Tuesday, October 2, 2012

Advice on Pricing - Why I Charge What I Charge and What A New Seller Needs to Consider about Pricing

NOTE: My intention is not to be a martyr or come across as whiny about Etsy pricing. But, it might... My goal is to give new sellers an idea of what real earnings mean.

I am assuming that you all are going to be or are Etsy sellers, too, so here's a word about my pricing and something to think about for your own.

I am a legitimately established business and pay all related taxes and fees.

So, how do I go about pricing on Etsy? So many of us undercut each other in terms of pricing. It's a travesty because a lot of us do not charge what would provide a LIVING WAGE. I think we Etsians need to support each other better than that.

So, the breakdown... why do I price what I do... Here it is.

If I sell a Readymade Etsy Shop Makeover for $24.00 what I earn is significantly less than this because...

1. I pay $.20 to Etsy for listing.
2. I pay 3% to Etsy for selling - that's $.72
3. I pay 3-6% to Paypal or the Credit Card processor for selling. That's another $.72 at least, or $1.44 if I sell outside the US.
4. I pay 20% in taxes on the sale after these fees are taken out.

So, the best possible earning is $17.88 for a readymade Etsy shop makeover $24.00 order.

What About the Time I Spend on My Work?

An original readymade design usually takes me 1 hour to make. I can sell the design up to 10 times. Each time I sell it takes me 30 minutes to read the order, set up the design, send a proof to the customer and then email the individual files. So, that's 6 hours total of work if I sell the design 10 times. That's $178.80 after all of those fees. Break that down by the hour and I'm making $29.80 per hour. I think that's pretty reasonable. If I got 40 hours of orders a week (which never, ever happens) and worked 52 weeks a year with no vacation I'd earn about $61,000 at best for the year.

But, I know that if I get 20 hours worth of work I'm seriously lucky and I have to bust my butt and pay to relist and do sponsor ads. So, the actual amount I earn will be much less. Realistically, I know I'll be lucky if I earn $15,000 in a year from my design shop.

When you get your shop set up and start considering pricing make sure you really think about everything that you pay upfront to make a sale. And then charge a reasonable price. Don't undercut your pricing just to make a sale. You'll find that you will quickly become discouraged and maybe will even decide to close shop. Then the rest of us will miss out on the chance to buy some amazing handmade wares from you!