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I am about to start my own small business and I was really stuck in what I should do or how I should price my product. Thank you for this video. It has helped me a lot.
Some of the financial terms are mixed up in the video... profit is not what you invest back into the business, profit is what you have left after taking all the cost and taxes from the revenue (including material cost, labor and overhead cost). You can even take the profits and pay it out to yourself or invest it back to the business. Income is what you pay yourself even in a form of a salary or as dividends from the profits.
Agree also for Tax purposes it's better to run your business at a small loss or break even point (so you don't pay any business tax) unless you think it's a business you believe can be sold for a profit in the future.
Thank you so much for you and your friends' support!! That really means a lot to me!! I'm really happy to know that my videos have been helpful for you and your friends! ❤️
You are so welcome! In case you haven't seen them yet, I have a few more pricing videos: th-cam.com/video/E84R362yfHE/w-d-xo.html and th-cam.com/video/BzMBA4CCZHQ/w-d-xo.html and th-cam.com/video/v3J_0bnEpjE/w-d-xo.html
You can divide up the cost on overheads by the number of hours you are using the item, or by how many pieces you think you will make on that particular tool before it needs to be replaced (a good guess is fine).
If that's the case then you need to source cheaper/bulk materials or you need to streamline your process. If you aren't making a profit on your items then something is off.
Don’t worry it means I’m selling a small car mirror hanging for almost $60 and it costs me $4 to make and 30 minutes of my time. They typically sell for over half of that so I won’t be using this formula 😂
What’s the best method to price a software ? I mean let’s say there is a one time cost and then a recurring expenses just do update the software everyday. I mean there is no quantity here so what’s the best way to price it?
I would price it based on 1) the value it gives to people and 2) what existing software like this costs in the market. It's less about how much you've invested into it to create it!
This is great, thank you. I am just getting started with wanting to start a handmade business. Still lots of work to do, but that’s ok. So thank you again for this. I did also subscribe to your channel.
I'm a bit confused. This does seem high. I'm an aspiring chef right. So, if I were to use this for let's say food, then this example should be right? Slab of ribs cost $10 Hours to grill: 2 Pay myself: $11 per hr 10+22= 32 32×2=64 for a slab of ribs?
Hi, i came across your channel and I would like to thank you for sharing your experience. İ have a question. İ make handmade items as a hobby and I decided just recently to start a business my question is how to calculate the cost of the materials that I already have , I don't remember all thıer prices and İt's even hard getting them listed as there are many ,how can price my items when not sure about part of cost?
Hi M, in this case I would probably price the cost of the same material now as if you were purchasing it new and go with that, because if you sell the items you're making and need to replace those materials then your costs will remain steady. Good luck!
I’m speechless on your comprehensible teaching on the Pricing Formula teaching! Where were you when I was going to school back in my day??? Oh! You weren’t born yet! Well as they always say Mei, “It’s never to late” Thank you so much for being such an amazing informative business instructor!👍❤️
So if you make jewelry and you use a $3,000 (that's what the artist paid the stone seller) opal in a piece. Should that stone be 4x the cost for retail? At what point are expensive materials NOT multiplied by (at least) 4?
Good question! Pricing in the jewelry industry can vary widely depending on factors like craftsmanship, design, overhead costs, and yes, the materials used. While there's no one-size-fits-all formula, the 4x markup you mentioned is a common guideline used by many jewelers to cover not only the cost of materials but also labor, skill, and other associated expenses. However, when dealing with exceptionally high-cost materials like a $3,000 opal, the markup might not strictly adhere to the 4x rule. Instead, it could be adjusted based on market demand, exclusivity of the design, and perceived value by the customer. Some pieces might command a higher premium due to the rarity or uniqueness of the materials used, while others might have a lower markup for more accessible markets.
Thank you so much! This video was really helpful. I created a puppet and I wasn't sure how to set the right price. Now I feel better about my work and I know how to give it value.
Let’s say you don’t get an income because you aren’t working, that’s why you have started this online business…..How should you place your works worth then even when someone’s asked for a portrait from you, you’ve completed it, they’ve accepted it but want you to price it?
Hi Rawan! Great question! Your hourly rate will completely depend on you and your expertise as well as your location. Just make sure you are able to run a sustainable business with your set hourly rate. Hope that helps! 😊
Hi Mey! I'm new here and I'm already making a marathon in your channel! I have two very specific questions: If your product is handmade, but it is a digital product. Does the pricing formula applies to it? Second question is: what if the labor is an specialty? Like a designer, or a journalist? You keep the pricing formula as it is? Thanks in advance!
If it is digital, you don't have the material cost. You would have the time cost divided by how many you think you will sell. The labor cost should be considered as, what would you pay someone else to do this for you per hour.
Hello Mei, I'm a new subscriber 😊. I watched your most recent video on pricing, so helpful this is all new to me. So naturally I'm going back to watch all your videos. I was searching info on shipping. This is my most challenging part. Free shipping or not. How to do this Canada (where I'm from) to US and International. And is this cost built in the price or add to the price? In the end one of my items will be over $70 which naturally scares me if people will buy or not. Can you do a video on this or do you have one? I made mistakes where I ended up giving an item away free becuase shipping cost was so high and I didn't mark up my item properly. Thanks in advance
Hi! Thank you so much for subscribing!! ❤️ I'm sorry to hear you had to give away your product basically for free because of high shipping cost. I think this blog post of mine can be helpful for you: www.creativehiveco.com/save-money-on-shipping/ I believe there were previous posts/discussion in the Creative Hive Facebook Group about this concern too. Here's the link in case you want to join the Creative Hive FB community: facebook.com/groups/creativebizmarketing I really hope this helps! Good luck!! You got this!! ❤️
Hi Sara! The $10 is the Labor which is your set hourly rate multiplied by the time it took you to finish 1 piece of your product (or in the video, it's $20 (hourly rate) x 0.5 (30mins or half an hour) = $10). Hope this helps! If you have further clarifications/questions, please let me know. 😊 If you'd like to, you're also welcome to download my free Online Pricing Calculator here: www.creativehiveco.com/pricing-handmade-items-guide/
Thank you so much for this video. I recently opened my candle business and I wasn’t taking into consideration my time spent $. Thank you I enjoy your tutorials.
