A Tale of Two Craft Makers

Note: you may print this page as a hand-out for a workshop.

As we’ve learned from the Craft Pricing Workshop, pricing is a balancing act and different craft makers have different ways of pricing their crafts. Here are the stories of Mary and Jane, two people who approach craft pricing in different ways. They are made-up stories, but are based on real life situations that will be familiar to most craft makers. Their ways of pricing aren’t the only ways, but we hope that these stories can illustrate how individual craft makers who wish to sell crafts could make enough money to pay themselves when selling their crafts.

People make crafts for a variety of reasons: for the joy of making hand made items; to keep traditions alive; to make items for their families; for a creative hobby; and/or to sell crafts to make money. Many creative individuals find that the activity of making art, crafts or music improves their mental health. One person might have several reasons for making crafts.

Every craft person has their own way of pricing crafts, and we can all learn from how others do it, but at the end of the day, each of us has to be comfortable with how we sell our own crafts.

At the end of the stories of Mary and Jane we have added discussion points – some things to talk about if you are reading this in a workshop, or some things to consider if you are reading this on your own.


Mary, Craft Maker

Mary makes crafts because she loves to. She has always made gifts for her family and friends. Occasionally she sells items to people she knows. She also participates in a local Christmas Craft Fair.

Mary has been knitting almost her whole life. She doesn’t remember a time when she didn’t have a pair of needles in her hands.

In the past, Mary would charge double the cost of the wool for any knitting she sold. The wool, buttons, zippers etc were available in a local shop. She always knew what the prices would be. She used patterns that were shared among her family and friends.

Nowadays, fewer people are knitting in Mary’s home town, and hand-knit items have become very popular. Mary is getting more requests for her work at the same time that it has become more difficult for her to get materials. The local craft shop that sold supplies has closed. Mary has to purchase her wool from out of town. If she can’t pick it up, she gets someone else to do it for her.

The types of wool and wool prices have changed, and Mary is particular about the wool she needs for each pattern. Sometimes she has to order it over the internet, and there is a shipping charge added.

Recently, Mary started getting requests from a local gift shop. She saw the retail prices in the shop, and realized that if she sold there, customers would pay double what she was selling her knitting for now. She is afraid that she would lose her customers if her price doubled.

Gradually, over the past five years, Mary has changed the way she prices her crafts.

She now charges for the cost of materials plus a fee for her work. She has a set price that she charges for her labour – so much for a sweater, so much for a pair of mitts, so much for a pair of socks, etc. It’s an amount that she is content with.

If she has to order in the wool, she adds the shipping costs to the price of materials.

Mary’s pricing formula:

Cost of materials (incl. shipping)
+ Mary’s price for her labour
= Mary’s selling price

If the cost of materials for an item was $15 and the price Mary charges for her labour was $20, Mary would sell the item for $35.

This is a method of pricing that Mary is happy with. She gets the price she wants, and finds it easy to price her crafts.

Mary realizes that she cannot sell her work through craft shops. She knows that it is important that the shop’s selling price is the same as her own selling price, but this does allow for the shop’s operating costs.

Mary will continue to sell directly to people she knows and on Facebook. She is happy with the amount of money she makes and the amount of work it takes to fill the orders she has.

Photo: J.Pye

Jane, Craft Maker & Business Owner

Jane owns a craft business. She started out like Mary, she used to work full-time and make crafts part-time, but for the past five years she has been able to make a living from her craft business. She sells some of her products wholesale to craft stores and gift shops, and she sell some of her products at retail price at craft fairs and on Facebook.

Jane has a jewellery studio attached to her home. She has built up her collection of tools and equipment over the years. Jane plans in advance for her busiest times of the year – Christmas and the tourism season. She orders in a supply of materials several times a year. Since she set up her business, Jane has kept track of all of her expenses to make sure she is covering her costs.

Jane is known for her statement necklaces – elaborate pieces that use semi-precious stones, wire knitting and chain mail. These necklaces are very time consuming to make and the materials are costly. Jane only makes a few of these necklaces each year. Her best-selling items are earrings.

Because so much of her product is sold in shops, Jane has to set wholesale and retail prices for her work. Because the cost of materials is high, and Jane has to maintain a studio, Jane had to set up as a business in order to make sure her overhead costs were considered. (See Discussion Points below for more information about Overhead.)

In order to account for all of her expenses, Jane uses the following pricing formula as a starting point for pricing her crafts.

Jane’s pricing formula that considers all of her costs:

Cost of Materials
+ Labour
= Total Costs

Total Costs x 2 = Wholesale Price
Wholesale Price x 2 = Retail Price

Jane multiplies her costs by 2 to get a wholesale price. This allows for the cost of running her studio and her business, her overhead costs. She sells her crafts to shops at the wholesale price. The shop then doubles the wholesale price to get the retail price, the price they sell the craft for.

