Tuesday, May 22, 2012
Etsy Labor Pricing Magic Numbers
Yesterday I talked about the number of items in your shop. Today I would like to talk about another magic number, price. One of the more difficult things to do is price your work. If you are selling vintage items it is a bit easier but for those of us who make our products it is a pain coming up with pricing.
First off, let me say your prices are probably too low. You are probably not paying yourself a fair wage. What is a fair wage? Let's look at it as if you were getting paid by someone else. When you first start a job with no experience you usually get paid a minimum wage. Let's say today minimum wage is $8/hr. So, everything you make when you start out, should have a labor price of $8/hr straight across the board. One item takes you an hour to make has an $8 labor price.
After working at a job for 6 months or a year you should be up for a raise. Your raise should be based on how far you have come. Let's say that item that used to take you an hour to create now only takes you 30 minutes. You have doubled your efficiency in a year. Does this mean that your labor for the original items is now $4? Of course not. You are not going to drop your price just because you are better at it now, that would be counter productive! Nope, your new labor cost for an item is $4 but you are still going to pay yourself the original $8 for it. You just got a $4 an hour raise, congrats!
You won't always be able to give yourself a 50% increase in your hourly wage. At some point you will eventually level out on the time you spend on an item. That is why it is important to give yourself a yearly raise and/or a cost of living wage. The cost of living is always going up, always.
What? You say you are not even making minimum wage? What is wrong with you? When you pay yourself less than minimum wage you are saying you are not as good as the kids working a summer job flipping burgers. Give yourself a raise right now! You are worth it! Period. End of discussion! Seriously, if you are not paying yourself a reasonable wage what is the point of doing what you are doing? You can offer a million excuses but the bottom line is you are worth it.
I look forward to the comments on this one so bring them on. Got a question? Email me MarketMyShop@gmail.com
P.S. The Fibonacci Sequence is one of my favorite 'magic numbers' an that is why I put the picture up, it has nothing to do with Etsy and everything to do with me being a nerd.