Creative Hive Thank you Mei. I do have a question. I’ve been approached by someone that wants me to produce candles with no labels of my company, they will will label their brand and sell it online. I am new to the business so wondering if you can give me advice. Is there need for me to consult or draw up legal paperwork to protect my business? Thank you
A lot of businesses do this - they call it private labeling. You can definitely draw up a form if you want to, depending on your concerns. For example, you can say that they can sell them in their store with their label but can't sell them blank to another store. Anything like that. Only take this on if you're comfortable with the terms.
You can adjust for your market for sure, but underpaying yourself really hurts the handmade market overall. Just because others aren't pricing correctly doesn't mean it's a good idea.
I owned a business for five years. Recently went bankrupt. I sold in my opinion a very unique and quality product but struggled making profit. I have done extensive research into the market and what other similar companies charged for a similar product and found I was selling at a wholesale rate for the duration of my company because I wanted to stay competitive with my competition. How is it that my competitors can survive selling at a wholesale price when the way they manufacture the product is identical to the way I did. The costs of raw materials should have been comparable because I took the time to set up large volume wholesale accounts and bought direct for the most part. I sold my product to real high end home builders building over million dollar homes. If I sell direct to the builder it would make sense that my price would fall under the "wholesale" margin because they would in turn mark my product up and sell it to the homeowner. I'm just confused on how a custom handmade wood product could have such tight margins. Tight enough to eventually go out of business. Is it possible to run a business selling at wholesale prices but not to dominate in volume?
Hi Travis, I'm so sorry to hear that. While selling primarily at wholesale prices in itself is a strategy, your statement is accurate. You need the volume in order to keep it sustainable, otherwise your fixed business costs will eat up all your profits from the little sales you've got. Regarding your competitors, volume was what it could be they had that kept them in the business. And/or their manufacturing process might not have been what you thought it was, and they could have used cheaper materials for a poorer quality product.
Mei, In using your pricing formula, the results are quite uncomfortable for me to post 😬 I have a question about pricing product with variable supply price points: When I purchase supplies (beads, wire, canvas, paint, etc), I only purchase them with a coupon, however, the discounts are not always the same and I can't expect them to be consistent. If I purchase supplies at 70% off but, the next time supplies are 40% off - should I use the price of what I would have paid (without any discount $5.99/54 Beads) or what I actually paid (with discount $1.79/54 Beads)? I won't get supplies at 70% off every time I need to replenish. Thanks for your assistance and expertise! Randi Design & Flourish
Hi Randi, I usually recommend generally avoiding buying supplies from places you can use 40-70% coupons on because they're not offering you their best prices from the get go and you're giving up that control over your pricing which is very important and has a trickle effect on YOU (your profits, ability to sell products, positioning your brand) and the customer (who pays the final retail price you come up with). Pricing is a pretty sacred thing, and you want as much control over that as possible. Find suppliers that you don't need coupons for, because those are the same ones that have consistent, lower pricing and are more reliable. It's hard and takes time to find those suppliers, so take your time and don't beat yourself up! Having said that, to this specific case, if I were you I would use the price you would have paid without a discount. Ultimately that will price your products a bit higher but at least you're protected and not undercharging, plus you end up profiting more when you get a discount from your supplier. The challenge now becomes making sure you don't end up charging A LOT more for your product compared to similar products, because that can make it harder for you to sell it.
Hi! Based off the formula, your markup is the profit you make from each piece of your product. Profit is the money you invest back to your business. Income, on the other hand, is the remainder from your profit after you deduct all your business expenses. Income is what you use to pay for yourself and personal stuff. Hope that helps! 😊
This video can very easily confuse students. PROFIT is NOT what you invest back in your business. You can find anywhere the definition. Good quality on the video btw.
Thanks for the advice I am a special needs person and I don't have a job yet I started my Business on Facebook so I would have something to do during the day name of my business is Emmy's homemade blankets and scarves mainly what my products are homemade crocheted blankets scarves and doilies I also armlet my scarves but the only problem I have is I have not had any customers sense my first sell and I cant understand why I am kind of not sure what to do
Hi! Are you asking about the retail price? After figuring out your item cost (materials cost + labor cost), you then multiply it by 2 (recommended markup) to get your wholesale price. Then, multiply your wholesale price by 2 again to get your retail price.
What if it takes you about a week to make your product like a blanket or something but it takes you eight rolls of yarn and it's like three bucks apiece so how much would you prices it
Hey Emily! Then your product could be positioned more like art. And some people will pay hundreds to thousands of dollars for something like scarves, cardigans, blankets... I mean, there are Coach handbags that sell for $1000+ and people buy them! At the same time, there are some products that don't make sustainable business ideas. Which is why very few crocheters and knitters sell their finished products, and they sell patterns instead. Or they use a very simple pattern and bigger gauges/needles so they can afford to price more accessibly. Pricing is part art and science, so without knowing you and your product in more depth, it's hard to give any more concrete ideas/suggestions!
