“Oh my, that’s expensive. Can you lower the price?”
“Goodness, you charge so much for this. Can’t you sell it for less?”
I and countless other local artisans and small businesses hear this almost every day. Our prices are not as unreasonable as some people think if they’d stop and look at the reality of it.
I recently saw a meme about if someone buys a gift for some else that costs X amount of money how it should be seen in terms of how many hours they worked to afford to buy that item. So, a $30 gift costs a person who makes $12.50 per hour roughly 2.4 hours of work. It wasn’t meant as malicious, but rather to help people understand that the cost of a gift is more than a price tag.
As a fibre artist, writer/copy editor/baker, it got me to thinking about how people always want to have artisans charge less for an item than the marked price. I recall people griping about prices for my handmade items when I worked craft fairs, including someone claiming she could go to a major discount retailer and get the same item for less. (Good luck with that).
Here’s the thing when it comes to how items are priced by local artisans or even local businesses, it usually costs you less than it should be priced. Most artisans, myself included, do not over-inflate our prices. We have to build in our cost for supplies and, most of us, then add in a cost per hour to make it. That cost per hour is far less than minimum wage. Add to this that we have to collect sales tax for some items as well as pay taxes on what we earn.
Here’s an example. Let’s say you ask for a shawl made in a pricey yarn such as Noro. If I can make it with only one skein, the skein itself costs me $50, plus tax. Here, that’s about $54. It takes me about 15 hours to make that shawl if I’m crocheting it because I hate mistakes and take care in making that shawl. My price to you is about $60.
I’m making about $6. But that’s before I deduct the 8% tax I have to pay the state. Now, that $6 profit is now $1.20. That’d be about $.08 per hour as a wage.
Would you work for $.08 per hour?
Note that I’m not charging you for my time to make it. If I did, and charged the going rate of $12.50 per hour, then I’d be charging you $241.50 for that shawl. In that case, I’d make $168.18 after paying taxes and for the materials. That also makes my hourly rate around $11.21 per hour, less than minimum wage where I live.
Would you work for $11.21 per hour?
I have a craft pricing app and have tried to use it to determine a fair price. I rarely use it because it would also raise my price. Using the same scenario, it says I should charge $243.91 retail for this same shawl. The wholesale cost would be $241.50. So, minus the tax, that’s $224.40. Subtract the $54 for materials, that’s 170.40. My $12.50 per hour is now $11.36 per hour. About the same as my outcome not using the app.
Would you work for $11.36 per hour?
But, you may say, that I’m just sitting around crocheting, so I should reduce my hourly rate. Okay, let’s say I reduce it to $5 per hour. That then lowers the wholesale cost to $129. The retail, at a 1% profit by the way, then goes to $130.29. Which makes my profit $65.87, after I pay out taxes and materials. My hourly rate has now dropped to $4.39 per hour.
Would you work for $4.39 per hour?
Another way of pricing is to take the amount of materials and multiply it by 2, then that becomes the price. In this scenario, the shawl then costs $108. The artist then makes $45.36, minus taxes and materials. The hourly wage is then $3.02 per hour.
Would you work for $3.02 per hour?
Again, I understand everyone wants to get a good deal. Yet, things cost what they do because of a number of factors, particularly the cost of materials and the time it takes to create something from those materials. Plus, is your lower priced item really a good deal? How long might it last? Are the materials of a good quality?
Local artisans and business owners are not trying to make enormous profits. They certainly don’t make profits like big corporations or big box stores make. Most of us are simply trying to pay our bills and maybe have something for a rainy day.
You don’t tell your mechanic or physician what they should charge you. You don’t try to haggle a better price from Amazon or a big box store when you purchase from them. (And even if you do, then they’d likely tell you off).
So, why are you saying something costs too much to buy from someone who takes the time and care to make something for you by hand? And, please ask yourself if what you’re spending in the big box retail or online store contributes to your local economy. Also, ask yourself if the quality of what you are buying matches what you expect. Last, using the scenario of the time the item cost you at work, is the item truly worth the time it took you to earn the money to buy it? Chances are, if it’s mass produced, it probably isn’t.
Just food for thought.
Shop local and at small business/artisans near you and online.