let's get started with todays question!:
The question of today is:
How to come up with prices for my artworks, services, handcrafted goods..?
If you’re an artist, designer, stylist, creator,... and have a question about how to start and grow your creative BIZ, send me your question and I would love to answer it!
This is a question that we need to ask ourselves over and over again. There is no perfect formula you could use to come up with prices. Everybody handles a different way to come up with them. However, there are a couple of things you should do before deciding on a price tag!
So let's get started!
You need to know how much money you will need every month to make a living. Write down all your private expenses. Don't forget anything! Take a look at your daily expanses, monthly and yearly commitments. Think about daycare, health insurance and other insurances. Don't forget a buffer you need in case something breaks and you need to buy it quickly.
You need to know how much money you need to run your business. Same thing here don't forget something. Even the little things add up!
How much time do you spend on marketing, shipping, and all those other things you need to do to keep the ship running?
What taxes do you need to pay? How high is the percentage of taxes you will need to pay on your income?
How much money do you spend on the material for the specific product you’re selling? (I call it a product, but you can also read it as artwork, service, craft-project,...)
How much do you need to spend on this specific product to get it packaged safely and shipped to its destination?
How much time do you work on this specific product or service?
Do you need to pay taxes for this specific product?
After you’ve created this list, you also need to know how many hours per month you are working.
Now you need to break those costs down into general costs, that you would have anyways with or without this specific product and cost you would only have for this specific product.
Now the fun part begins ;) playing with numbers.
First we want to see what you will need to make each hour that you’re working in order to cover your personal costs, your business expenses and your taxes.
The general expenses each month / hours you will work each month = how much you will need to make per hour
Now you know the amount of money that you will have to make per hour! And you know how much money you need to create that specific product, plus the time you need to create it.
But this is not the final foundation for coming up with prices! It's actually not that straight forward!
There are more things to consider for determining your prices.
Who is your ideal client? What do they want?
Is your product, service or artwork handmade? Never compare prices of handmade pieces with those which are not.
What is the price of a competitive product?
Do you want to sell your items wholesale? I'm unexperienced with this pricing model, but if you’re considering it make sure to find out how others do it! Only thing I know for sure is don't set your price for normal customers too low, wholesale buyers expect to pay half or less for your products.
How many other pieces will you be able to create when you’re creating this piece? This will give you a clue how much money you will need to make from this piece in order to get the monthly amount you need to take care of yourself and your business.
So there you have it! This is the foundation on which I come up with my prices.
This sounds like a ton of work to do for every piece that your selling, but you won't need to come up with your general expenses every time. You will know those numbers. However, check them regularly to make sure your life style and business changes are still reflected in it.
You will also get a feeling for it. You’ll learn what worked for you and what didn't!
I hope this answer is giving you some new ideas! It might sound overwhelming to commit to prices, but always keep in mind you’re the one setting them, you can also change them as you go!
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