Hi! Here's an article that explains the difference between the two: www.indeed.com/career-advice/career-development/revenue-vs-income-vs-profit Revenue is the total amount of money earned by a business and income is the money left after all the business expenses are deducted from the revenue.
Noone wuld buy my.product if i keep retail of x2 of wholesale. As the market is selling in much.lower price. I dnt know if this percentage works unless u r a.super big brand. Not for handmades i think
Hi there! Yes, this is the pricing formula for handmade, it's just that so many people underprice their handmade work. While I do agree that you need to be priced well for your market, you still have to make a profit.
If the product you're selling contains packaging that would be included if you were displaying on a store shelf, then it's part of your materials cost. If it's packaging costs for shipping your merchandise, like shipping boxes and bubble wrap or tape, then that is part of your shipping costs.
Hi Oyin! You can deduct the total weight/length of material you've used up on 1 piece of your product from the total weight or length of your material to get your unit cost. If it'll help, feel free to also use my Online Pricing Calculator Template here: www.creativehiveco.com/pricing-handmade-items-guide/ If you have any further questions, just let me know. 😊
so the first mark up gets me the profit ( money that belongs to business) and the second mark up gets me the income( income of being the business owner) correct?
Hi ALZ'S DIARY! Your markup is the profit you make from each piece of your product. Profit is the money you invest back to your business. Income, on the other hand, is the remainder from your profit after you deduct all your business expenses. Income is what you use to pay for yourself and personal stuff.
Hi, thanks for the video it was very helpful!!!but I have a question. Should I includes the price of any safety equipment or tools to the cost of the product? I am starting a business but I am stumped on this.
You can. This would be your overhead costs and you can divide up the cost by the number of hours you are using the item, or by how many pieces you think you will make on that particular tool before it needs to be replaced (a good guess is fine).
How much is it per bottle? If your supplies are $80 and you make 10 bottles worth of hair oil from that, then the supplies would be $8 per bottle. Same with your time. If you charge $10 and hour and you make 10 bottles in that hour, each bottle is $1 an hour.
I enjoy sculpting polymer animals, have been commissioned family and friends. Problem: I spend quite a bit researching (as it accompanies me throughout the process), designing and then sculpting. Based on your formula, my pieces would be over two hundred. Since I'm just starting, an known per say, I don't see how I could charge so much so soon. Any suggestions?
Hi Donato, your price has nothing to do with being known or unknown - the price comes down to time, skill, and materials. If you are uncomfortable with that pricing, is there a way you can cut down on time, or find cheaper-priced materials?
Thank you ! im enlighten now ! my mistake should stop ryt now 😅. its a great oppurtunity that i learned on your video. its a big help for me and in my small business handmade macrame for pricing each one of my item 🙏🏼🥰💵. Godbleaa you more !
If my business was on an online domain I'm paying for (ex. $18/month on squarespace), should I include this price into each product? Or how much $ should I include in each product to cover the $18/month?
You can, since it is an overhead cost. You can divide the cost by how many products you sell on your site per month, or the projected amount, and add that in.
This formula prices me right out of the market in my niche. What sells for up to $40 everywhere else (and that's the high end boutique price) would now be $130. :(
So there may be something else amiss. Is there a way for you to find your materials for less? Is there a way for you to streamline to cut down on your work time? Are you pricing out materials for just one item?
Not exactly. This article breaks it down well: www.investopedia.com/terms/p/profit.asp There are three types of profit, your net income being the third step of the three.
You need the second markup to pay yourself for your work. This is the standard formula for products. The first markup is the wholesale price, or what a shop buying in bulk would pay to resell your products. They will then mark them up another 2x so they make a profit on their purchase. You should be doing the same.
So there's a couple of ways we can look at this and use that information. First, it could be that your price is too low for what you are making, which is why it isn't selling. When a price seems too low, people can be hesitant to purchase because they're worried it's going to be cheap quality. Have you looked at what price other people are selling similar items for? That's a good way to know if you are in the right range. The other could be that if your end price truly would be that much, is that a good item to sell for your business? Is that a profitable item?
Hi and thank you for this helpful video. I just have a quick question regarding the income and labor hourly rate that you set up the the begging of the video. Isn't the Income that you're going to pay yourself included within cost ? Thank you
If you have trouble with the formula you may need to look at your factors - can you source your materials for cheaper? Are you breaking down the cost per item? Are you able to charge less in labor?
@@CreativeHiveCo yes, I can only lower the amount I'm paying myself per hour of my work. At least only now, when I'm at the very beginning. Thank You for reply 😊
Let me make sure this is right $4 (material)+$10 (labor, $20/hour,30 minutes to make=$10) =$14 $14 x 2 =$28 $28 x 2 =$56 ...... $56 for a crystal car hang that costs $4 to make
Yes, that is correct. You are pricing for a profit based on your skill and design. There is wiggle room there, obviously, for what the current market will allow, but the formula gives you an idea of where you should be priced.
Hi Mei, what's a healthy markup for clothes and bricks? May you please do a markup video explaining how it differs from industry to industry. Thank you in advance.
In general, the markup will be the same. Art is one thing that sometimes can be priced out differently: th-cam.com/video/utv_FQUReH4/w-d-xo.html Crochet is another: th-cam.com/video/pXsvmEpqxiw/w-d-xo.html
2 hours times your hourly rate. So if you charge $10 an hour, your time is $20. But if it takes you 2 hours to make 10 items, then it would be $2 per item for your time.
Hi sister , for my resin art bizz I thought I'll count material cost of resin per ml and see how much I use, should I include thr cost of my mould? And if yes how?
