Recently encountered an artisan vendor who asked me what she should price her goods for. She admitted pretty freely that she usually sells her goods at cost. Yes, you read that correctly. She usually sells her goods at cost, does not factor in labor, does not make a profit. What?!
I quickly created a draft pricing sheet for her, and it looked something like this:
(Cost of Product)x2 = the minimum you need to make
The minimum you need to make + retailer’s cut (30%-50% of retail price) = retail price
I didn’t even calculate for her what her labor is worth exactly, but I’m sure it would have increased the retail price of her product tremendously.
I know it’s difficult to find a sweet spot between a fair retail price and a reasonable profit margin, but THE GOAL IS TO MAKE MONEY. You may love what you do, but your time and materials cost money, and your sales need to recoup that loss or else it’s just not sustainable.
It’s time we flip the Walmart mentality. Don’t set yourself to compete with cheaply mass-produced imported products, because you will lose. Let your customers know your product has real value, tell them about the quality materials you use and the love and care that goes into each product. You’re in a league of your own, so act like it!