Pricing for Profit: Make it a Family Tradition

This is a post by Rachel Gregg, Content Marketing Lead, CreativeLive

Editor’s Note: In this post, Rachel Gregg of CreativeLive, reflects on the economic impact crafting can have on a maker’s well-being and how to price your handmade goods so you and your family profit from your work.

One of my favorite childhood memories is of my aunts, my mom, my cousins, and myself gathering around my aunts (very) long table to craft.

Our family is a sizable one – my mom is the youngest of 13 – and big family gatherings like Christmas and summer reunion required a considerable sum of cash to host.

Rather than collecting cash contributions, my entrepreneurial aunts came up with a money-making scheme that involved hot glue, woven hats, and a considerable amount of lace.

Our flagship product was a dress-up kit and it was these kits that we’d assemble around my Aunt Marilyn’s table. Another aunt made her living selling handmade goods under the moniker, Small Thyme, and as a favor to the family she’d manage the dress-up kit sales and hand over the cash.

When I was little, I didn’t think much about why we were embellishing the hats or why we needed the money. All I cared about was the sheer joy I felt sitting at the table surrounded by the chatter of my aunts, the laughter of my cousins, and the promising smell of plastic glue sticks warming in the gun.

My family has long since moved on from selling dress-up kits (we now sell to each other at a handmade auction featuring the talents of our extensive brood) but the motivation behind our work remains: it takes cash to care for a clan.

The meaning and the memories of crafting might obscure the math, but making and selling (and not selling) handmade goods makes a difference to your pocketbook and, very likely, your family’s kitty.

The proliferation of online marketplaces like Etsy and Amazon Handmade, has put the economic opportunity of making in the public spotlight, but there are still so many of us who struggle with the economics of it all.

When crafting is something we simply love to do or when our only relationship to it is one of selfless generosity, it can be really easy to ignore that pile of materials receipts, or to offer our work only as a gift, or apologize for the cost when we do finally ask people to pay.

But the reality is that materials cost, our skills take an investment of time to develop, and our projects take precious hours to complete. While we might really like the people we are selling to – makers have a real opportunity to improve their lot in life (and by extension their family’s) if the do what my aunts did way back in the early 1990s and seize the opportunity to sell their work for a profit.

Selling work for a profit means you keep track of your costs, make note of your time, and take into consideration all of those peripheral expenses (that craft magazine your subscribe to, your sewing machine maintenance, domain renewal, etc).

When Megan Auman taught her game-changing bootcamp, How to Make a Living Selling What You Make on CreativeLive, she shared a formula crafters can use to calculate cost:

materials + labor + overhead + profit = wholesale price

wholesale price x (at least) 2 = retail price

The formula takes the guesswork out of pricing. It also takes the emotions out of it. Your final dollar amount doesn’t hinge on how you “feel” about the product or how much you like the buyer – the price assures you make a fair wage, that you cover your cost, and the you’ll be able to contribute to you and your family’s well-being with ease.

If you want to learn more about embracing the business of crafting and how to price your handmade products, check out the incredible collection of classes on CreativeLive.

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Thanks to Rachel for sharing these tips with us!