Pricing handmade products is always difficult for all sorts of practical and psychological reasons, and 2023 presents its particular challenges.
Last week I was repurchasing some of the staple supplies that my business relies on – printer paper, packaging materials, etc – and it occurred to me just how much the prices of these items have risen in the last two or three years.
I knocked up a quick graph for myself in order to really see what has been going on.
Note that I shop around exhaustively to find the best prices for the items I need at any given moment in time.
I realised that I need to face up to the fact that during the same period I have not reviewed the pricing on my handmade products to reflect my increased costs.
My best-selling robin kit, for example, which contains all the above materials, has been the same price since before the pandemic: £13.99 on Etsy and £12.99 on my website. My digital crochet patterns have not changed in price for much longer.
It’s not just the absolute rise in the cost of items, but the percentage rise. The printer paper I use has over doubled in price in three years, an increase of 125%. The boxes I use for my kits have gone up by 24%. If I were to raise the price of my robin kit by £1 on Etsy, that would only be a 7% increase for the customer. And I would only see 73p of that £1, due to the scale of fees on Etsy.
Aside from the tangibles – like a sheet of printer paper rising from 0.8p to 1.8p – there are also increases in my intangible overheads like, of course, our electricity bill, postage and Etsy’s fees. Etsy is raising its fees again in July – that will amount to me receiving just a couple of pence less on each sale of one of my products, but it all chips away at my profitability.
The prices rises, each time, are usually small. It’s easy to swallow them up and not realise the overall impact until you step back and do an analysis like this. I’ve just done my annual accounts and Tax Return too and realised that, taken over the year, my profitability is definitely down due to the relative increase in my Cost of Sales.
I can easily accept that my sales will be down this year compared to last. After all, my items are not essential items for people in the difficult times we are living in. I’m also accepting that my profits and therefore “take home pay” will be lower like everyone else’s at the moment. I just need to make sure I’m still running a viable and profitable business.
Suffice it to say, this is something I will be looking at seriously in the next few weeks. I will probably have to make a 3-5% price increase across my range. These changes will take me a while to calculate and implement though, so if you are thinking about buying any of my kits, right now would be a good time to do it!
How else you can help small businesses
There are many ways you can help small businesses like mine without spending a penny.
Share something from my blog or shop on your favourite social media, it helps keep my business alive in people’s feeds.
- On Instagram, find my posts using the hashtag #LittleConkers or at @LittleConkersUK
- Visit my Facebook Page and like/love/comment on a post.
- Quote-retweet one of my tweets @LittleConkers.
- Visit my Pinterest page and repin one of my pins to one of your own boards.
Be assured though that small businesses like mine value each and every sale, no matter how small. Those small purchases are just as important to us as the big ones. Read more about this on the Just A Card campaign website.
On discounts and sales
I don’t offer sales on my products (despite how very much Etsy pushes us to do this). This is because my products are priced fairly to reflect materials, time, effort, etc at all times. If I were regularly offering discounts, it would mean that at other times my items were priced too highly. I feel it can also lead to hesitancy on the part of customers if they don’t trust that the price they are seeing will be the same next week or next month. I’m probably flying in the face of centuries of marketing science here, but that’s how I feel.
That said, I have found other ways to offer discounts when I genuinely can. For example, when customers purchase multiple products the P&P often remains the same.
My ‘seconds’ range is also a great way to get one of my top quality kits at a reduced price. This is possible because you are helping me use up materials that I couldn’t otherwise use.