You can divide the cost of the mould by how many pieces you think you will make out of it. If it was $5 and you plan to make 100 pieces out of it, you could add $0.05 to each piece.
While there is definitely more that can be added on, this is just a basic item pricing guide so creatives have a handle on how to price their work fairly.
Hello!! I gave a question! Let's say I've been taking time to make my art and extended making and adding details to days and not hours.. what's the best way to calculate those hrs? Or make something up? Thank you for this break down btw
Hi Stephy! You can take the total number (or average) of hours you've spent in finishing 1 piece of your product. In case you also need it, feel free to download my free Online Pricing Calculator here: www.creativehiveco.com/pricing-handmade-items-guide/
@@CreativeHiveCo hello! Thank you for your response! Okay so I will make a estimated time. Now I did view that calculator but I am confused with the calculations all the way at the bottom left. I'm not too sure where those numbers came from. Guess I will write some things out and maybe try and make sense of it or compare the numbers. Since it's different from the breakdown u provide in your video
🚨NEW FREE WORKSHOP FOR 2022🚨 Learn how to create a PROFITABLE handmade business online without keeping up with social media 🔽
Watch the free workshop here: bit.ly/34svLNy
I am about to start my own small business and I was really stuck in what I should do or how I should price my product. Thank you for this video. It has helped me a lot.
I'm so glad to hear this, Maria! You got this! Good luck launching!
Some of the financial terms are mixed up in the video... profit is not what you invest back into the business, profit is what you have left after taking all the cost and taxes from the revenue (including material cost, labor and overhead cost). You can even take the profits and pay it out to yourself or invest it back to the business. Income is what you pay yourself even in a form of a salary or as dividends from the profits.
Agree also for Tax purposes it's better to run your business at a small loss or break even point (so you don't pay any business tax) unless you think it's a business you believe can be sold for a profit in the future.
Very correct
Yes but I think she was really referring to what you should be using your profit for as a business owner.
At the earlier stage of the business profit can be plough back
This was perfct, exactly what I needed to stop me making really bad mistakes! :)
I'm so happy to hear it was helpful! Thank you so much for watching!
This is so helpful! Thank you for making this video. I was searching for the answers of questions in my mind. And here I got all me question answered!
I'm not expecting that there's a video like this. Thank you ❤️
Thank you so much for watching Peter!! ❤️
I love you ❤️, I share your videos they help me and my friends a lot
Thank you so much for you and your friends' support!! That really means a lot to me!! I'm really happy to know that my videos have been helpful for you and your friends! ❤️
Big Help. Thanks
Thank you so much Camille!! That means a lot!! ❤️
You made this so easier to understand! Thank you!
I'm so happy to hear that! Thank you for watching, Anita!
I love this video, for me visual work best! Thanks
Just what i needed...THANK YOU
You are so welcome! In case you haven't seen them yet, I have a few more pricing videos: th-cam.com/video/E84R362yfHE/w-d-xo.html and th-cam.com/video/BzMBA4CCZHQ/w-d-xo.html and th-cam.com/video/v3J_0bnEpjE/w-d-xo.html
How does the rule of marking up twice cover the cost of Overheads (Supervisor, heating & lighting, insurance, dep on assets etc)?
You can divide up the cost on overheads by the number of hours you are using the item, or by how many pieces you think you will make on that particular tool before it needs to be replaced (a good guess is fine).
can i include the utility cost in pricing the product? example machines that is used to create the product?
With this formula, I’d be selling 8oz candles for $90.... that’s the issue with this.. like trust me when I say no one is going to do that lol
If that's the case then you need to source cheaper/bulk materials or you need to streamline your process. If you aren't making a profit on your items then something is off.
Don’t worry it means I’m selling a small car mirror hanging for almost $60 and it costs me $4 to make and 30 minutes of my time. They typically sell for over half of that so I won’t be using this formula 😂
What’s the best method to price a software ? I mean let’s say there is a one time cost and then a recurring expenses just do update the software everyday. I mean there is no quantity here so what’s the best way to price it?
I would price it based on 1) the value it gives to people and 2) what existing software like this costs in the market. It's less about how much you've invested into it to create it!
Watched tons of videos...but this is what I'm looking for... Great. Exact and perfectly explained. Your voice is so nice You speaks so sweet.
Thank you, this is what I was looking for. Highly appreciated
This is great, thank you. I am just getting started with wanting to start a handmade business. Still lots of work to do, but that’s ok. So thank you again for this. I did also subscribe to your channel.
You just saved my life! This is so important and useful information. Im so grateful!
Yay, glad to hear this helped!
This pricing is crazy! Is this standard?I'm looking at the pricing formula.
right? I can't remember the last time I spent $64 on a $6 product. Most people can see right through that!
Damn right 👉
I'm a bit confused. This does seem high.
I'm an aspiring chef right. So, if I were to use this for let's say food, then this example should be right?
Slab of ribs cost $10
Hours to grill: 2
Pay myself: $11 per hr
10+22= 32
32×2=64 for a slab of ribs?
What do you do if your competitors are selling lower than you?
Girl you need more view. Giving us future business owners financial advice. Amazing.
Awww, thank you! I am so appreciative of every view that I get!
And how many businesses have gone bankrupt due to the pandemic and people not being able to afford the prices that the formula suggests? A lot
Hi, i came across your channel and I would like to thank you for sharing your experience.
İ have a question. İ make handmade items as a hobby and I decided just recently to start a business my question is how to calculate the cost of the materials that I already have , I don't remember all thıer prices and İt's even hard getting them listed as there are many ,how can price my items when not sure about part of cost?
