A Real Approach to Pricing Your Handmade Goods | Podcast Episode #55

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Pricing Your Handmade – Your time is valuable.

That statement literally means your time has a value associated with it. You expect your employer to pay you for your time. Pricing your handmade is no exception. Your work and your time are worth a fair price. Be fair to yourself.

I’m joined this week once again by, Chantal, of Knitatude to elaborate on her top tips for makers back in episode 53. She gives it to us as real as possible – why we should charge for handmade, why it’s worth a price, and how you should calculate the fair value of your goods. Hold on to your hats, this is a good one!

Episode Transcript

Brittany:
Hey there, friends. Welcome back to episode number 55 of the BHooked podcast. I’m so grateful that you’re here today because I really believe that this episode has the potential to change your business. Yes, that is right. The number one question that comes into my inbox is, Brittany, how do I price my items? And I’ll be the first to admit that I’m not really the person to explore this topic because I don’t sell my goods online. But that’s the great thing about the podcast. It gives me the platform to invite people on the show who are experts with the questions that you have.

And I have brought back none other than Chantal from Kniaitude. We heard from her just a couple of episodes ago. She’s very passionate about this topic. And you’ll hear that bleed through her interview today. And I am so excited about the knowledge and the message that she was able to share throughout our chat.

Now before we get on to my interview with Chantel, I do want to let you know that the show notes are available at behookedcrochet.com slash session 055. That’s where you can find all of the resources that we talk about and we do mention a few. So that’s the only URL you need to memorize here. Head over to the show notes page and if you have a question, please feel free to leave them there. I’ll go in and check all the time. Maybe even Chantel can check things out and we can help answer your questions about this topic that so many people seem to really struggle with.

I wanted to take a moment to thank Yarnspirations for sponsoring this podcast once again. Yarnspirations is your online destination for inspiration and the yarns you love like Patons, Bernat, Caron, and Lily Sugar and Cream. You guys, my listeners, BeHooked podcast listeners, you can get a special offer to redeem at YourInspirations.com. All you need to do is enter the coupon code BeHookedPod, that’s B-H-O-O-K-E-D-P-O-D, at checkout, and you can get 20% off your order of $40 or more, and you can redeem that at YourInspirations.com.

If you guys have seen any of my patterns and projects, you know that I love Yarnspirations yarn. I use their products all the time. So if you like to follow along with my tutorials, you can almost guarantee that you’re going to need to get some Yarnspirations yarn. And this is the best way to do it. I’m all about saving a few bucks, so make sure you head over to Yarnspirations.com when you’re ready to make your order and insert the coupon code BHOOKEDPOD.

Alright, I think I have teased this episode enough. Quite enough. I just want to dive right into my call with Chantel from Knittitude. Chantel, welcome back to the BHooked podcast.

Chantal: 3:22
Thank you. I’m so excited to be back.

Brittany: 3:24
I’m really excited to have you back too. I’m calling this episode a real approach to pricing your items because I know that out of everybody that I know personally, you are the one person who’s going to just give it to you straight. Give it to people in the real way about how to price your items. And I’m so stoked that you’re gonna share it with us today. No sugarcoating. None whatsoever. None.

Well, before we get into the ins and outs of pricing and all of the good stuff that we have planned today, I want to give people a chance to get to know you. Now, you were on the podcast a couple of weeks ago, and some people may have heard that. And I mean, honestly, 15 minutes was just not long enough for the tip that you had for us. So tell us, again, for people who are brand new, a little bit about you and how you got started with—

Chantal: 4:18
So I’m Chantel from Knittitude. Knittitude is four years old. I have been knitting for five years. I started originally selling physical items. I started going to markets. I originally had a bunch of girlfriends see my knitting and be like, that’s really cool. Would you be able to make me one of those? And I was like, for sure, but I’ll charge you for it. And I was still undercharging at that point.

But in the last about year and a half, so since September of 2016, I started diving into the garment designing and that has completely taken off for me and I love making patterns. I still sell physical items. I still do markets, but I love designing stuff.

Brittany: 4:59
Oh, that’s cool. It’s really neat to get an insider’s perspective on people’s journey because it always looks like one thing on the outside to everybody, but it’s cool to know that through making your own goods, you’ve kind of found a new passion in designing and that’s kind of the way you’re going with it. So that’s really cool.

Chantal: 5:19
Yeah. And you’re constantly, your business is always transitioning and I feel like I’m in a transition phase.

Brittany: 5:24
Yeah. Yeah. So transitioning from selling your goods to designing, but you said you still are selling some things. Are you primarily doing that online or are you still going to markets?

Chantal: 5:37
So I, I’m still doing markets usually about, um, for the last three years, I’ve done between five to 10 markets in fall, um, between September until December, mainly for the Christmas season, because we all sell knits, which means that you have to be having a cold weather system. Um, but this year, instead of doing, uh, five to seven, I’m hoping to do only three markets in the fall. I’ve already done two for this year. So I still sell, um, in person as well as I sell ice—

Brittany: 6:15
curious. Do you sell on Etsy or do you have your own, like your own shopping cart on your website?

Chantal: 6:20
So I sell on Etsy. I should have stuff on my website, but I’ve been very lazy. I’m bad at that. It’s a lot of work. It’s a lot of work.

Brittany: 6:32
So let’s see. So you definitely have a lot of experience with this topic. So you’ve been selling for at least four years, it sounds like. Four years—

Chantal: 6:40
yeah.

Brittany: 6:41
So you know what you’re doing. You know– well, you’ve probably gone through– all of the growing pains for pricing your items to sell. I’m sure you didn’t know from the get-go how to price. If you thought back to your first project, do you think that you priced it the right way? Absolutely.

