Before you start your cutting business, you should know how to price your handmade items. There is nothing worse than designing an item, cutting it, applying it to an item, packaging it, selling it, and then realizing you made no profit – or worse – you lost money selling an item! There are a lot of articles online to price your handmade items, so this post is going to connect you with those resources.
Generally, a handmade item is priced using a formula similar to this:
Cost of Supplies + Labor + 10-15% Overhead = Total Costs
Total Costs x 2 = Wholesale Price
Wholesale Price x 2 = Retail Price
There are a number of online craft calculators available online, as well as phone apps: Crafting Profit Calculator, Craft Pricing Calculator app, and Craft and Jewelry Pricing Calculator. Need help figuring out how much to pay yourself? Head to this post.
Don’t forget: When figuring out your overhead costs, you’ll need to take into account everything you used to create your item. From the software costs, machine costs, actual supplies used, packaging (box or envelope, packing supplies, tape, the label paper you used), the cost of the scale you used, the amount of electricity used, the space in your home or studio, even a portion of your advertising costs or store fees.
Remember, pricing your crafts using a formula produces a good price estimate for your item. Feel free to add a few dollars to cover hard to quantify costs or forgotten costs. You could also subtract a few dollars to stay competitive.
So far, we’ve covered a lot of general business aspects of setting up your cutting business. We will finally dive into something fun on the next post: naming your business!