cost of materials, labor, overheads, and allows for a reasonable profit, you can ensure that your business remains sustainable and profitable, while also providing high-quality handmade cards to your customers.
Handmade Card Price Formula
As we have seen, getting the price right can be a challenge. However if you truly understand your costs – and your market, it should help you with the pricing. Here’s a simple formula for pricing handmade cards – however remember to ‘sense check’ this balanced with your own knowledge and experience:
Materials cost + Labor cost + Overheads + Graphics and illustrations + Software + Trade prices/commissions = Total cost
Total cost x Markup (e.g. 2 or 3) = Wholesale price
Wholesale price x Markup (e.g. 2 or 3) = Retail price
In this formula, the total cost includes all of the expenses associated with making and selling your cards, such as materials, labor, overheads, graphics and illustrations, software, and any trade prices or commissions. The markup is the amount by which you increase the price to cover your profit margin.
Once you have calculated the wholesale price, which is the price at which you sell your cards to stores or other third-party platforms, you can then determine the retail price by applying another markup. This is the final price that you will charge to customers who purchase your cards directly from you.
Remember, this is just a simple formula, and you may need to adjust it to reflect the specific costs and circumstances of your business. By carefully calculating your costs and setting a fair price that allows for a reasonable profit, you can ensure the sustainability and success of your handmade card business.
Be Like Goldilocks 🙂
Getting the price right is key to the success of any handmade card business. Just like in the story of Goldilocks and the Three Bears, the price of your cards should be “just right.” If the price is too high, customers may not see the value and choose a more affordable option. On the other hand, if the price is too low, it may be difficult to sustain your business, and you may not make a profit.
Finding the right price for your handmade cards involves taking into account all the costs associated with making and selling them, including materials, labor, overheads, and any trade prices or commissions. By factoring in a profit margin, you can ensure that your business is sustainable and that you are compensated fairly for your time and effort.
In conclusion, pricing your handmade cards correctly is crucial to the success of your business. By finding the right price point, you can appeal to customers while also ensuring that your business remains profitable and sustainable. So, just like Goldilocks, take the time to find the price that’s “just right” for your handmade cards, and you’ll be well on your way to building a successful business.