Chantal: 7:01
Absolutely not. I remember making items for my family and we ended up going on a road trip up to into the mountains. And I remember someone reaching out to me being like, do you sell your items? And I remember being in the car with my mother-in-law being like, I have no idea what to sell this for. I have no clue. It was a huge, massive infinity scarf. It was taking me eight hours to be able to make. I was on like six millimeter needles and it was taking forever.

And I remember being like, is 35 too much? is like 40 too much. And now when I think about it, I was only using, I was using maybe like, I went to Walmart and I got one of those big, big balls of yarn that’s like still kind of scratchy and 100% acrylic. And I think it was like five bucks. And I remember selling them for 40 bucks to my girlfriends. And when I do the math, I have a calculator with me. But for me, if I end up having $5 towards my yarn, that means that the $35 went to me. The only issue is that when I break that—Yikes. I know better now. I definitely know better now.

I even have luxury items, and that’s the first time that I’m going into a higher-end market, and it is such an unreal experience. But I think it’s because I had this idea, and I think a lot of crafters, when they first start, they’re like, oh, I need to compare myself against H&M or Walmart, or people are purchasing stuff at this price. this like big box store and I obviously have to match it. And it’s like, no, that biggest box store makes things way, way quicker than you, than you do. And you have only two sets of hands and they have millions.

Brittany: 8:54
That’s so true. How long do you think it took you to realize that this pricing structure just didn’t work?

Chantal: 9:01
I think it probably took me about a year. And then I think it really started clicking in when I started selling more items and I couldn’t keep up. I was like, why am I selling these items for so small? I’m breaking my back. I don’t have enough time to be able to spend with my husband. I don’t have time to be able to go out with my friends because I’m panicking that I have to finish three scarves in the next two weeks. They take me eight hours each. I work a full time job. Yeah. And I’m stressing about it. And it’s a whopping $35. It’s like, no, there are other better things that are worth my time. And I’m worth more than $4.37. Absolutely.

Brittany: 9:42
Yes. I love the way you said that. You are worth more than that. And you could spend those hours doing other things. Because when you said yes to that person to take on their project, even though there was an exchange of time for product, value for product—

Chantal: 10:00
Mm-hmm.

Brittany: 10:00
You said no to something else.

Chantal: 10:02
Exactly. Exactly.

Brittany: 10:03
I think, honestly, a lot of people make that same mistake that you did. And I wouldn’t– I hesitate to even call it a mistake because I think it’s just– it comes from just a world of– An experience.

Chantal: 10:16
An experience.

Brittany: 10:16
Exactly. A world of unknown. You had no idea, so you started somewhere. And that’s the first– positive step like even though you didn’t know what you were doing you still took action which is a win in my book and you learned from it so my goal for our conversation today is maybe to take some of that guesswork and that inexperience out of people’s lives so maybe they have a higher starting point and their businesses can potentially benefit from it.

And make money.

Chantal: 10:46
And make money.

Brittany: 10:47
It’s not a dirty thing. A lot of people feel like they need to feel guilty because a business is a business, right? Businesses make money. Otherwise, you have a passion project. And a lot of what we do may start out as a passion project or we’re just feeding our hobby. But at the bottom, at the end of the day, the bottom line is if you want to do what you love as a career or as a full-time thing, you have to make money. And you can’t feel dirty because you need to make money to support your family.

Chantal: 11:24
You need to live. And I think that there’s a great thing that I feel like there’s always a difference where people are like, well, this is my hobby. This is not my full-time job, or I’m not trying to make money. And it comes down to, if you think of it from government standpoints, once you make a cent on anything, you’re not a hobby anymore. You’re actually a business. The government is going to want a cut of that money.

So whether you sold one scarf and you charged $40 for it… That technically makes you a business. And I think that there’s a great quote saying, this one comes from, I think her name is Patty McNitz. I will find out for you. She gave me this beautiful quote that said, you can’t have a business with a hobby mindset. And it’s okay to make money. You are allowed to make money. You are making a business to make money. Like no one’s just doing it just because they love it. Obviously, that’s a very large portion of it. But if you were doing it just because you loved it, you would be donating things. You wouldn’t be selling them. You would be giving them to multiple people.

There is obviously a portion if you want to make it a business that you want to make money off of it, which is a profit.

Brittany: 12:36
Exactly. And you know, that sounds like that needs to be the first step because it is a hobby for so many of us. Maybe before you even consider selling your goods, you need to figure out exactly why you’re doing it. Because if you’re If you have a hobby mindset and you’re like, well, I would be doing this anyway. I want to sell this to my sister because she asked for it and she can afford to give me $20. Okay, that’s fine. I’ll go ahead and do that.

When you do that, I feel like you shake up the market a little bit because you are… you’re offering things for lower than what your time and everybody else’s time is worth. Would you agree?

Chantal: 13:15
Absolutely.

Chantal: 13:14
You are undercutting the other people that are either trying to make a profit through this or you’re undercutting people that want to make it full time. With just selling it for $20, you may be thinking, great, I’m making an extra buck by myself, but I like to call it a spiral of shit because essentially what ends up happening is that you sell it for a really low price and then the person who ends up who’s trying to do this full time or is trying to make a profit they’re constantly having to battle the people that are selling at a lower rate because they don’t value their time or just think that it’s not exactly that they’re not valuing their time they’re just not thinking of it as along the lines of like oh that’s a standard to be able to price.

So you’re having all these people who end up um trying to make a profit or trying to live off of whatever their craft is, having to essentially be low-balled or have to lower their prices and essentially make less profit for themselves to be able to kind of hit the prices that other people who are crafters or who have a hobby mindset are putting out there, which is really difficult for any person that is trying to live off of it.

