Calculate my cost of goods. How much did I pay for the yarn, buttons, and other material that went into the piece? My price should be at least 2x the cost of goods. Ideally, it is 3x or 4x.
Track my time. News flash: knitting rarely pays as well as minimum wage. Even so, I do like to understand how much per hour I would be making if I were to keep the profits, and I make sure I am comfortable with this number.
Identify my fundraising goal. Will I be able to reach this goal by charging a certain price for my items? Will I be able to knit enough items to hit this goal?
Search for similar items on Etsy. What are they priced at? How many items has the vendor sold previously? (Knowing this helps me evaluate if the vendor has priced his or her things appropriately in the past.)
Research what similar items are priced at in retail stores. I sometimes use this pricing to justify my price, whether it is lower, higher, or comparable. Let me explain:
- If acrylic cowls are priced at $30 at the Gap, and my cowls are made from a merino/cashmere blend, I can (and should) price mine higher. During the boutique, I explain the quality of my material and justify a higher cost with something along the lines of, “Sure, you can buy a cowl for less at a chain store, but you won’t get the warmth and softness of these natural fibers.”
- If a comparable wrap is priced at $150 in a high end shop, I can price mine less and emphasize the bargain I am offering. “The boutique on High Street has something similar for $150, and I am selling it for half that price.”
- If hand knit merino wool wrist warmers are $35 at Uncommon Goods, I may decide to charge the same price for my merino wool wrist warmers.
Estimate what buyers will be willing to pay. Ask friends! I show samples to friends and get feedback on various price points. Would they buy it at $75? What about at $50?
Develop my sales strategy. Typically, I have a couple of boutiques lined up, and I evaluate my sales after each one and adjust my pricing. If the cowls aren’t selling at $45, lower the price to $40 at the next boutique (as is shown in the photo). However, if I have just one opportunity to sell my goods, I will consider lower prices so that I can sell as much as possible.
Be willing to negotiate. If someone asks if there is a discount if they buy 3 of something, say yes!
I look forward to hearing your thoughts on how to best price hand-made goods. Please comment!