How much is your time and project worth?
As craft business owners, finding the perfect price point is one of our biggest challenges. If the price is too high, customers will look elsewhere; if it’s too low, you’ll struggle to make a profit despite steady sales.
Many pricing approaches exist, but most follow a similar pattern. In the first approach:
Labor time (give yourself a base rate) + materials = project cost
Cost x 2 = wholesale price
Wholesale x 2 = retail price
In the second approach:
Materials + labor + expenses + profit = wholesale price
Wholesale x2 = retail price
While these formulas look straightforward on paper, let’s consider a real example from a recent contract I completed:
10 medium pet ID tags with vinyl words sealed in epoxy, 24 stickers with a waterproof layer, and shipping costs. The client was charged $48 for the project, which took roughly 4 hours to complete over three weeks.
Comparing two formulas:
Labor: 4 hours at $10 each = $40
Materials: epoxy for 10 tags, estimated at $1.50 each = $15
Cost = $55 (I’ve already exceeded my contract price before calculating wholesale!)
Wholesale value: $110
Retail value: $220, this is just for the tags!
With the second formula:
Materials: $18 (vinyl, epoxy, and sandpaper) for the tags, $6 for the stickers (paper and layer) = $24
Labor: 4 hours at $10 each = $40
Expenses: none since I had everything at home
Profit: 20% (valued at $12.80)
Wholesale value: $76.80
Retail value: $153.60
These formulas don’t align with my actual pricing. When pricing this contract, I analyzed the components more realistically:
For the tags, I purchased an epoxy bundle for $60 that I used across multiple projects. I estimated each tag pour at around $0.50, totaling $5 for all ten tags. The vinyl text on both sides cost approximately $3. I spent about two hours pouring, adding text, and sealing each tag.
For the stickers: I used three sheets from a 100-page sticker paper bundle (about $2 worth) and added a semi-gloss overlay costing roughly $1.50. Between designing, printing, cutting, and packaging, this component took about an hour and a half, partly because I needed to redesign my file.
Finally, I spent approximately thirty minutes handling packaging and shipping arrangements.
My total material cost was $11.50, with four hours of labor. While I achieved a 220% profit on materials alone, when I factor in my labor at just $3 per hour, the profit margins reduce to 30% for tags and 20% for stickers, significantly lower than the standard formulas suggest.
The ultimate question
This is where any business owner must make an important choice: Do you sell at wholesale or retail price? My two cents: on your website, sell at wholesale, but be mindful of not underselling yourself. There’s no wrong approach when starting, except overpricing. Begin with lower prices initially, and gradually increase to more sustainable rates when your business stabilizes.
Will you participate in shows or sell to more significant contracts and businesses? Go retail. These venues require more work, effort, and organization. Your time, expertise, and reputation should be reflected in your pricing.
Remember that pricing is personal to your business. Consider your unique materials, time investment, skill level, and target market. The right price respects your craft’s value and time while remaining competitive enough to build a loyal customer base. Building a sustainable craft business takes time, so be patient when finding your optimal price points.
Stay tuned to our next blog as we discuss the importance of setting up your store correctly!