And I like to always say that I think there’s a lot of people out there that go, oh, well, because I’m not making it a full-time job or anything, it means that I can just make whatever kind of money off of it. Which, yes, that does come to a case. But I think that there’s a lot of people out there that if they… You’re working full-time. Your time outside of your work is precious. And if you’re not… I feel like you could you could say that that time is probably a little bit more worthwhile or more dollar worthy than a person who is spending the eight hours to be able to make it their full time job because they have that time allocated to it. You as a person who is a crafter or a hobbyist don’t. That’s extra time.

So wouldn’t you wouldn’t you think that that was like you’re taking that extra time away outside of your job from your family and from your kids and et cetera that you’re You need to be paying yourself for it. Just because it’s a hobby doesn’t mean that you shouldn’t get paid for your time or your hourly wage.

Brittany: 15:31
Yeah, I totally agree. I think no matter what you’re doing, we live in a world where time is valuable. Time has some kind of value to it. And in a lot of ways, it’s a monetary value. So like you said, even if you’re not trying to make a business out of it or if you’re not trying to turn a profit, you should still value your time.

Value your time.

Chantal: 15:54
And it’s the same idea of like, say that you end up having it where you’re an electrician or outside of work, you decide to go help a friend or whatever. You’re still going to charge them an electrician’s wage because you’ve gone to school for that. You’ve learned how to do that. You’re a skilled worker and you still deserve a minimum wage just because it’s not in your nine to five job.

Brittany: 16:15
Yeah, and people pay for those skills too. I mean, there are a ton of people who knit and crochet nowadays, but there are still a lot of people who don’t. And so they’re paying you for your skill because maybe they can’t make it for themselves.

Chantal: 16:27
Yeah, absolutely. Some people are just not crafty and that’s okay.

Brittany: 16:31
Yeah, some people don’t want to be.

No, some people don’t want to at all. And they would rather pay for it. So I think the sooner you make that realization and the sooner you figure out your focus and your direction, I think… you’re already going to position yourself maybe a little bit higher than what you would if you were just going in blind.

So we’ve said a few words that I wanna clarify a little bit. Some of the lingo that goes into pricing your items, I don’t wanna assume that anybody knows anything. I like to kind of just spell everything out and make sure that before we move into the formulas and some of the tools that you’re going to recommend that people know all of the details that they know to be able to understand those things.

Chantal: 17:18
Yeah, so there’s a couple words that I’m going to be saying in the formulas that maybe, yeah, we’ll go through them first. So one of them is cost. So I like to think of my cost is associated with an hourly wage, whether that’s $10 in your city, whether that’s $15, whether that’s $8.67, your cost is your hourly wage. That is what you’re going to be putting in to make that one scarf. That is your cost for that scarf.

If you do one hour and it is your minimum wage is $10 an hour, the cost for that product is going to be $10. From there, you have materials. So those are the actual physical materials that you’re using to make that product. So let’s just use a scarf as an example anyways. Say you buy a ball of Lion Brand Thick and Quick and it is $10 because we’re just going to be eating it. with math so your materials for that would be ten dollars.

Your materials also include the tags that you put on like your maybe your leather tags or your buttons those are included in your material costs. You also have other types of materials that could be maybe you have a price tag that you put on there or maybe if you ship something your materials would include a a poly mailer or wrapping paper that is your material so that is what it takes to make one product.

There’s another one that we’re going to talk about is overhead. So overhead has a tendency to get really lost, but essentially overhead is all of the things that you need to be paying for in your business outside of making that that one item, whether that is the time that you were spending to be able to go to the craft store to be able to get yarn, that becomes a portion of your overhead as well as maybe, so the gas to be able to get there as well, or there’s many things that can go into overhead.

I always like to put a little bit of overhead in my formulas, which I’ll also talk about a little bit better. But overhead can include anything like your website monthly fees, your listing fees, your packaging, your tools, your time invested in researching new materials. Your overhead could include the time that you’re spending to be able to listen to this podcast, time invested in courses to be able to make you grow your business.

And then from there, you have a wholesale rate. This is what I like to also put as my base rate. This is what you have to be able to sell your product at to meet the bare minimums. And that is to be able to pay for your hourly wage and pay for your materials. That is to break even. That is your wholesale cost.

As well as wholesale cost, whenever you’re selling to a boutique or someone is trying to bring your stuff into their store, usually what they’ll do is they will purchase at a wholesale. So say that it’s usually half of what your retail price is. So that’s your wholesale. We like to think of this as our base. It’s our bare minimum. You have to make this money. Otherwise, you are losing money if you sell this product at any less.

Also, when it comes to sales, you want to be making sure that you are not going below your wholesale cost or your base cost. These are known as the same thing. From there, you have a profit margin, which means that this is all your play money. This money goes towards the rest of your business as well as it makes you profitable. So you have a profit margin when it comes to these formulas, meaning that you are making money on top of your wholesale rate or your base.

And then you finally have your retail rate. And that’s the one that you slap onto your Etsy. You slap onto all of your prices. That is like the like, oh, moment like that. It’s like your that is your price dollar that you are showing to the world. And you’re like, look at how much I’m worth.

So just going over cost is your hourly wage. Materials are obviously your materials. Your overhead includes anything that is not in your material. So say gas or gas. maybe your website. Your wholesale rate is your base. Your minimum, you have to make that money. Your profit margin is your play money. And your retail rate is what you slap. And it’s your slap on your Etsy on your actual price tag. And that’s it. So those are the lingo.

Brittany: 21:51
Nice. So tons, obviously tons of information goes into this. A lot of things that I would say people wouldn’t even realize and they would have to learn the hard way that, oh, I forgot to include my Etsy listing fee in my cost or I forgot to include the gas that it took me to get to the store. So this is good. This is going in a really awesome direction.

I do have one question really quick before we move on is I’ve had a few questions come through where people are curious about incorporating the cost of their tools. So let’s say I… I splurged a little bit and I have personally, I have an $80, well, I have two $80 knitting needle sets.

Chantal: 22:35
For all crochet?