Hi M, in this case I would probably price the cost of the same material now as if you were purchasing it new and go with that, because if you sell the items you're making and need to replace those materials then your costs will remain steady. Good luck!
I’m speechless on your comprehensible teaching on the Pricing Formula teaching! Where were you when I was going to school back in my day??? Oh! You weren’t born yet! Well as they always say Mei, “It’s never to late” Thank you so much for being such an amazing informative business instructor!👍❤️
Aww. Thank you so much for the sweet words, Bernice!! This really made my day!! ❤️
Thank you for the best explanation I have ever heard!
You're welcome!
So if you make jewelry and you use a $3,000 (that's what the artist paid the stone seller) opal in a piece. Should that stone be 4x the cost for retail? At what point are expensive materials NOT multiplied by (at least) 4?
Good question! Pricing in the jewelry industry can vary widely depending on factors like craftsmanship, design, overhead costs, and yes, the materials used. While there's no one-size-fits-all formula, the 4x markup you mentioned is a common guideline used by many jewelers to cover not only the cost of materials but also labor, skill, and other associated expenses.
However, when dealing with exceptionally high-cost materials like a $3,000 opal, the markup might not strictly adhere to the 4x rule. Instead, it could be adjusted based on market demand, exclusivity of the design, and perceived value by the customer. Some pieces might command a higher premium due to the rarity or uniqueness of the materials used, while others might have a lower markup for more accessible markets.
Thank you so much! This video was really helpful. I created a puppet and I wasn't sure how to set the right price. Now I feel better about my work and I know how to give it value.
I'm so glad to hear that! Definitely be confident in your work and your pricing!
Let’s say you don’t get an income because you aren’t working, that’s why you have started this online business…..How should you place your works worth then even when someone’s asked for a portrait from you, you’ve completed it, they’ve accepted it but want you to price it?
Consider your time, effort, and the heart you poured into that portrait. Factor in materials too! ⏰🎨 Be confident, you got skills!
Thank you so much for this. It's a minimalist, no b*llsh*t explanation. ❤️
I'm so happy it was helpful! Thanks so much for watching, Angela!
how can I determine the hourly rate? I mean is there's a limit? of course I'll never put it 100$ 'case it will increase the price in negative way
Hi Rawan! Great question! Your hourly rate will completely depend on you and your expertise as well as your location. Just make sure you are able to run a sustainable business with your set hourly rate. Hope that helps! 😊
Hi Mey! I'm new here and I'm already making a marathon in your channel! I have two very specific questions: If your product is handmade, but it is a digital product. Does the pricing formula applies to it?
Second question is: what if the labor is an specialty? Like a designer, or a journalist? You keep the pricing formula as it is? Thanks in advance!
If it is digital, you don't have the material cost. You would have the time cost divided by how many you think you will sell. The labor cost should be considered as, what would you pay someone else to do this for you per hour.
Hello Mei, I'm a new subscriber 😊. I watched your most recent video on pricing, so helpful this is all new to me. So naturally I'm going back to watch all your videos. I was searching info on shipping. This is my most challenging part. Free shipping or not. How to do this Canada (where I'm from) to US and International. And is this cost built in the price or add to the price? In the end one of my items will be over $70 which naturally scares me if people will buy or not.
Can you do a video on this or do you have one? I made mistakes where I ended up giving an item away free becuase shipping cost was so high and I didn't mark up my item properly. Thanks in advance
Hi! Thank you so much for subscribing!! ❤️ I'm sorry to hear you had to give away your product basically for free because of high shipping cost. I think this blog post of mine can be helpful for you: www.creativehiveco.com/save-money-on-shipping/ I believe there were previous posts/discussion in the Creative Hive Facebook Group about this concern too. Here's the link in case you want to join the Creative Hive FB community: facebook.com/groups/creativebizmarketing
I really hope this helps! Good luck!! You got this!! ❤️
2:09 isn’t the 10 supposed to be multiplied by the time?
You didn’t multiply that, I didn’t get that part
Hi Sara! The $10 is the Labor which is your set hourly rate multiplied by the time it took you to finish 1 piece of your product (or in the video, it's $20 (hourly rate) x 0.5 (30mins or half an hour) = $10). Hope this helps! If you have further clarifications/questions, please let me know. 😊 If you'd like to, you're also welcome to download my free Online Pricing Calculator here: www.creativehiveco.com/pricing-handmade-items-guide/
Thank you so much for making this video , it was really helpful
I'm so glad to hear that! Thank you so much for watching!
Thank you so much for this video. I recently opened my candle business and I wasn’t taking into consideration my time spent $. Thank you I enjoy your tutorials.
I'm glad you found it helpful, Virginia! Definitely don't shortchange yourself on your time. Part of the business is your time and expertise!
Creative Hive Thank you Mei. I do have a question. I’ve been approached by someone that wants me to produce candles with no labels of my company, they will will label their brand and sell it online. I am new to the business so wondering if you can give me advice. Is there need for me to consult or draw up legal paperwork to protect my business? Thank you
A lot of businesses do this - they call it private labeling. You can definitely draw up a form if you want to, depending on your concerns. For example, you can say that they can sell them in their store with their label but can't sell them blank to another store. Anything like that. Only take this on if you're comfortable with the terms.
Creative Hive thank you again for your time and advice. I continue to watch you tutorials and enjoy each one of them. Thank you Mei!
You confused me alittle but after replaying and hundred times (lOl) i think i got. It. BEST VIDEO EVER !!!!!!
Thank you, Tiara!
