It’s the new year, and maybe one of your resolutions is to start a crochet business! Good for you. It’s an exciting journey. One of the first things you’ll have to figure out is how to price your crochet items.
But with the excitement come a host of questions about how to price crochet items. Words like profit margins, hourly wage, and price of materials probably aren’t the first things that popped into your head when you started daydreaming, but it’s a good thing to consider right from the get go.
You want to be sure you’re offering your potential customers a fair price, but you also don’t want to pay yourself minimum wage. I don’t know that anyone has the best way to price their items, but I’ve come up with a great way that allows me to come up with a good price for handmade items.
*Please note, I am not talking about pricing crochet patterns in this post. That’s a different topic all its own.
Let’s break it down and see if you can come up with the perfect selling price for your target market!
Does the Perfect Pricing Formula Exist?
Do you ever find yourself asking how to price crochet items on Etsy or other marketplaces? Everyone wants to be sure they’re charging a fair price, but where do we even start?
When I peruse Etsy, it makes me sad to see people selling themselves short. I see full-sized baby blankets on sale for $40.00 and hats for $12.99 and I cringe. That person does not value her time and talent nearly as much as she should.
It’s easy to think you need to use lower prices to draw potential customers into your shop. You may find it tempting to try to set your prices a little bit lower than your “competition” so you can snatch the sales. DON’T DO IT! There are several problems with underpricing your items.
First, you could potentially hurt other shops who are pricing their items correctly. I’ve been asked why I charge “so much” for certain items when similar things are available in such-and-such shop for so much less. I then have to explain to the potential customer that I have to consider how much time I put into making items and price my work based on that.
Another issue is this: if you’re pricing your items low, you could burn out. You won’t see a huge profit so you’ll lose interest and not find it worth your time to spend hours upon hours creating beautiful items.
How to Price Crochet Items on Etsy
Want to reference this pricing method again?
Calculate all materials and expenses accurately.
First you must pay yourself for the cost of supplies. This should include prices for things like balls of yarn, buttons, and crochet hooks. Also, be sure to properly add up all Etsy and PayPal fees. Are you using a loom? Did you need to purchase Photoshop for editing product photos? You need to calculate those things, as well.
Pay yourself for your time.
Come up with a price that you want to make per hour. This is your labor cost. Time yourself as you make each item. Then pay yourself for each hour you spend.
Your hourly rate times the time it took you to make the item will give you your labor cost.
Decide on a pricing formula.
Etsy has a suggested formula for coming up with a price. You can read all about it here. Their formula is as follows:
materials + labor cost + expenses + profit = wholesale price
wholesale x 2 = retail price
To be honest with you, I love this formula. I think it would be wonderful if it worked for everyone, but I simply don’t think it can. If you take this formula and plug in the numbers for a relatively small crocheted blanket, here’s what the price could potentially be: $203.
I’m not sure that your potential customers or mine would be willing to pay that. So, I had to come up with a formula that worked better for me.
(materials x2) + labor + expenses = total price
Materials – the price of your skeins of yarn and any other items you had to have for your project.
Labor – figure out how much you want to make per hour and multiply that by the number of hours it took to make your item.
Expenses – what fees are involved in this transaction? Make sure you cover those.
Using this formula, the same small, crocheted blanket would be priced around $90.00. That’s quite a difference and will allow far more blankets to be sold in your shop.
Now, if you plan to sell wholesale, you would need to double the above number for retail (I don’t sell wholesale because I simply don’t have time).
This said… blankets of the same size can often be sold for the same amount so it might be a good idea to look for projects that take a shorter amount of time and are easier to make in order to maximize profits. I’d check out this three hour crochet blanket as well as this one.
Very low prices do not mean more sales.
When I first started selling on Etsy, I sold my owl hats for under $20. After I started making some sales, I decided to up my price to $25. I sold the same number of hats. After reading about pricing, I upped my price to $30. I didn’t think I would sell any. I was shocked to see my sales increase tremendously. Yes, you read that right. I made far more owl hat sales at $30.00 than I did at $20.00.
What if my prices are too high?
If you’ve followed the recommended formula and your item is still priced too high, you have two options.
First, you could try to find a less expensive way to make your various items. Are you using a high-end yarn? You might have to grab something cheaper at Hobby Lobby. Are you making a huge throw blanket? Maybe make a smaller version.
Second, you might just have to scrap that idea. If you’re making an intricate pattern with expensive yarn, your target market might not be willing to pay the price that item would cost.
It’s ok to have to scrap idea and come up with new ones.
Be willing to experiment to find a sweet spot.
After you’ve figured out a price that you’re comfortable with, be willing to go up or down a couple of dollars. You might be surprised to see that you’ll sell more items just by changing the price from $30.00 to $29.50. Test the waters and do what works best for you.
Decide if shipping will be included or separate. I’ve decided to keep all my shipping fees separate. These include packaging materials, postage, labels, and the like. I know some people like to include these in their item fees and offer free shipping, but this isn’t the route I’ve decided to take.
I certainly hope these tips helped you figure out how to price your handmade items. Find more Etsy tips here.
Do you have any other tips for learning how to price handmade items? If so, I’d love to hear them! Send me an email or shoot me a message on Instagram.
What items should I crochet to sell?
Some of the most common crochet items you’ll see for sale are baby blankets, baby hats, and smaller items like scarves and head wraps.
When you’re trying to decide what items to sell in your crochet business, you must first make sure you actually like making it. If you hate making baby blankets, don’t sell them. Do you love making boot cuffs? See if there is a market for those.
You should have a small variety of crocheted items for sale in your shop. I believe that having items at different price points will allow you to draw in more than one type of customer.
Should I take custom orders?
Inevitably, your customers will see the crochet items for sale listed in your shop and ask you if you can make it in a different size or in a different color palette. I always found that taking these custom orders was worth it.
Be sure to be upfront with your potential customer about your turn around time and the cost of your custom items. Be sure to under promise and over perform.
Pricing Crochet Items Doesn’t Have to Be Rocket Science
I know it can feel hard to come up with the perfect price for your crochet items. Many of us in the crochet world have been there.
Come up with a formula for your business that works for you and enjoy the journey of selling what you love to make!