Learning how to price products for your Etsy store front can be challenging. Pricing your products is a very important part of starting a successful Etsy business. If you under price you will not make a profit, and if you over price you may not sell anything. It is a real balancing act to come up with the right price point and can take some trial and error.
In general prices should:
* Follow Etsy’s Terms of Service – It’s important, no matter what service you use to sell your items, that you read their terms of service and all updates. You do not want to accidentally break rules when pricing your item such as adding shipping costs to the cost of the item.
* Reflect on the Value of the Item Being Sold – Value can be both inherent in the product but also an intangible in terms of how rare or sought after it is. The market will determine what it can bear and the only way to determine this is to slowly raise prices to find out when the customer stops buying and then put it back down to the sweet spot.
* Take into Consideration the Costs of Goods – If you price your product lower than it cost you to make it, you’re wasting your time. You want to price your product at more than it cost you to make it so that you can make a profit. Keep track of every aspect of the costs of materials for your product.
* Factor in the Cost of Running Your Business – Aside from the actual materials that you will use to create the product, you must also factor in other costs of running your business such as telephones, air conditioning or heat, water, and so forth.
* Leave Room for Potential Wholesale Orders – If you price your product too low, you won’t be able to take advantage of wholesale offers if and when they come. If you’re not interested in doing wholesale, this is okay; you don’t have to. But normally people who buy wholesale are expecting at least 50 percent off retail.
* Relate to What Your Customers Will Pay – If you know your customers well, you’ll also know exactly how much they can and will pay for your items. You’ll also know what items to create for them because you’ll know in advance what they want.
* Position Your Product with Your Competition – Do you want to be known for a well-made product and great customer care, or do you want to be known as the cheapest? Price can determine how people look at you when comparing you to your competition. It can make them feel a certain way about you that you may not expect.
* Consider the Value of Your Time – One of the missing components in some pricing strategies is the money value of your time. How much is your time worth? The way to figure out how much your time is worth is to consider how much you want to earn and how many hours a week you can work. Then you can come up with an hourly figure that you can then add to the cost and price of your items.
Pricing can come down to an art and experimentation. Start with a price based on costs and time, and then find out how your customers and audience react. If you get a lot of orders, slowly raise your prices until you reach a happy medium – enough orders to make your business profitable at a price you feel good about.