Brittany: 22:36
They’re actually, for knitting needles, I have the Hayahaya, both the small and the large set. And that was a splurge for me. I don’t, honestly, I’m relatively cheap. I don’t like to spend a lot of money on supplies. But this was one thing that I was really… I was really happy that I spent the money. So I definitely loved the tools. They were worth it.

But let’s say I did sell my knitting. Would it be fair for me to include some of that price within each one of the listings until I recoup that money? Or is that something that you don’t do? Like you just pay for the tools and that’s sort of a cost that you have to eat?

Chantal: 23:16
No. So you should never be eating– if you have a company, you should never be eating a cost and having that come out of your personal bank account or your spouse’s bank account. That should be coming out of your business bank account.

So that money is coming from your profit margin as well as you can incorporate some of that into your overhead. So say that you are going to make– say that you end up having your needles, they’re $80. Say that you put a dollar into every single listing as your overhead to be able to recoup that cost, which means that you would have to sell 80 scarves to recoup that cost of those $80 needles.

And then from there, your price wouldn’t change as it keeps going because chances are you’re going to keep on accumulating other materials to be able to… to be able to keep working on your projects, you’re probably not going to stick with those $80 needles for the rest of your life. You’re going to keep on adding.

I always like to say that if you end up having a little bit of added money and say that you just keep charging that extra, say that you stay with those $80 needles, all the things that you end up using, you still incorporate that dollar into your overhead costs of your product, so that’s $1 per product, and you just keep on making money off of it, I am all thumbs up for that, as well as other things are going to start taking over and replacing that $80 in your overhead costs. That dollar is still going to go towards something else. You may be taking money from that other thing until you’ve paid that $80 needle off.

Brittany: 24:55
Okay. So it sounds like probably a good strategy is when you make that big purchase, you figure out how long you want it or, well, not necessarily how long, but how many projects you want to sell, products you want to sell in order to recoup that. In your example, eight. So let’s say that’s your target number and then you just do the math and divide it out and then just keep that in mind for the next purchase.

Chantal: 25:20
Yeah, and you can even, as we go into pricing formulas, you can even go and work backwards. This is something that I do in my full-time job as well. Say that you want to make a certain amount of money. Let’s say it’s $50,000 a year. That’s what you want to make to be able to live, to be able to survive. That might be a little high, but that’s the wage that you want to be able to… you make for a year, say you want to make $50,000, you can work backwards and say, okay, to be able to make that $50,000, how much money do I have to be making every single month? And let me just go 50 divided by 12 is you need to be making $4,166 a month to be able to make that $50,000 minus your expenses. So you’re not including paying for your website management or anything on top of it, you can work backwards if you want to and say, okay, how many items roughly do I need to be able to sell to make that $4,166 per month? And then you can work backwards as you keep going. But that’s going a little bit farther into it. So I’m just going to give

Brittany: 26:37
three really easy formulas. Yeah, yeah. I love the big picture stuff. I definitely want to to come back to that. But yeah, let’s talk about the formulas real quick.

Chantal: 26:47
Yeah. So I have three formulas, two of them. I’m like, hell yeah. The last one don’t ever use it. And I, and I say, don’t not that I don’t ever use it. I’m just going to blatantly say that I’m going to put that, that foot in the stand in the sand. I’m going to say it. So one of the standard formulas is your cost. So your hourly wage, plus materials, so what it costs to be able to make that item, and then you times by two. So that’s super simple, really easy. It means that you are making a 100% profit margin.

So say that your cost and materials are, it takes you one hour to make an item, so that’s your cost. Let’s say it’s a $10 an hour, so that’s $10. And then you have your materials. Say that it’s one ball of thick and quick. We’re just going to go really easy math. We’re not going to include our tags and stuff, but you should be including them. And say that that’s $10. So one hour to make something, $10 to be able to make it. That equals your wholesale rate, which is your bare minimum that you have to make, would be $20. And then from there, you’re going to times it by two. So you’re making 20 extra dollars in profit. That’s your profit margin.

This is a really basic formula for a lot of crafters slash a lot of industries. Some people even go even farther. If you look at jewelry and if you’re looking at like where they’re… Whenever we go shopping, we’re like, oh, well, what’s the… what’s the retail rate of this and what is, um, what does like the company actually make on it? Like how long does it, how much, I’m trying to find the word that I’m thinking of. If you know what I’m thinking of, shout it out, Brittany, but essentially, Oh, the markup. Okay. What is the, what is the markup on this product?

So some people will say that it’s times two times three. If you look at jewelry, sometimes the markup is like ridiculous. Like it’s, It may take them– it may make the– like, if they’re using a diamond, whatever you want to call it, and it costs them $100 to be able to make, they’re charging, like, $10,000. Their markup is huge. That’s a 10– that’s, like, a 10 times markup.

Brittany: 29:00
Yeah.

Chantal: 29:01
So– Basic would be times by two, which means that you’re making 100% of a profit margin. The second one that I have, which I use as well as I think that it is really, really good for knitters and crocheters, especially because it takes us so freaking long to make something. Like, I don’t know about you, but I can’t make a scarf in an hour.

Brittany: 29:22
No, I can’t either. No,

Chantal: 29:24
but we’re going to make it really dumbed down. This is the one that I really like to use, as well as it’s one that a lot of the people in MakerStrong, if you ever go into the MakerStrong Facebook group that I’m a part of, you will see this toted over and over and over again. And that is cost. So your hourly wage plus materials, so how much it costs to be able to make that scarf or whatever, plus overhead.

So we like to say, if you ever listen to Toni from TL Yarn Crafts, she will say that her overhead cost is 20% of her cost and materials put together. which comes up to a couple dollars. Otherwise, I like to say that you add a couple dollars onto it. So say that it’s like a two to anything from one to five dollars could be your overhead.