So, for an item that cost $5 for materials and $5 for labour, the Total Cost would be $10. The wholesale price would be $20. The retail price would be $40.

Jane quickly realized that this worked well to price her earrings, but by using the formula, her statement necklaces would be too expensive to sell. This is a product she cannot afford to wholesale.

So, Jane works two ways – some items she sells at wholesale prices to shops, and other items she only sells directly to the customer at a craft fair or on Facebook.

Jane’s pricing formula for items she only sells directly to the customer:

Cost of Materials
+ Labour
= Total Costs

Total Costs x 2
= Retail Price for Craft Fair

Jane still needs to be able to pay herself and keep up the costs of her studio, so she has developed a line of decorative hanging objects and Christmas decorations made out of inexpensive materials. These are very popular with cruise ship visitors and bus tours. Because the cost of making them is much lower, she is able to double her costs to cover her overhead and still make a good wholesale price for the shops she sells to. When she sells them in her craft booth at Christmas, she sells them at the retail price so she isn’t competing with the same shops she’s selling to.

By using several pricing strategies, and making specific products for specific markets, Jane is able to make a living as a craft producer. She sells her crafts at wholesale and retail prices, but she sells different lines of work differently.

It’s often a juggling act, but Jane is happier working for herself and making crafts full time. She enjoys the extra work, knowing that it all goes to support her business.


Discussion Points

What are some examples of how people price their crafts?

In the stories of Mary and Jane we have seen several different ways to price and sell crafts.

  • Mary charges the cost of the materials plus a fee for her labour.
  • Jane prices different items in different ways. For items that she wholesales, Jane adds together her expenses and labour and then doubles that to get a wholesale price. The shops she sells to will double the wholesale price to get a retail price.
  • Some items are too expensive for Jane to wholesale and Jane only sells them directly to the customer. Jane uses the same formula – she adds together her expenses and labour and then doubles that – but in this case, to get a retail price.

Can you think of other ways that people price their crafts? Some people don’t sell their crafts, though they might make them as gifts or trade their crafts for something else – slippers for sealskin, for example. Some craft producers have always charged double the cost of materials for the crafts they sell.

How do you price your crafts?

What is Overhead?

Overhead is any cost your craft business has to pay in addition to the cost of materials. It would include the cost of packaging – tissue paper, boxes and bags – the cost of your craft booth and your display and signs, even the cost of a course you take to learn a new skill. It might include transportation – to craft fairs, or to deliver your work to buyers. The cost of your tools and equipment, and necessary replacements of tools and equipment, should be considered – spread out over time. If you have a separate working space, overhead would include operating costs for your studio – rent heat and light. Even if you work from home, you can include a percentage of your costs. It would include any costs associated with running your business including the time you spend taking care of bookkeeping and other administrative tasks. In short, overhead is the cost of doing business.

Can I afford to make this item?

Sometimes we have to adjust our prices in order to sell our crafts. Maybe we can’t afford to sell an item at a wholesale price and can only sell it at a craft fair. Sometimes, we can’t afford to sell it at all.

Considering all of your costs, if you can’t make your money back, even if you sell the item directly to the customer, you can’t afford to sell it. You’ll be taking a loss.

You might find that there are other ways to sell high priced crafts. If it is a unique, high quality item, you might be able to sell at a higher price in a gallery setting or at a one-of-a-kind show.

What if Mary decided to sell her knitting through the shop?

What would she have to take into consideration? She would have to set a wholesale price for her products. That might be the price she is now selling at. The retail price of her knitting, the price the shop would put on her knitting would probably be double. In order to not compete with the shop she would have to charge the same price when she sold directly to customers. Could she afford to do that? Would she lose customers? Would the new sales at the shop make up for the customers she loses by raising her retail price? Could she pick a couple of items to test the market? Could she have separate items that she only sells to the shop?

How does Jane know if she is making enough money in her business to make it worthwhile?

To find out if a product is worth making, Jane compares the price she can get for an item with the cost of producing it. If Jane really wants to know the true cost of running her business she would need to keep track of all her expenses, (her overhead and her labour and all costs associated with running her business) over an entire year. She would have to compare that with all the money she brought in during that year in to see if the way she was doing business generated enough income to pay her labour and expenses.

What could Jane do to streamline her business to make more money?

In Jane’s story we learn that she has several strategies to make and sell different types of products in different ways. If that doesn’t work for her, what else could she do to either cut down on her costs or increase her prices? Perhaps she could get together with other producers to buy raw materials in bulk. Perhaps she could sell one-of-a-kind items in a gallery where she can ask for higher prices. Perhaps she could teach jewellery making as well as selling items she has made. Can you think of other things that Jane could do to increase her income?