Why do crafts people underprice their products?

[Pearlyearrings]

I'm coming new to making things and have been browsing sites like Folksy. I am really shocked at how low some prices are and can't understand why people are working for so little. I'm not naive- I've been running another business (service type) for over 10 years. I know about factoring in time, materials, all the admin time, advertising, and fixed overheads. I'm just shocked at how one seller is selling earrings for £8 but another at a more realistic £30. For £8 they are barely covering time and materials. Anyone else noticed this? It makes it harder for people to charge a fair rate for their work when others almost give away their products.

[Konyaa]

Because, not many would pay £30 for a pair of earrings for regular use or wear. I wouldn't. I am much more likely to buy something for a fiver and think ah this goes nicely with my orange top.

[Lexilooo]

Drives me mad too.

It is normally because they are hobbyists with no need to make a living who can make a bit of pocket money to justify their hobby by selling on the Internet.

20 years ago they wouldn't have been trading against professionals because they wouldn't want to pay to advertise or pay for craft fairs etc. They would have sold a bit to neighbours or work colleagues to cover their materials. Sadly while the Internet makes it easier for craft businesses to trade it also opens up trade to those who don't want or need to make a living.

[LonnyVonnyWilsonFrickett]

Because people don't factor in their time, admin, etc. They just add a small % on to their raw ingredient costs and think they're building a marvellous business. Or they're desperate. Or they're stupid. Or they're just playing at having a business. The fact they're undercutting other people doesn't occur to them.

[Pearlyearrings]

It's madness.

The basic rule is 3 x your costs (materials) to cover your time. This includes taking the photos, uploading your advert, queuing at the post office, fuel to get there, wrapping the parcel, and then the skill of your designs.

I don't agree that £30 is too much for something made from quality materials. My own jewellery for day wear ranges from about £10 to £1K+ for diamond studs.

[Pearlyearrings]

By 'my own' I mean what I've bought, not made!

[Akire]

I agree I make crochet blankets as gifts often the wool coat say £30 and then about 50hours work. If I charged £2 hour that's £130 or even 3x costs is £90. People will just not pay it!

In fact people who ask and I say I do it for gift but you buy wool then think it's expensive!

[Pearlyearrings]

It's just ridiculous.

The minimum wage is £7 and a bit.

If you sell your item for £8, and calculate the time taken to select your materials, design and make it, photograph it, upload it, handle enquiries, package it, take it to the post office (with fuel maybe added in), pay commission on Etsy or pay for the ongoing hosting / creation of your own website, then you aren't even earning the minimum wage. In fact you are probably working at a loss.

Akire I think you should charge what it's worth and sell it on up market outlets where people will pay for what could become a family heirloom.

[MrsMushrooms]

Hobbyists just want to make the money back for their materials so they can keep the hobby going, so they sell them cheap to shift them quickly. It's a shame that it undercuts professionals but I totally understand why they do it

[Konyaa]

If you are spending £1k on diamonds you're clearly in a different income bracket to me and DH (university lecturer and it manager) and/or have different expense priorities.

[Pearlyearrings]

Not necessarily Konyaa- just saved hard and not bought other things over many years.

[BakedWellTart]

This drives me insane.
I've been to uni, I have also studied the business side of it, and produce as a living, paying £££'s to exhibit at the 'right' events.

Yet I cannot earn even a very basic wage because I am competing with hobbyists, who sell their work cheaply just to cover materials. Consumers look at my work and think I'm expensive as they are used to paying cheap prices.

It's demoralising.

[Hughpughbarneymagrew]

This is why I've never tried to have a craft business, despite the fact it's what I'd absolutely love to do.

[BakedWellTart]

To have a successful craft business now, you have to invest so much time in marketing your product/brand. Social media is such a major part in it (and what I struggle with). You aren't just selling the item you have made, but the lifestyle.

Or just sell it cheap (and completely erode your self esteem)

[Pearlyearrings]

Baked I fully understand.
Have you thought of investing in someone to do PR for you or even help you with social media? I've worked in the media so am pretty happy to use SM - Twitter, FB etc- and have friends who help businesses get media coverage. I wonder if you could invest in something like that and reduce your outgoings on other things - just to see if it helped?

[OdinsLoveChild]

I used to sell my handmade items for 3x the basic costs and I really struggled to sell them. No one wanted to pay £20 for hand engraved Christmas decorations and light catchers.