I am going to sell hand-sewn cloaks. It takes hours. I need help deciding on my hourly rate. Suggestions?
I do not have wholesale prices, I produce artisanal tailor made costumes 😅
Hi Arya! If you don't intend on selling your products/costumes wholesale at all, you can sell them at your computed wholesale price.😊
how can you compete in the market if you have 300% profit margin?
You can adjust for your market for sure, but underpaying yourself really hurts the handmade market overall. Just because others aren't pricing correctly doesn't mean it's a good idea.
I owned a business for five years. Recently went bankrupt. I sold in my opinion a very unique and quality product but struggled making profit. I have done extensive research into the market and what other similar companies charged for a similar product and found I was selling at a wholesale rate for the duration of my company because I wanted to stay competitive with my competition. How is it that my competitors can survive selling at a wholesale price when the way they manufacture the product is identical to the way I did. The costs of raw materials should have been comparable because I took the time to set up large volume wholesale accounts and bought direct for the most part. I sold my product to real high end home builders building over million dollar homes. If I sell direct to the builder it would make sense that my price would fall under the "wholesale" margin because they would in turn mark my product up and sell it to the homeowner. I'm just confused on how a custom handmade wood product could have such tight margins. Tight enough to eventually go out of business. Is it possible to run a business selling at wholesale prices but not to dominate in volume?
Hi Travis, I'm so sorry to hear that. While selling primarily at wholesale prices in itself is a strategy, your statement is accurate. You need the volume in order to keep it sustainable, otherwise your fixed business costs will eat up all your profits from the little sales you've got. Regarding your competitors, volume was what it could be they had that kept them in the business. And/or their manufacturing process might not have been what you thought it was, and they could have used cheaper materials for a poorer quality product.
What about if I wasn't doing wholesale price
You still have to factor it in. The retail price is found this way regardless.
Mei,
In using your pricing formula, the results are quite uncomfortable for me to post 😬 I have a question about pricing product with variable supply price points:
When I purchase supplies (beads, wire, canvas, paint, etc), I only purchase them with a coupon, however, the discounts are not always the same and I can't expect them to be consistent. If I purchase supplies at 70% off but, the next time supplies are 40% off - should I use the price of what I would have paid (without any discount $5.99/54 Beads) or what I actually paid (with discount $1.79/54 Beads)? I won't get supplies at 70% off every time I need to replenish.
Thanks for your assistance and expertise!
Randi
Design & Flourish
Hi Randi, I usually recommend generally avoiding buying supplies from places you can use 40-70% coupons on because they're not offering you their best prices from the get go and you're giving up that control over your pricing which is very important and has a trickle effect on YOU (your profits, ability to sell products, positioning your brand) and the customer (who pays the final retail price you come up with). Pricing is a pretty sacred thing, and you want as much control over that as possible.
Find suppliers that you don't need coupons for, because those are the same ones that have consistent, lower pricing and are more reliable. It's hard and takes time to find those suppliers, so take your time and don't beat yourself up!
Having said that, to this specific case, if I were you I would use the price you would have paid without a discount. Ultimately that will price your products a bit higher but at least you're protected and not undercharging, plus you end up profiting more when you get a discount from your supplier. The challenge now becomes making sure you don't end up charging A LOT more for your product compared to similar products, because that can make it harder for you to sell it.
Wait how do you calculate the income you pay yourself?
Hi! Based off the formula, your markup is the profit you make from each piece of your product. Profit is the money you invest back to your business. Income, on the other hand, is the remainder from your profit after you deduct all your business expenses. Income is what you use to pay for yourself and personal stuff. Hope that helps! 😊
This video can very easily confuse students. PROFIT is NOT what you invest back in your business. You can find anywhere the definition. Good quality on the video btw.
Thanks for the advice I am a special needs person and I don't have a job yet I started my Business on Facebook so I would have something to do during the day name of my business is Emmy's homemade blankets and scarves mainly what my products are homemade crocheted blankets scarves and doilies I also armlet my scarves but the only problem I have is I have not had any customers sense my first sell and I cant understand why I am kind of not sure what to do
Have you tried a sponsored face book ad that might help your visibility, tell friends and family as well
Always double cost for any sales price?
Hi! Are you asking about the retail price? After figuring out your item cost (materials cost + labor cost), you then multiply it by 2 (recommended markup) to get your wholesale price. Then, multiply your wholesale price by 2 again to get your retail price.
Thumbs up! can you apply this to pricing Services instead of a product?
Langsung saya subscribe. Sangat mudah dimengerti bagi pemula seperti saya. 🙏🙏🙏
What if it takes you about a week to make your product like a blanket or something but it takes you eight rolls of yarn and it's like three bucks apiece so how much would you prices it
Hey Emily! Then your product could be positioned more like art. And some people will pay hundreds to thousands of dollars for something like scarves, cardigans, blankets... I mean, there are Coach handbags that sell for $1000+ and people buy them!
At the same time, there are some products that don't make sustainable business ideas. Which is why very few crocheters and knitters sell their finished products, and they sell patterns instead. Or they use a very simple pattern and bigger gauges/needles so they can afford to price more accessibly.
Pricing is part art and science, so without knowing you and your product in more depth, it's hard to give any more concrete ideas/suggestions!
What is difference between revenue and income?
Hi! Here's an article that explains the difference between the two: www.indeed.com/career-advice/career-development/revenue-vs-income-vs-profit
Revenue is the total amount of money earned by a business and income is the money left after all the business expenses are deducted from the revenue.
Hello, Is advertising fees considered as the money we invest from the profit
Yes, anything you put back in to your business would be considered this.
