I have to start this post by saying that I hate discussing money, but I have to figure this out or close up shop. Okay, onto the dirty topic.
I'm having a pricing quandary. When I made up the wholesale price list for potential shop owners at the Appel and Frank show yesterday, I factored in the fabric cost (I pay wholesale) and paid myself less than $10/hour for the cutting and sewing. This does not cover thread, needles, electricity, rent, marketing time, etc. This pricing structure would not support me at even 1/4 my old salary, and I really need to make half my old salary to just barely get by. If I do go by this meagre wholesale pricing structure, then I have to greatly increase my Etsy retail prices. How is this possible? How can other sellers sell similar items for less than half of what I sell mine for? They use less expensive (and I personally think, less beautiful) fabrics, and don't pay themselves enough to make a living. I certainly do not mean to sound snarky because everyone has their reasons for going into business, but I really think there are a lot of people on Etsy who sell their goods as a way to pay for their hobbies, but not to make a living. More power to them! But I have to make a living. Also, many of these crafters are selling at what would be wholesale prices anyway because they do not want or need to sell through retail stores.
What to do? If I raise my Etsy prices, I will not make any sales (or so I think), but if I keep my prices below retail, no retail store will want to buy from me at wholesale and then have me undercut their prices. But I have to charge a "fair" price or I'm literally giving my time away - time that would be better spent with my daughter or at an office job making a living. Not what I want to do (the office job).
When at the Appel and Frank show, I saw lots of cute clothes, designed by the vendors but MADE IN CHINA (!!!!) and the prices were so much higher than mine. I hand-make everything myself. There is value in that. I have to believe that I am doing myself a disservice by pricing myself so low and trying to compete against some Etsy sellers with their greatly reduced prices.
So, I think I've come up with a solution. I've figured out what my retail price should be (still barely making a living at the wholesale end) and this is actually close to what the other Appel and Frank designers sell their goods at. I've marked this retail price down 25-30% and put the shop on sale until the end of the year. To make myself feel better for the higher prices in 2009, I've also reduced shipping (free in the US) until the end of the year.
I have to remember that I make a very high quality product and I have to be able to support myself. I'm not trying to get rich, but I don't want to suffer or place undue burden on my family. I will continue to come up with designs I like and execute them at the highest level of quality that is in my power to achieve. This is all I can do. I would really appreciate any feedback on this.
