Cost and Price Issues

Cost and Price Issues
You need to accurately figure out what your items cost :

>> Total up your cost of materials, labor, etc.
>>>>Then add a profit… or just price your items at market pricing ! 




You don’t want to price too high and never attract any buyers at all, and you don’t want to price too low and leave money on the table !

There are way too many pricing theories in the world… so let’s narrow them down to 4 basic price strategies that make sense in the Etsy world:


1.  Market Pricing

Setting a price based upon analysis and research compiled from the targeted market :

What is the market willing to accommodate ?   Based on your exploration of a particular market segment, how much is your “targeted” market willing to pay ?  If you are targeting teenage kids with T-Shirts, then you will have to realize that they cannot pay as much as adults can for the same shirts.  If you are trying to attract wealthier mothers with babies, then you may wish to charge higher pricing since they can afford any may prefer to pay higher dollar for their baby stuff.

2.  Competitive Pricing

Setting the price based upon prices of the similar competitor products:

What are your competitors pricing their items at ?  Do a thorough search on Etsy and find as many competitors as you can.   Make a list of at least 5 that are really close to your product.  Then price your product in the same range as them.   If you choose, you can price a few dollars below them to try to capture bargain hunters.

3.  Cost Plus Pricing

Find the cost of producing the product and add on a profit to that cost to get the selling price.

Calculate how much your item actually cost you to make, and then add a profit that will make you happy.   Add up the cost of materials and labor, and then add a profit to make you happy.   (See more below on this topic)

4.  Premium Pricing

Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price.

People who pay a high price for items usually believe that they are buying higher quality goods for those higher prices.  A person who pays $80,000 for a Mercedes believes he is getting a higher quality than for a $40,000 Honda, even if the quality is really the same.   You can price your items  ABOVE your competitors if  you feel that your items are indeed of a higher quality than the competitors…or just do it anyway and see if the buyers come to you.   A person who sees a $25 painting may think its “too cheap” and low quality — he already has a higher acceptable price in his mind…but if he sees the same exact painting for $150 he may feel that he is getting higher quality.


More detail on “Cost Plus Pricing”:    (From

Steps to determine Cost Plus Pricing :

a.  Figure the Cost of Materials:
The cost of materials is broken down by how much a thing costs, and how much you can create from that thing. If you purchase a ball of crochet thread for $5 and create 30 boxes from it, your cost of materials is .17 per box (5.00 divided by 30). This needs to be done for every material (not tool) you use.

b.   Figure the Cost of Labor:
How much are you worth per hour? Decide that, and then multiply or divide your hourly wage by how long it took you to make a single product. If your thread box took 1.5 hours and your hourly wage is $10, the cost of labor would be 15.00 ($10 X 1.5).

c.  Figure Your Fees:
Average out the fees you pay.   Include Paypal fees and Etsy listing fees, but don’t include shipping and handling unless you’re going to promote your product as having “free shipping”.

d.   Figure Actual Cost:
Using the numbers you’ve created, add the cost of materials and the cost of labor to figure what your actual cost per product is.

e. Figure Retail Price:
Retail price is created by multiplying your actual cost times two.

f. Figure Etsy Price:
The fair Etsy price of your product is figured by adding the retail price and your fees.


Leave a comment

Add your comment below, or trackback from your own site. You can also subscribe to these comments via RSS.

Your email is never shared. Required fields are marked *