Now that we've walked through the basic idea of setting a price window for yourself and how to find your target audience... now what? How do you decide on an actual price for your work of art (or product, workshop, print, pattern etc)? My favorite method is to take a giant step back and look at your entire year. How much do you hope to make this year from your creative endeavor? These are the steps I use to come up with my prices:
STEP 1: Come Up with Annual Income Goal
How much do you need to make from your business this year? When you’re thinking of this, don’t belittle yourself or your work. Be bold. Set a number that is going to not only let you keep this business going, but keep it sustainable to you personally and financially. Then on the flipside (here comes our “price window” concept again), what is the least you can make from this endeavor this year? When I first started I told myself, “If I make $500 from my Etsy shop this year, I’ll keep it going.” It felt like a personal safety net to me to know that I was going to watch out for myself, and if I didn’t get what I thought I needed, I could find another avenue. Keep in mind that you can have lots of different sources for this income. For example, I don’t just sell my embroidery, I also teach workshops, sell prints, and create downloadable PDF patterns.
STEP 2: Calculate the Hours a Week You Spend Working
Is this a side project or are you taking the full time leap? For me personally, I need it to be a bulky side income to complement my husband’s salary. I take into account that I’m
staying home with my kids and therefore cannot spend all hours of the day working; meaning while my kids are at home, this is a part time job that creates a side income. I usually spend 3 hours a day working, but because embroidering is also my form of relaxation, I usually end up working 7 days a week making it a 20(ish) hour work week.
STEP 3: Estimate How Many Pieces Can Make in a Month
Once you figure out how many hours you are working a week, you should be able to estimate how many pieces you’ll be able to make in a month (it may be how many workshops you can teach, patterns you can make... you get the idea). Let’s just focus on one thing for the sake of this example. Let’s say you figure out you can create 5 pieces of art a month (this is a lot by the way). This will be vastly different for each person and each business and can even vary from year to year or month to month. When I began it took me three times as long to stitch a hoop compared to what I am able to do now. So just remember: this is an estimate.
STEP 4: Calculate Your Prices
Lets say your goal is $10k a year and you know you can get 5 pieces done a month. That means you’ll make (5 pieces X 12 months) 60 pieces a year. Therefore, the average price per piece needs to be about $166. Voila! You now have at least a ballpark of what you need to set your price at. Alas, here comes the age old question: Will your audience actually be able/willing to pay that price for what you’re making? So from here you will need to use your knowledge of your target audience and work with your pricing window to decide on your price. Please remember that if you are surprised by how expensive your price ended up being, don't second guess yourself! Your work is worth it!