Steps on How to Price Your Crochet
Day 4- Pricing Your Crochet
Pricing is not easy thing to do. In fact, deciding how much to charge for your crochet whether it's a pattern or a finish product, it is the most difficult task you face as an artisan or a business person. Just pricing your ow work is difficult in itself. That aside, you need to take into consideration several cost and value factors. To figure out the best price to charge for your crochet, you'll need to get your calculator out and do some number crunching, as well as spend some time researching your crochet market. in essence, your pricing goals are to cover your expenses, determine the market value of your crochet, and make a healthy profit from each finished crochet or pattern sold. The price you determine for each of your product must be fair to both you and other customers.
Covering Your Cost
The first step in pricing your crochet product is to determine how much it cost you to produce and sell each product. Cost arising from making and selling your product fall into 3 expense categories:
- The cost of goods- is the expense incurred in the making and packaging of each product.
- labor- labor is the price of your time and effort expended in the making and selling of each product.
- overhead- is the fixed expenses that keep you in business.
Determining the Cost of Goods
make a list of all your crochet materials needed and breakdown the total cost you paid for each materials. Direct production cost involving reusable nut eventually consumable materials like the cost of hook, stitch marker etc., can be estimated by dividing the price of the material by the number of crochet item produced during its usable life.Even though the amount of this may seem minuscule, it is important to include their cost because it can add up!
Overhead cost is the catchall category for all the other expenses not related to the cost of goods. Not recognizing these indirect cost is where many business owners lose money. Overlooking several small cost quickly adds up and results in poor profits. To figure your actual overhead cost, calculate the total of all your overhead cost ( including phone, Internet and others that are easily overlooked) per month and dived by the total number of candles made during the month. Add that number to the cost goods for each product. do not include start-up cost if you are just starting, because this will inflate your monthly over-head cost. Instead, spread your start-up cost over a 12-month period and include that monthly figure in your overhead to accommodate for these expenses over a longer period of time.
To estimate your labor cost, track the number of crochet you can make in a week and how many hours you spend weekly on crocheting related activities. These activities should not only include the time spent making the crochet product/pattern, but also time spent working on other task such as preparing marketing materials, purchasing supplies or selling candles. As a beginner, pay yourself a higher rate. A good rule of thumb is to consider how much it would cost you to hire someone to do your work for you. Some crochet items is more complex and take a considerable amount of time to make. As your crocheting skills develop, however, you will become more efficient and spend less amount of time in the shop.