Pricing

Many people get started working with cord because it's a fun diversion, and end up with a lot of stuff cluttering the house. Others are looking for a business opportunity from the very beginning. Determining how much to charge for your products is sometimes confusing. Remember to not undervalue your own craft. You spent the time and effort to learn how to make these items; you deserve the credit (monetary and other).

Costs

There are fixed and variable costs associated with any business. Fixed costs include any dedicated space or facility, utilities, or any other cost that you pay out of your pocket every day or month, whether you are selling anything or not. For most of us, we can ignore this, because we do this small business out of our home. If you do have a dedicated space or phone line, remember to consider those costs to not lose money. You may start selling at shows; if you buy a table or canopy, figure out how long you want to take to pay those off, and amortize the costs into your profit margin.

Variable costs are the big ones we all see. These are materials, supplies, and labor. Most cord crafters are single-person operations, so you may be tempted to ignore the cost of labor, but your time should be valuable to you. Supplies are things which you use for the craft but are not part of the finished product. These can include lighters, winders, rubber bands, any packaging you use, postage, etc. The simplest cost to figure out is material cost - you should have a pretty good idea of how much cord you use in an item, and how much that cord cost you.

Let's say you sell only bracelets. You don't do shows, so you have no table or canopy of exhibit fees to worry about. You buy cord in spools, and they cost $50 per 1000, including shipping (don't forget all the costs!). You use plastic buckles, and they cost you 25 cents each in bulk, including shipping. Each bracelet uses ten feet of cord, and takes you six minutes to make. You think a good wage is $10 per hour. So, this bracelet costs 75 cents in materials and 1 dollar in labor. You don't package the bracelet, and only sell locally. Your total cost is $1.75.

Profit Margin

There are a lot of variables to consider when setting the final price. Most people want to make a reasonable profit, and still have room to offer discounts for large orders or loyal customers. A common rule of thumb is to have a wholesale price of double your costs, and a retail price that includes a healthy profit margin above that. Using our above example, the wholesale price is $3.50, so $5.00 or more for a retail price will give you plenty of wiggle room to have bulk discounts, short sales, or other promotions, and never drop below $3.50, so you will always make some money.

Another issue to consider is perceived value. You are making a hand-made product. You are part of a local economy, and you are a local artisan or craftsperson. These should make your product worth more to a customer than a mass-produced item at the local sporting good store, made in a far-off country. Also, you can provide a custom product that will fit your customers better than anything they can find at Wal-Mart. Furthermore, there are other artisans in the world whose work will be undervalued if you undervalue your own work.

Finally, there is the concept of "what the market will bear" to consider. There are some things which take a lot of time and effort to produce. If you price them in the same ratio as your simpler items, you may be surprise to find that you are asking someone to pay 75 dollars for a leash. In some cases, you may decide to not offer a product you know how to make, simply because nobody would be willing to pay what it is worth. Other times, you may decide to be flexible on what your labor costs are. As an example, the Conquistador braid is a tedious thing to make; with practice it may take an hour to make a bracelet which contains 12 feet of cord. So, the costs are $10 in labor and 85 cents in materials. Let's say $11, doubled to $22 for wholesale, and a retail cost of around $30. It's extremely unlikely anyone would see that much extra value in the conquistador over a solomon bar for $5 sitting right next to it. But, if your labor costs were $5 per hour instead of $10, you end up with a $12 wholesale cost or around $14 or $15 retail. That is easier for a customer to swallow, and you still make some money. If you're not willing to sell your labor that low, it's not a product for you.

Final Words

There are many different approaches to pricing hand-made goods. This method is one common process, but others will use another approach. Another common system is to ignore labor costs, set a "cost" of double your materials, double that again for wholesale, and then set your retail above that. This would lead to our first bracelet above being $1.50 in cost, $3.00 wholesale, and probably still around $5 retail. Different paths, similar result. Of course, you still have to at least consider if something is worth your time. The conquistador example would end up, using this method, with a $3.40 wholesale price - you may want to adjust that upwards. Your own opinion on that will guide your final pricing.