Before we talk about the actual pricing, we need to go over what your plan or goal is. Do you want to sell products for a higher price? Do you want to move larger quantities of your products? Maybe you want to do a little of both or maybe something in-between. Knowing what approach you want to take is a primary step to pricing your product. Think of it in another way. So if you want to sell products for higher prices, then you should be commissioning pieces and also selling online or at events. If you want to push lots of products, then sell at wholesale prices to shops locally and call shops out of state too. Deciding what path to take will drastically effect your pricing and approach.
So where do we start when it comes to pricing? Well lets think of how much you want to be paid. This is an opinionated subject that depends on you and what you want. Remember you don't want to do this and make less then what you would working at a decent call center. Now this is my suggested way to do this. Start by thinking of your highest paying job and double or even triple how much you were being paid hourly. If you were paid $12 an hour, raise yours to $24, and that is a pretty nice starting point. Real quick, if you have a pipe that takes 10 minutes to make then you would divide $24 by 60 to equal 40 cents a minute meaning that 10 minutes would be $4 (you will need to update the $24 in the coming steps and divide it by 60 again to get your price per minute). You can raise it once your work is better and you see a higher demand. It is ok to raise your prices! Your learning and improving constantly!
The next step will involve pricing out your materials used to make your products. This will apply to you no matter your medium because we all require materials to turn nothing into something. So this is always tricky. Depending on your materials, it might be sold by the pound, and that is usually easier to start with. Mostly because you can weigh the weight of the product you made and price it based off of that. But if you have to batch up clay or make your material, then you need to time how long that takes and incorporate that time into the material.
Lets say you have 10 pounds of material and it costs $1 a pound, plus it takes 30 minutes ($24/hr) to mix... That would mean that you should price it at $10 plus $12 for the thirty minutes. That would equal $2 per pound, but again, how do you make money if your just incorporating the price it costs to make it? Double that too. So it would be $4 per pound and with that you can buy 2lbs for the price you charged for 1lb.
We have the two main things down but unfortunately that only means so much. At the start of the day, you need tools and what not to make your products. You need to use electricity for various things. Maybe a piece of equipment is needed in the future. Let me be honest, starting out, you will be spending more then you make so that you can have the necessities to succeed with your work. This is where we need to add profit, and more importantly overhead expenses to cover what we can't always predict.
Overhead is always a weird thing to have to guess on what you should be charging. Over time you will know what your expenses are for your website, utilities, rent, and all of those recurring bills. Then you might have a better estimate for what your overhead cost should be to keep things running. Ideally you would estimate what all of your bills are for the year and divide it by the hours you work through the year. So if all of our bills came out to be $200 a month times 12 months would equal $2,400. Assuming you have a part time job to compensate your lack of pay, you would be working your art the other half so we will say you work 1,000 hours a year. Now lets divide the $2,400 by the 1,000 hours and that equals 2.4 dollars added to your hourly rate. Meaning we are now at $26.40 an hour. This is also assuming you work that many hours and regularly sell your products, otherwise you need to do it based off of the number of pieces you sell a year instead of hourly (it will be a guess). Now I am no expert and there are different ways of doing this so you can always try to learn more but this is a simple run down for you.
For profit it is all up to you. This is as it sounds, extra money that is supposed to be your profit for the business. Now when it all comes out, will you actually take away that profit? Probably not, yet it is good practice, but you'll need that money to grow. A good starting point is to add 20% either to your hourly if you work and sell products regularly or the common thing to do is to add it to the final price of the product. So if we are at $26.40 then we will multiply that by .20 and it will equal $5.28. So that equals $31.64 an hour. I personally like doing it that way because if you have a bunch of products your always doing math on and having different prices per piece making it complicated for customers too.
So you got the price down but is that all there is to it? Unfortunately we need to circle back to the plan/goal of basically who you want to sell to. Lets start with selling to shops. This is where you will be getting into selling at wholesale prices. The way to explain this is after you have your hourly (including overhead and profit) and material cost worked into your product you have the price you should be charging wholesale (as you grow keep in mind distributors who get a 25% discount, they buy larger quantities and sell to the shops). I like to round up so it is not some weird penny amount they have to pay as well.
From that wholesale price we can get to our retail price. That is simply 2 or 3 times what the wholesale price is. After you do the math including overhead and profit, lets say your pipe came to be $10. You'll just do 10 times 2 to equal $20. I have noticed that many shops online as well as brick and mortar charge 3 times what the wholesale price is. So make the decision of what you'd like to try and adjust based off of your customers / experience.
That is the general information to get you started on your pricing. As you will learn with wholesale, shops might tell you the price they will pay and honestly it is worth getting into that shop at that price starting out. From there you might actually adjust your prices to work with that. It is a hard game to play. Same with online, you might be charging to much at first and nobody wants to buy until you drop it to something more reasonable for them to try until you have made a name for yourself. At the end of it all, there is no wrong or right way to do this. It really comes down to your end game of if you want this art business to grow beyond just you or if a moderate pay is good because you just want a lifestyle business to last till you retire. The last thing I will say is that it is much easier to get a good education and job then to start from scratch to work towards being the one who provides jobs. It takes tons of hard work, patience, and motivation to not give up. Stay strong and keep dreaming on.