So you would have your cost plus your materials, plus your overhead of like maybe a couple of dollars, let’s say three dollars. And that equals your wholesale rate. So that is your bare minimum like that, which means that let’s say that it’s let’s say five dollars at a high overhead. So we have ten dollars an hour. one hour to make a scarf. So it’s $10. Then we take our materials, say it’s $10, that’s 20 bucks. And then from there we add a $5 overhead fee, quote unquote. That means that it’s $25.

And then from there you can times it. We like to say by 1.75, which means that you’re getting the 75% profit margin. So you take 25 times 1.75 equals $43.75. That 75% profit margin is going to pay for a lot of other things, which I will be talking about later because there’s a lot of things that you’re forgetting about. Exactly.

So we like to say cost plus materials plus overhead times 1.75. That’s something we would obviously want to move it up to times two. But a lot of people see that $43.75 and they see sticker shock. They get panicked. They’re like, no one will ever buy my stuff with that. I’m not worth that dollar amount. And it’s like, yes, yes, you are 100 percent. You’re totally worth that. You’re allowed to make a profit. You should be making a profit.

Brittany: 31:35
Exactly. And before I’m having two thoughts here. So the first thing is with the overhead cost. So you don’t necessarily have to go in and calculate that every single time. You can kind of generalize it a little bit is what I hear you saying. Yeah. Awesome.

Chantal: 31:51
All of these pricing formulas are like a basis to be able to start off of. They’re not in gold. You don’t have to do them, but they’re a really good starting or bouncing point.

Brittany: 32:04
So I’m guessing that the cost plus materials times two is the one that we should never be using. No, it’s

Chantal: 32:12
not. I have a completely new one. So those are my two gung-ho do them. I think they’re great. I think they’re great. I think they’re great.

Now my third one, which is the one that I say, please, God, do not use this is materials times three. And I apologize. I’m going to go on a little rant here.

I have no idea who the stupid crafter was that said, yes, materials times three. That’s the way to do it. That’s the only way to do it. Absolutely. That is the one way to be able to craft stuff. I think they’re an idiot because so many different people.

Let’s say that you make a hat. Let’s say three people. Make a hat. They’re all the exact same. One of them ends up using, let’s say, like a really cheap acrylic wool that’s $5. And another person uses a different wool that is $10. And then another person uses a luxury line wool and that is $20.

You’re saying that even though they’re spending the exact same amount of time, the only difference that they’re spending on is materials that it should range from $15 to $60 for the same hat.

Brittany: 33:20
Yeah, that’s crazy. And it doesn’t factor in what I would argue is one of the most important things, their time.

Chantal: 33:27
Your time. Like you could say that it takes you four hours to make a hat or let’s say four hours to make a scarf and you’re going to charge $15. Like six, sorry, 15 divided by six is $2.50 an hour. Yeah, there’s a problem there.

That is horseshit. That is the dumbest method I have ever seen in my life. And I’m even talking to… And I’m sure that there are going to be people that are going to blow back on this. Please send them my way. Don’t yell at Brittany. It’s my opinion.

Brittany: 34:04
I appreciate that. I’ve never heard of this formula before, honestly, because I’m not in the market where I’m selling, which is why I’m bringing you here because you’re definitely the expert here, not me. So this is all news to me.

Chantal: 34:17
Come talk to me. I will gladly chat your ear off. But mainly, this is something that even people that are in other industries, I talked to one of my girlfriends and she makes jewelry. She’s like, how is it possible if something ends up costing me $5 to be able to make that I’m going to charge $15 when I could be selling it for market value at $45? It doesn’t make sense.

It’s a pricing method that I think is really, really outdated. I don’t know who came up with it, but I see a lot of Facebook groups toting it. And a lot of people will come back and say, well, Chantel, I can’t. If you’re talking about an hourly wage, say that you have a brand new beginner. Why should a brand new beginner who takes eight hours to be able to make something? Well, I’m a skilled artisan that only takes four hours. Why should they be charging more than me? That makes sense.

Yeah. And I get why people end up saying that to me. And that’s totally right. But also at the same time, if you’re selling it for $40, let’s just do easy math, $10 an hour, we’re not even going to include materials. If it’s taking you four hours and you charge $40 and someone is selling it for $80 and it’s actually selling, bump your stuff up to $80.

Brittany: 35:30
Yeah.

Chantal: 35:31
That’s a whole entire idea of perceived value, which I know what we’re going to talk about later. And I also think that a lot of people will come and say, oh, well, maybe it’s because I’m not lollygagging. I’m not taking a lot of time to be able to make something.

Well, that’s really unfortunate for the person who is making something that is really intricate. Because if you say that it’s materials times three and they’re like making beautiful cables and making lace work and it’s taking them way longer than what it does to make a garter stitch scarf, which is the most basic one, you’re saying that they should still be selling it for the exact same amount.

Brittany: 36:06
Yeah, yeah, and there’s definitely, that’s not going to add any value back to the community, I think, if you take that

Chantal: 36:14
approach. No, it’s definitely not. So… I really do not recommend, please do not use materials times three. I think it’s a really, really outdated practice. It’s still toted constantly around in Facebook groups.

If you see this, please talk about the idea of cost plus materials plus overhead. I think so many people, like you go into a Facebook group and you talk to a person who believes in materials times three, and you say, well, what about your hourly wage? And it’s like, some people will get so upset. Like, how dare I charge an hourly wage for something that is my hobby?

And it’s like… A plumber is going to charge an hourly wage. An electrician is going to charge an hourly wage. A lawyer is going to charge an hourly wage. And you better bet that a lawyer is going to jack that fee up.

Like, why is it as an artisan or as an artist or a fiber enthusiast that you shouldn’t be getting a minimum wage? Why should you be making less than a 14-year-old who works at McDonald’s flipping burgers who has absolutely no skill because all you have to do is take a burger and flip it?