@@CreativeHiveCo thankyou
Wow 🤩! What an amazing video! I learnt sooo much in 8 mins! Thanks 🙏🏼
I'm so glad to hear that! Thank you for watching, Domitille!
Sometimes my grandma gives me free stuff, but i don't really like taking things for free.
Noone wuld buy my.product if i keep retail of x2 of wholesale. As the market is selling in much.lower price. I dnt know if this percentage works unless u r a.super big brand. Not for handmades i think
Hi there! Yes, this is the pricing formula for handmade, it's just that so many people underprice their handmade work. While I do agree that you need to be priced well for your market, you still have to make a profit.
when i make money how do i know what is my income from my profit?
This post might help you understand the difference between income and profit: easieraccounting.com/difference-income-profit/
Do I include packaging cost in the amount for materials or not?
If the product you're selling contains packaging that would be included if you were displaying on a store shelf, then it's part of your materials cost. If it's packaging costs for shipping your merchandise, like shipping boxes and bubble wrap or tape, then that is part of your shipping costs.
Beautiful video thank you
Thank you so much!! ❤️
does it matter if you use a different markup for each price? for example markup x 2 for wholesale then markup another 1.5 for retail?
If you want to use a smaller markup you can, though 2 is the standard.
How do you calculate your costs of materials (for one product) if you buy your materials in bulk?
Hi Oyin! You can deduct the total weight/length of material you've used up on 1 piece of your product from the total weight or length of your material to get your unit cost. If it'll help, feel free to also use my Online Pricing Calculator Template here: www.creativehiveco.com/pricing-handmade-items-guide/ If you have any further questions, just let me know. 😊
Wow this video is 👏
Great video.
so the first mark up gets me the profit ( money that belongs to business) and the second mark up gets me the income( income of being the business owner) correct?
Hi ALZ'S DIARY! Your markup is the profit you make from each piece of your product. Profit is the money you invest back to your business. Income, on the other hand, is the remainder from your profit after you deduct all your business expenses. Income is what you use to pay for yourself and personal stuff.
Hi, thanks for the video it was very helpful!!!but I have a question. Should I includes the price of any safety equipment or tools to the cost of the product? I am starting a business but I am stumped on this.
You can. This would be your overhead costs and you can divide up the cost by the number of hours you are using the item, or by how many pieces you think you will make on that particular tool before it needs to be replaced (a good guess is fine).
Im still confused if i make hair oils and the stuff comes up to about $80 + 10 = 90 then what i cant charge that per bottle🙈
How much is it per bottle? If your supplies are $80 and you make 10 bottles worth of hair oil from that, then the supplies would be $8 per bottle. Same with your time. If you charge $10 and hour and you make 10 bottles in that hour, each bottle is $1 an hour.
I enjoy sculpting polymer animals, have been commissioned family and friends. Problem: I spend quite a bit researching (as it accompanies me throughout the process), designing and then sculpting. Based on your formula, my pieces would be over two hundred. Since I'm just starting, an known per say, I don't see how I could charge so much so soon. Any suggestions?
Hi Donato, your price has nothing to do with being known or unknown - the price comes down to time, skill, and materials. If you are uncomfortable with that pricing, is there a way you can cut down on time, or find cheaper-priced materials?
Thank you ! im enlighten now ! my mistake should stop ryt now 😅. its a great oppurtunity that i learned on your video. its a big help for me and in my small business handmade macrame for pricing each one of my item 🙏🏼🥰💵. Godbleaa you more !
I'm glad to hear that it was helpful to you, Rinalyn! Thank you for watching!
If my business was on an online domain I'm paying for (ex. $18/month on squarespace), should I include this price into each product? Or how much $ should I include in each product to cover the $18/month?
You can, since it is an overhead cost. You can divide the cost by how many products you sell on your site per month, or the projected amount, and add that in.
This formula prices me right out of the market in my niche. What sells for up to $40 everywhere else (and that's the high end boutique price) would now be $130. :(
So there may be something else amiss. Is there a way for you to find your materials for less? Is there a way for you to streamline to cut down on your work time? Are you pricing out materials for just one item?
Don't teach wrong.. This is. Absolutely INCORRECT
PROFIT = INCOME
Revenue - expenses = Profit or Net Income
Not exactly. This article breaks it down well: www.investopedia.com/terms/p/profit.asp
There are three types of profit, your net income being the third step of the three.
@@CreativeHiveCoinstopedia is correct but ur video is wrong dont spread information
I still don't understand why you NEED to markup twice. How about 1.5-1.7?
You need the second markup to pay yourself for your work. This is the standard formula for products. The first markup is the wholesale price, or what a shop buying in bulk would pay to resell your products. They will then mark them up another 2x so they make a profit on their purchase. You should be doing the same.
If I use this pricing tool, a popular blanket that I make would cost $474 and I’m having trouble selling it at $90 on Etsy.
So there's a couple of ways we can look at this and use that information. First, it could be that your price is too low for what you are making, which is why it isn't selling. When a price seems too low, people can be hesitant to purchase because they're worried it's going to be cheap quality. Have you looked at what price other people are selling similar items for? That's a good way to know if you are in the right range. The other could be that if your end price truly would be that much, is that a good item to sell for your business? Is that a profitable item?
So if I was to make macaroons is the material counted by everything I bought to make the macaroons or ingredients use for 1 macaroons
For just one. So if you know you can get 100 macaroons out of a bag of flour that costs $10, each macaroon uses $0.10 of flour.