I decided to sell them all off at a local Christmas fair for £7.50 each. Not only did I sell everything in less than an hour I got asked for more than a dozen new orders. When I said I was closing down because I couldn't sell the items for £20 without exception they all said they would never pay that much. I have sold a few special orders since for just £10. They often take over an hour each to make so any possible profit is minimal

[Pearlyearrings]

Unless you can afford to work for less than the minimum wage Odins- why do it? You're working at a loss.

[Flossyfloof]

Surely it is a matter of people not valuing the skills involved and not wanting to pay for them? Selling at high-end outlets would probably involve paying a huge commission and where are these outlets?

[Pearlyearrings]

I think the situation is complex in some ways but also simple in others. It's like running any business. Having a skill / craft / professional expertise does not always equate with having a good business brain or the time /money / investment to make the business grow. (I'm not being critical here, just stating how it is!)

People generally don't appreciate that in running any business - whether it's a cafe or a accountancy practice- that you don't just charge for your 'product'. Your fees/ prices have to cover all your overheads and time. But the way to get customers is to try to have a USP and thoroughly research your target market.

Just as a tiny example, if I were making crocheted blankets, I'd consider them heirlooms. I'd try to get press coverage (by using a good PR) in women's and children's magazines, or pay for advertising in an upmarket children's magazine - ie Little London- which reaches mums living in Chelsea . I'd take my blankets to fairs at local independent schools - organised by their PTAs. It's unlikely that your average punter at a church hall fair is going to pay £200 for a blanket, but that's not to say there is not a market out there if the blankets are really unique, can be personalised and are put in front of the right type of customer.

I think the crux of it is whether you want to make serious money or whether you simply enjoy crafting and are happy to earn a few quid here and there (in which case find another job for your main income.)

Sorry for the essay but trying to get my own head around the whole thing! :)

[StubbleTurnips]

If it's a hobby them some people just want to cover material cost, I used to make knitted blankets by request and people just won't pay the true cost of hours / nice wool.

[Pearlyearrings]

Of course.

But many posters here are complaining that they can't get a decent living from it - so presume they don't do it as a hobby.

Moving a hobby up to a business is different and needs investment in time and money, including researching the market and the competition (people selling the same thing and how they do it successfully).

[Hughpughbarneymagrew]

pearly you are absolutely right, of course, I suppose I just have doubts about my ability to convince people that my crafts are premium items and priced accordingly.

[Pearlyearrings]

If you don't believe in your product then no one else will Hugh!

I'd much rather pay for something made by a craftsman than something mass produced- as long as the quality was there.
An example- you can buy a perfectly ordinary pair of silver earrings in J Lewis for £25, or a pair of glass beady ones by Martick, whereas I'd be happy to pay the same or a bit more for something unique , where I'd also be putting money into someone's small business. (Not that I have any hang ups about spending in J Lewis as well!)

[Rumtopf]

It's very frustrating.
I've recently researched the viability of starting my own craft business - handmade christening gifts, samplers, embroidered pictures, crocheted blankets and the like, something to keep. There's no way someone would want to pay £50 for it which is what I've estimated I'd have to charge for it to be worth my time.

[Pearlyearrings]

But how do you know that? I'd have thought £50 was perfectly reasonable for something that was a momento. You need to aim it at the right market.

Look at the prices of clothes -Fashion- in this London mag.
www.littlelondonmagazine.co.uk/category/fashion/

If you want to sell to people who can afford your stuff, you have to get some PR on board, or do your own through social media and local networking groups, and really market it like a business.

[SoupDragon]

Basically, people will not pay the true price. I Crocheted a wrap over the summer. The yarn was about £1 from a charity shop so no cost there but it took hours and hours and hours. Even at 10 hours minimum wage people wouldn't pay that and it might easily have taken twice as long.

The people who would pay over £100 for a decorative wrap are as rare as hen's teeth - why would you when you can get one on the high street for less than half that? Or you would buy a designer wrap.

So, your choice is to sell it cheaply and still make some money back or not sell it at all and make nothing. I make things for myself, gifts and Woolly Hugs sales only because it simply isn't worth trying to sell things at a reailstic price.

I would love to have a successful crafty business but that won't happen. It might work for quicker crafts but crochet is too time heavy.