Brittany: 37:17
Yeah, it’s so true.

Chantal: 37:19
Sorry, I got a little heated.

Brittany: 37:23
I mean, it’s getting real up in here, but it’s good. It’s a message that people really do need to hear, to be honest. I think the more people who are on the same page, the better the industry is going to do as a whole.

Chantal: 37:37
Yeah, and you’ll even notice that there’s people in, like I always talk about Maker Strong, and if you haven’t watched or you haven’t seen the podcast from Brittany from three weeks ago, Maker Strong is essentially a group to be able to empower and support and inspire people to be able to make a profitable business. And we always tote this constantly because you’re worth it. You are completely worth a minimum wage and a profit. You’re allowed to do that. You deserve this kind of thing. It’s time out of your day, so why shouldn’t you be pricing appropriately?

Brittany: 38:13
Exactly. I couldn’t agree with you more. I’m curious now, we’ve learned the formulas here. Are there any tools that you recommend that might help people or do you kind of create a spreadsheet or something like that? How do you keep track of the prices for all of your different products? Um,

Chantal: 38:35
So I like to, I like to use the same method for every single one. And I use the second one that I ended up talking about. Um, and I just do it manually, but you can also find, there’s a couple of tools out there. There’s called pricing calculators. I wouldn’t suggest that they’re the be all end all, because I think, again, they’re a really good bouncing point. Um, there’s one that you can, it’s an app, uh, it’s called the pricing or craft pricing calculator. If you ever look for it in the app store, it’s purple, it’s free. Um, and it essentially breaks it down. So you put in, um, your hourly wage, you put in how much your materials cost, and then you put in a profit margin. And we like to say that it should be 75% and up. And then it will poop out a number for you.

Again, pricing calculators don’t take into account all the other things that are added. So I wouldn’t say that those are the gold standard and that whatever their price is, is the price to go with. But it is helpful to kind of get an idea of how much you’re actually how much time you’re actually spending on it, how much you should be charging appropriately or approximately. So I definitely say pricing calculators are a good jumping point. Again, not be all, end all. They do have pros and cons, but they’re a really good jumping point. So I use all mine just in person. But a pricing calculator is like a good bouncing step.

Brittany: 40:02
Yeah. I think if it were me, I’m a little bit of a data geek here too. So I love to use spreadsheets. I think they’re super practical. And I could see myself creating a spreadsheet, whether it be Excel or Google Sheets. I personally like Google Sheets because it can be used over any device. So I would just go in and just– make a column for each one of those things, like wholesale, overhead, all of those things, and then just use that as a template. And then every time you list a new product, you would have to go in and manually enter those values. But then the system is going to do the calculating for you. So I could see that as an easy way to save time.

Chantal: 40:49
As well as it’s a really good way to be able to see what are your high-end products, what are your low-end products, what is your intermediate. And I think that a lot of people really panic when they do pricing. They go, well, that’s really, really high. And you’ll notice that a lot of people who sell their items usually sell quickly. Quickly made items. So you’re talking thicker wool, bigger needles, things that can be pumped out a lot quicker because I know that a lot of people will look at something like a baby blanket and go, wow, that takes a lot more time. That means that I’m going to be charging at least $150 for a baby blanket. That seems high. And it’s like, no, that is an average rate for what a baby blanket should be.

Brittany: 41:30
Exactly. We just have this standard where we think that it should be cheap. Yeah. And I think you’d have to expect that you’re probably going to have less competition or less people who are selling the same thing that you are when you’re going for those items that take longer to crochet. But I feel like that could be a strategy in itself, a business strategy. Oh,

Chantal: 41:52
Absolutely. I started a luxury line because I started realizing that there was, instead of doing a super bulky weight yarn, I decided to go down to a worsted or a size five bulky. And just by doing that meant that I had to go down in needle size, which means that my time really bumped up.

So I finally realized, I was like, well, if I’m going to be selling a hat for $95, which already seems really high by itself, because to me, a standard hat, I’m a crafter, which means that… I’m not my own target market. I would rather make something than spend $95, which I think a lot of us as crafters think we’re kind of cheap. If I can make something, why wouldn’t I make it? But then we realize that we spend all that money on the materials and spend like three times the amount of the product, but whatever.

Brittany: 42:44
Yeah.

Chantal: 42:45
If I’m going to be selling something for $95, that’s a whole new target audience or ideal customer who’s going to purchase that. So why don’t I just make it with beautiful yarn and charge $150? Because a person who is going to look at $95 is going to go, $150, better quality. I’m going to do it and have no qualms.

Brittany: 43:05
Yeah. That leads us right back into perceived value. I know this is something that you’re super passionate about. I am because it really is a huge deal. Can you… elaborate a little bit on what perceived value means and like specifically what it means to us who are selling knit and crochet wear?

Chantal: 43:23
Yeah. So I find that however you price your item, it’s going to be how people are going to perceive your item. If you have a low number that is $15 for a scarf, people are going to think that it’s shitty. If you have a $150 scarf, people are going to think that it’s really beautiful and go, why is it so expensive?

So perceived value is the idea of you can make someone think that something is really, really quality and worthwhile just by putting a higher price point. And I talked about it in the In the podcast that we talked about earlier, there’s a girl, her name is Caitlin Batcher, and when she talks about perceived value, she says, say that you end up having two identical erasers. One of them is 50 cents. One of them is $1.50 for price point, but they’re both identical. They’re made the exact same. They cost exactly the same amount to be able to produce. They’re the same quality. They’re all the same. The only difference is that there’s a price point difference.

It’s actually proven that more people will spend the money on the dollar 50 eraser because they think that it’s better and then there’s a whole added perspective that their friends will view them differently because they spend more on products and it’s crazy to believe that in this world if you have more money and you spend more money it means that you have like a different value or that you are viewed differently so when it comes to perceived value you can make your stuff look amazing and look super high quality just by increasing your price.

