Ever wondered how to find the best price for your Etsy products? You’re not alone. That’s why we’ve put together this guide for you.
Read on, to learn about…
- What to consider before thinking about price.
- All the factors that determine your expenses.
- A handy tool to help you find the right price point.
What to Do Before Thinking About Product Pricing
Before we get into the nitty-gritty of pricing your products on Etsy, it’s worth having a look around the platform to see what everyone else is doing.
That’s also known as market research.
We could simply calculate our expenses and profits, but those numbers won’t matter if they don’t match your competition at all. So let’s first make some decisions and do some research.
1. Find a Niche
You have to decide on the kind of product you want to sell, and that will go a long way to determine the price point.
- Is it handmade or mass-produced?
- Does it require cheap or expensive materials?
- Will you provide a personalized experience or rely on automation?
Answer these questions to help you find a niche for your Etsy store. Your field of competition might be a lot more narrow than you think -- as long as you set yourself apart.
2. Identify Your Target Audience
Once you know what niche you want to create or break into, it’s time to look at your target audience. Understanding your ideal customer is key to selling regardless of price.
- What are their characteristics?
- How much money do they have?
- What does your product do for them?
- What else do they buy?
Knowing these things will also give you a rough idea of how to price your items. You can’t charge low-income customers an arm and a leg -- but you can crank up the price for big spenders.
3. Research Your Competition
Your niche and your audience are both important factors, but so is your competition. Your products will need to be competitively priced -- otherwise, you’ll have no chance.
You can install the Alura browser extension and search for a product on Etsy to see the average price point. That way, you can gauge whether you want to undercut the competition or position your shop as more exclusive.
Here are some additional questions to ask during your research:
- What makes your competitors special?
- Which materials do they use for their products?
- What’s their customer service like?
- How do their customer reviews look?
What you’re looking for here is not only a gauge to see what everyone else charges for similar items. You also want to find an opening so you know how to set yourself apart from them.
How to Find the Best Price for Your Etsy Products
Now that you’ve done some preliminary research, it’s time to look at how to find the best price for your Etsy products. We’ll start by looking at the various expenses involved in producing your items, and then use that as a starting point for calculating your profits.
The first thing you should look at is the cost of the materials you use for your products. Remember to include the cost of both primary and secondary components.
Raw materials include components such as:
Secondary components include things like:
- Tools (such as a loom or workbench)
- Software (such as Photoshop or InDesign)
It’s worth looking at how much of the material you buy at once. The cost of each component will go down significantly when you purchase them in bulk as opposed to individually.
You should also account for the time you spend on producing your goods. Depending on your experience level, your hourly wage can be low or high -- only you will know that.
There are quite a few tasks to account for when calculating labor:
- Learning the trade.
- Designing the product.
- Shopping for materials.
- Constructing the item.
- Photographing the item.
- Creating a product listing.
- Marketing your shop.
- Packaging and shipping.
- Providing customer service.
If you’re not sure how much to charge for each of these tasks, then consider timing yourself when you do them. That will give you a clear idea of how to price your labor.
You’ll also have other expenses in addition to the cost of materials and labor. Again, these will depend on your particular method of working and facilities.
Here are some typical expenses for a craftsman or -woman:
- Educational materials.
- Transport to and from your workshop.
- Office supplies.
- Rent and utility bills.
- Taxes and accountancy fees.
- Shipping costs.
- Etsy and PayPal fees.
Finally, you need to make a profit from your sales. It’s nice to break even, but it’s not sustainable in the long term. Figure out how much profit you need to make to grow your business.
Here’s a common formula for calculating your profits:
Materials + labor + expenses x 2 = wholesale price.
But selling your products at the wholesale price doesn’t make sense unless your customers buy them in bulk. Since most customers don’t, you should calculate the retail price instead.
Fortunately, that’s quite straightforward:
Wholesale price x 2 = retail price.
Found A Price Point?
Hopefully, this guide has helped you understand how to find the best price for your Etsy products.
If you still need more help, then it’s worth checking our Alura -- it’s a tool that’ll help you research the market and competition on Etsy.
That way, you’ll save yourself a lot of valuable time and quickly identify the right price for your products.