Hi and thank you for this helpful video. I just have a quick question regarding the income and labor hourly rate that you set up the the begging of the video. Isn't the Income that you're going to pay yourself included within cost ? Thank you
That could be the hourly rate, if you are paying yourself per hour.
great presentation and concise ..was looking for a clear vid for my daughters biz.. i will pass along to her so she can subscribed. thank you
That's great! I'm glad that you found something that will be helpful for her!
Thanks.
You're welcome! Thank you for watching, Moaz!
I can't markup twice because nobody will buy my product for such a hight price so I don't think this formula is good for everyone 🤔
If you have trouble with the formula you may need to look at your factors - can you source your materials for cheaper? Are you breaking down the cost per item? Are you able to charge less in labor?
@@CreativeHiveCo yes, I can only lower the amount I'm paying myself per hour of my work. At least only now, when I'm at the very beginning. Thank You for reply 😊
Let me make sure this is right
$4 (material)+$10 (labor, $20/hour,30 minutes to make=$10)
=$14
$14 x 2
=$28
$28 x 2
=$56
...... $56 for a crystal car hang that costs $4 to make
Yes, that is correct. You are pricing for a profit based on your skill and design. There is wiggle room there, obviously, for what the current market will allow, but the formula gives you an idea of where you should be priced.
Creative Hive the ‘current market’ is roughly half of that
hiii! I have a question, what is a good hourly rate for you? what is too much/less?
Think of what you would pay someone to do the thing for you.
Please. Language Malayalam
Hi there, I wish I could present these in all languages!
😄
Thank you! I'm ignorant when it comes to business. Now at least I know this lol
I have lots of videos here to help you out, Coco!
Hi Mei, what's a healthy markup for clothes and bricks?
May you please do a markup video explaining how it differs from industry to industry.
Thank you in advance.
In general, the markup will be the same. Art is one thing that sometimes can be priced out differently: th-cam.com/video/utv_FQUReH4/w-d-xo.html Crochet is another: th-cam.com/video/pXsvmEpqxiw/w-d-xo.html
@@CreativeHiveCo thank you for your assistance
very simple and straight forward. thankyou..
I'm glad it was helpful to you! Thank you for watching, Brendan!
Thank you for enlightenment Jabulani from South Africa
Thank you for watching, Jabulani!
Thank you so much for making this video I have my small business now in which I need to know how to price my product so thank you!
Thank you so much for watching Alexi! I'm so glad my video helped! Good luck with your business! ❤️❤️
@@CreativeHiveCo Thank you!
So what if it takes it take me 2 hrs to make, do I multiply 2 for time or divide like you did?
2 hours times your hourly rate. So if you charge $10 an hour, your time is $20. But if it takes you 2 hours to make 10 items, then it would be $2 per item for your time.
This was helpful information so that I can price my items fairly. Thank you
That is most definitely the goal, M M! Thank you so much for watching!
Hi sister , for my resin art bizz I thought I'll count material cost of resin per ml and see how much I use, should I include thr cost of my mould? And if yes how?
You can divide the cost of the mould by how many pieces you think you will make out of it. If it was $5 and you plan to make 100 pieces out of it, you could add $0.05 to each piece.
@@CreativeHiveCo makes sense sis!
you should add operation expense, cost of goods, gross profit , net profit etc
While there is definitely more that can be added on, this is just a basic item pricing guide so creatives have a handle on how to price their work fairly.
That was a really great video!!
Hello I wanna ask how do you mark up if you have the item made for you? the price of the item becomes really high
You would double the cost of the item. They are already charging for materials and labor, so you are starting at the wholesale point (hopefully).
@@CreativeHiveCo Thanks. Although I also pay for the materials and only pay for labor to get it relatively cheaper. Does it also apply for that? 🙂
Hello!! I gave a question! Let's say I've been taking time to make my art and extended making and adding details to days and not hours.. what's the best way to calculate those hrs? Or make something up?
Thank you for this break down btw
Hi Stephy! You can take the total number (or average) of hours you've spent in finishing 1 piece of your product. In case you also need it, feel free to download my free Online Pricing Calculator here: www.creativehiveco.com/pricing-handmade-items-guide/
@@CreativeHiveCo hello! Thank you for your response! Okay so I will make a estimated time. Now I did view that calculator but I am confused with the calculations all the way at the bottom left. I'm not too sure where those numbers came from. Guess I will write some things out and maybe try and make sense of it or compare the numbers. Since it's different from the breakdown u provide in your video
Hi Stephy! Feel free to reach out to me here or via email at mei@creativehiveco.com if you have any questions.
You explained it very simple though
Hi Mei. Thank you for the video! So you would be selling the item for $64 +shipping?
Hi Stephanie! Yes. You add the shipping cost on top of your retail/wholesale price.
@@CreativeHiveCo thanks mei! How do you determine the shipping of an item?
Hi Stephanie! You can refer to the videos below. Enjoy watching!! 😊😊
th-cam.com/video/gnegIK-kIV4/w-d-xo.html
th-cam.com/video/6-hQAGL0M_Q/w-d-xo.html
Thank you for this explanation, great tips and good to know that mark-up is the rule.
I'm glad to hear this was helpful to you! Thank you so much for watching!
excellent!
Thanks! Thank you so much for watching!
@@CreativeHiveCo
hey can you do a video on how to pay or get your net income from a weekly total revenue? Thanks in advance!
Thank-you so much very easy to explain speech
Thank you so much!
let me ask u, it woks only with hanmade business?
This is the formula most makers use because it accounts for materials and time.
Thanks for this video, now I know how to price my furniture I made.
You're most welcome Ramil! Good luck!
Thanks, this was helpfull!
Thank you so much Simeon! ❤️