Brittany: 44:58
Yeah, I would agree. And the one thing I would add to that for me personally, if I were doing it, because when we talk about perceived value, it kind of feels a little sleazy, if I can just be completely honest, but it really doesn’t have to be.

If you are confident in your product and you know that it’s worth that, you know that you have done the absolute best that you can do, then it is absolutely worth the additional cost.

Now, if you have any doubts to that whatsoever like say you used a cheaper yarn or there are lots of mistakes in it or whatever it may be if you don’t feel confident in that product then maybe you shouldn’t jack up the price because then it does kind of cross that line into questionable intentions.

Chantal: 45:46
Yes and if you I always believe that once as soon as you end up pricing your stuff appropriately, which means that probably your chances are high that it’s going to be going up. If you have someone, there’s always that one person who’s at a market that goes, why is it this expensive? And if you start going, well, it’s because it takes me like this many hours. And I just like, I do know, like stand straight, roll your shoulders back, look them straight in the eye and say, that’s the price because you are worth that price.

If you can have the confidence to come off with that price, People won’t question you.

Brittany: 46:21
Right, right. I completely agree. Why do you think it’s so hard for us to feel confident in our prices?

Chantal: 46:32
I think it’s because we have a tendency to, as soon as you end up putting a price on an item, it goes, that’s how much you are worth as a human being. I think that it’s very hard because we always internalize things and go, well, am I really worth that? Is someone going to pay that amount? That’s a high price point. Or I don’t think that I’m worth that.

It really comes to as soon as you end up pricing your stuff, it’s showing how much you’re worth. But also know that if a person looks at you and looks at your price and goes, they’re really confident with themselves, they’re worth that amount. If you have a person who is underpricing, they’re going to think a little bit lower of you.

So why wouldn’t you just take the initial steps to be able to make sure that you are showing your worth and making sure that people understand that you’re not supposed to be trifled with you’re an artisan that knows your craft and you should be proud about it there’s no reason for people to be able to walk over you because it is a fiber based business I think that a lot of the stigma comes around the fact that people think that fiber items should be cheap.

Brittany: 47:38
Yeah.

Chantal: 47:39
And they shouldn’t. They’re handmade. You’re taking so much time to be able to make them. And there’s so much blood, sweat, and tears that go into every single product that they’re worth minimum wage. You’re worth it. But I think it’s hard for us as crafters because it’s really internalizing that of going, what am I worth as a person? And trust me, you’re worth every freaking penny.

Brittany: 48:06
Right. I think a lot of people, they might struggle with the fear of missing out. They might say, well, if I price it at this point, I know that my potential customer is going to go from 50% to 10%. There’s going to be a huge… cut in their potential market if they raise that price.

So they might be afraid that while there’s somebody offering it for a lower price, that customer is going to go to the other person and then I’m going to miss out on that sale. But I think if you, and I’m kind of thinking about it and relating it to my business model personally, which is not selling things. And I want to touch on that too, because I find it really interesting.

But when you set your price, you’re setting the standard for your customer, for your business, for your brand. And just because somebody else might be doing the same thing or offering the same thing, it doesn’t mean that you are worth the same amount that they are.

You are able to put your price on what you know that you’re worth, not just what you think you’re worth, but what you know you’re worth because you’ve done the math to figure it out.

Chantal: 49:22
Yeah. And I also think that if you are having serious FOMO or if you’re missing out, I like to interject that if you raise your prices, you’re starting to work smarter, not harder. Say that there’s a person who sells something for $25 and you sell it for $50. You only have to sell two items to make $100. Well, they have to sell four items to make $100. Exactly.

Brittany: 49:48
Yeah.

Chantal: 49:48
Even though you may end up having 50% less people end up buying it, you’re still making the exact same amount of money, if not more. We ended up really toting pricing in MakerStrong in October. And there were so many success stories of people going, I raise my prices and I have more people purchasing now than I had last year at this time. Because people go, wow, they’re worth it. That’s a really great item. It’s perceived value.

Brittany: 50:18
It is. I’ve heard that, too, on other podcasts that I listen to, that whatever you think your product is worth, double it. Yes. Just double it. And add tax. See what happens. Yes. So go through the formula. Find your retail price. Try doubling it. Yeah. See what happens.

Chantal: 50:38
Try doubling it. If you make the sale, great. And you never know. Yeah, right. And you never know. And worst comes to worst, you start off small and you grow it by $5. And that’s five extra dollars that you didn’t have. And $5 is the difference between having a coffee that day from Starbucks or not. And if you have people that go, oh, no, it’s five extra dollars. I’m not going to pay for it. That person isn’t your target audience. They’re not your ideal customer.

Brittany: 51:05
Exactly. And you don’t want to attract customers who have the mind frame that I have. Homemade isn’t worth anything, that it’s not valuable.

Chantal: 51:15
Exactly. Cheap prices attract cheap customers.

Brittany: 51:18
Yes. All across the board, not even just in homemade.

Chantal: 51:22
Yeah. All across the board.

Brittany: 51:24
Yep. Well, man, this has been so insightful, even for me. Like I said, for me, my wheels are turning because this advice is not only applicable for people who are selling their goods online, but I’m thinking people like me. We’re bloggers who work with brands. We go through the same process. And I can’t tell you how many times my husband has told me this is what he’s a financial analyst. So I really do trust his opinion and very much lean on him for things within the business. But there have been times where he’s told me what a service is worth because he’s done the math. He’s ran the numbers. And my thought instantly is, yeah, right. People will never pay for that. And he has challenged me to change my perspective. And I’m still here. Yeah,

Chantal: 52:16
Exactly. And there’s a whole entire other aspect to it of like, blogging takes a really long time. I always laugh whenever people are like, oh, I’m going to start a blog. And you’re like, do you realize how hard it is to start a blog? Yeah. Like, how long the upkeep is and how long you’re writing. You’re coming up with the content. You’re writing the content down. And then you’re editing it. So if you don’t think that that’s going to be at least an hour to two hours, it is. It’s a lot of time. And you should be charging time. Time for that as well as there’s a whole entire idea of like intellectual property, right?

