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Virginia Lindsay is the owner and designer of Gingercake Patterns. Her book Sewing to Sell just released this November. Sewing to Sell not only guides you through the basics of starting a handmade business, also includes 16 copyright-free patterns that you can make and sell to get your business started!

Virginia discusses The Balancing Act of Putting a Price on Handmade, something we’ve all talked about quite a bit at Sew Mama Sew. (See: Do What You Love And the Money Will Follow, Placing a Value on Your Quilts + our Craft Fair Series.)

We appreciate Virginia’s honest, direct, supportive and informative approach to guiding readers through the process of sewing to sell. Her book is a great resource for anyone ready to take the plunge into sewing for profit!

You can comment for a chance to win Sewing to Sell! Just share your thoughts below and you’re entered to win.

So, you have finally gotten your courage up to sell some of those handmade treasures you have been gifting out to all your family and friends for years. Congratulations! But now you have to figure out what to charge for your time, talent and the actual materials you put into your piece. Although it is really hard to put a price on handmade, you can put your best effort forward to make good decisions by using some simple strategies.

When you take cost of goods down to the very essence, it is actually very simple. You want to be paid fairly for your time and effort and your customer wants to pay a fair cost. It is simple trade, right? Your handmade item traded for their cold hard cash! Keeping both parties in mind, pricing becomes a lot simpler.

It’s really important to value your time and effort when you are running a handmade business. If you are selling yourself short, you will quickly see your enthusiasm begin to fade away as you work like crazy and see little change in your financial situation. So first, get yourself organized and figure out the cost of materials in the items you are selling. Instead of just ripping into fabric, pay attention to how much you are using when you make that tote bag or peasant blouse.

After your materials cost are worked out (and they are usually more than you think!), it is time to determine how much time it took you to make the tote bag. Even if you are buying $10 a yard designer fabric your labor costs, not your materials, are what truly bring the cost of things up. From cutting the fabric to giving the finished piece that final press, can you determine how much time you spent making it? One hour? Two hours? Then you must decide how much you want to be paid. $15? $20?

Of course, as a seller of handmade sewn things, you almost never just make one thing at a time, but let’s use a single unit to come up with an easy equation. You spent $12 on materials (including fabric, interfacing, thread, zipper) and it took you two hours to make the tote bag. With this equation, at $20 an hour, you should be able to charge $52 for your tote bag, right? Well, maybe. Now for the hard part; although the bag may be worth $52 to you, you need to realize that customers might not be willing to pay that much. You are going to need to do some research and make some tough choices about selling this tote bag. What are other similar bags selling for online or at craft shows? If you see many of them listed around your price range and selling at that price, great! But if you are much higher, you will have to make some changes. You are either going to lower your own cost per hour or figure out how to make this bag a lot faster and simpler!

Here is a reality check that you might not want to hear… You are certainly worth $20 an hour but making and selling your handmade items are not as simple as being paid by the hour. You are an entrepreneur now! You are no longer just an hourly employee. You are now fully engaged in running your own business and your labor comes as part of a salary package deal.

Let’s talk about the other half of the pricing equation: Your customer. First, this person is special and wonderful because they are specifically shopping for something that is handmade. Either on Etsy (or Goodsmiths, etc.), or at a craft show, they know they are not going to find the same prices they will see at the big chain stores. They want to buy (or trade with their money!) something handmade and unique. They want a little bit of YOU and they are willing and expecting to pay a little more. But, they want to feel like its a good exchange and even if they love your tote bag, $52 might be just too much to ask. It’s important for them to feel that they are getting value from your product.

I have heard the saying before that a good trade is when both parties feel satisfied. The buyer did not get a super great deal and seller sold at a fair price. Selling handmade is not for people who want to work little and get paid a lot. It is for people who want to feel satisfied and accomplished with their work. That means being compensated properly.

My good friend Amy has taken her handmade business to the next level. She created Mindfully Made Studios back in 2011 by sewing bags and cuffs with spiritual quotes printed on special fabric sewn onto the fabric. Her blessing bands and patchwork cuffs have become her best selling items and she now sells them wholesale to over 40 stores across the country and has just finished a huge order for the uncommon goods catalog. Amy does all this sewing by hand with the help of two part-time employees. When I asked her about her pricing strategy, she told me this, “One thing so many sellers can forget is that you don’t just spend your time sewing to run a handmade business. It’s important to incorporate all the time you spend on the computer doing marketing and returning emails into the cost of your product. If you are selling at craft show, think about how much you spent on the entry fee and how much time you spend sitting there and selling your goods. Think about the money you spent printing out business cards and promotional signage. All these things need to be incorporating into your asking price. If you are making something and can’t figure out how to get the asking price you need for it to keep your business running, consider a different strategy to find that perfect handmade thing that will not only give your customer a beautiful handmade piece but will also bring you the compensation you need.”

Finding the right price for your handmade items is a journey that will have successes and failures. But working to find the balance between compensating yourself properly and respecting your customer’s sense of value is crucial to making your own handmade business a success!