Brittany: 52:50
Yeah.

Chantal: 52:51
You could charge an unreal amount for the stuff that you know that other people don’t.

Brittany: 52:55
Exactly. And I want to stress too that it’s not– money doesn’t have to be a dirty thing. Having a business doesn’t have to be a dirty thing and wanting to make money in your business isn’t a bad thing. But you have to– You have to be confident and know that what you’re putting out there is the absolute best that it can be and that it’s actually worth what you’re asking.

Chantal: 53:24
Yes, absolutely. And you should be making a profit. You should. You definitely should.

Brittany: 53:33
Yeah, you definitely should. So, man, this has been such a great talk. I’m so glad that we got you back on for a full episode. I know this is going to help so many people. And before I let you go, I just want you to give people a chance to find some of your resources because I know you’ve written a lot about this topic. You mentioned MakerStrong, so I think that’s a good place to direct people. So just– Give it to me straight. Where can people find you and what do you have to offer?

Chantal: 54:04
Um, so you can find me, most of my stuff is on Instagram and I usually post all of my blog posts and link to it. Um, I have two. One of them is Knititude. So K-N-I-T-A-T-U-D-E. Most of my blog posts are on there as well as another blog post. Sorry, another blog. So you can find me on Knititude on Instagram as well as my website, which is Knititude.ca.

As well as if you’re really looking to get into more blog posts about being business savvy, I have another Instagram. It’s called No Shit Biz Tips, B-I-Z or B-I-Z, however you want to say it. No. And… And you can check my blog on NoShitBizTips.com.

And it also goes into if you’re really feeling like there is sticker shock and you don’t understand why you should be putting a profit margin in there. I have a profit, like I have a blog on there saying why you should be making a profit margin because P.S. there’s other things in your business that you need to be paying for that are outside of production time.

So you can find me on those two places as well as check out Maker Strong. It is absolutely amazing. We have an Instagram page, which is Maker strong but we also have a Facebook group and the Facebook group is gold because we have over 1700 people in there you can ask for advice you can get responses from other people who may be in the same situation as you are and maybe you’re struggling with something that you can also help other people that may be in a situation that you’ve already been in so definitely check out our maker strong Facebook page there are three questions that we ask you to answer and they are mandatory to be able to get in which is just simple as like how long have you had your business what are your like what are your weaknesses what are the things you want to learn but those three places I would definitely suggest going to.

Brittany: 55:50
Yeah and I think there’s a lot of value in being a part of a community when if this is a topic that is really weighing on you if you’re really struggling with what you feel like you’re worth what your product is worth and maybe what you think you should be asking for it like I said it kind of goes goes back to that unsettled that unsettled feeling like you know what you should be charging, but you feel bad charging that much. I think if you’re in that situation, being a part of a community can really help you build confidence and be more comfortable with knowing what your worth is and what your product is worth.

Chantal: 56:32
We will always be your cheerleaders. That’s awesome. I will rah-rah behind you until the cows come home.

Brittany: 56:38
Nice. Well, I will have links to all of that stuff in the show notes page so people can head over there. They can access that Facebook group as well as see some of your helpful blog posts that’s on this topic. So Chantal, thank you so much. This has been absolutely incredible.

Chantal: 56:56
Oh, thanks for having me back.

Brittany: 56:59
Well, I know after hearing all of that, you completely understand my excitement for this episode and why I believe that it has a potential to change your business. I would like to ask one favor of you today. If you know somebody who might also have an Etsy shop or sell their goods online, even selling in markets in different places, if you know somebody and you think that this episode can help them, I would just ask that you share it with them. That’s going to be wonderful.

One great way that, well, first of all, we can help spread the word about the show, but also, and more importantly, I just want to help as many people as I possibly can. And I have been given the opportunity to utilize this platform to help people and to bring on specialists like Chantel to be able to help you. And I just want to continue that. And I ask that you help me.

Thank you so much for watching. Thank you guys so much. This is your podcast, too. If you have a topic or a guest that you would like to hear from, just send me an email. I am right here on the other side of the line, and I am listening and actively trying to do what you want me to do. So leave me an email, Brittany at BeHookedCrochet.com. Just go ahead and type podcast suggestion in the subject line. That way I can be sure that I put it in the right place so that I read it. And I’m super grateful for you if you take the time to do that. And I will do everything that I can to make sure I get your episode on a future show.

I appreciate you so much for listening to today’s podcast. Once again, I’d like to take a quick moment to thank Yarnspirations, our sponsor. Whether you knit or crochet, Yarnspirations is the online destination for free patterns, video tutorials, and of course… the yarn you love. You can buy it directly from the source, guys. Patons, Bernat, Caron, Lily Sugar and Cream. If you’re not able to get them in your area, I recommend that you check their website. You can order it straight from the source. You won’t run into any stock issues or have any colorway limitations because of this. You can get everything that you want right there on their website.

In case you missed it at the beginning of today’s show, I You guys, my listeners, are offered 20% off your entire order of $40 or more at Yarnspirations.com and all you have to do is enter the coupon code BHOOKEDPOD at checkout. That’s B-H-O-O-K-E-D-P-O-D.

Well, I can’t help but tease next week’s episode just a little bit here at the very end of the show because one of my… Little dreams came true. I was able to connect with somebody who I have admired for so long in this industry. Next week, I have none other than Vicki Howell on the show. I’m so excited about it. Don’t want to miss it. So tune in next Thursday and until then, have a wonderful weekend. I’ll see you then. Bye-bye.