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Monday, 29 November 2010

Bootcamp Week 6

Well I'm back from a lovely break :) If you want to read more about what we got up to it will be described in detail on my personal blog at in the next few days, alongside some pictures from the trip.

I realise I promised you an article on photography but shortly after making that promise the weather turned and then I went away so I haven't yet had a good opportunity to take any new pictures.

Time to continue scrabbling to catch up on my bootcamp posts! This week's task list looks like this:

Revisit your prices
Check out this reading list
Connect with your buddy

OK task 1 is another very timely task for me. My pricing at the moment comes from the following approach:
1. Pick a price that seems reasonable and in-line with other sellers on Etsy
2. Calculate the cost of the materials in the item and the packaging
3. Check that the price I picked is more than the price I calculated in step 2, if it isn't increase it a bit.

It is something I have had in the back of my mind to work on for a long time now and I have already read several articles providing advice on how to go about doing just that.

Danielle suggests this formula for calculating prices so I'm going to take a couple of my pieces and use the formula to see how my current prices match up:

Cost Price (Labor + Materials Cost) x 2 = Your Wholesale Price
Wholesale Price x 2 = Retail Price
These earrings are currently priced at  $12 plus shipping

Material cost:
6 inches 18ga copper wire @ $0.02/inch = $0.12
2 inches 24ga copper wire @ $0.01/inch = $0.02
2 copper earwires              @ $0.26        = $0.52

Labour cost:
This is the part I currently ignore. These earrings are quite simple to make so I reckon they take about 5 minutes. According to wikipedia the minimum wage in San Francisco is currently $9.79/hour. For the sake of making things easy to calculate I'm going to use $12/hour as my "wage" which would make the labour cost of this item $2.

Final Costs:
Adding it all up gives a cost price of $2.68
Using the formula that would make the wholesale price $5.36
And the retail price $10.72

So this piece isn't far off being priced according to the formula, although Danielle does recommend being generous with the salary, possibly more so than I was. Let's take a look at a much less simple piece that uses more expensive materials.

This is a new piece as yet unlisted. I would probably price it around $25

Material cost:
6 inches 18ga copper wire     @ $0.02/inch = $0.12
20 inches 24ga sea foam wire @ $0.01/inch = $0.20
18 inches copper chain           @ $0.14/inch = $2.52
Copper lobster clasp              @ $0.41        = $0.41
2 copper jumprings                @ $0.03        = $0.06

Labour cost:
This one takes substantially longer to make; the pieces have to be shaped and hammered and then wrapped together with the coloured wire. I made a new piece like this and timed it - it took 30 minutes. Using the same hourly wage this gives a labour cost of $6

Final Costs:
Adding it all up gives a cost price of $9.31
Using the formula that would make the wholesale price $18.62
And the retail price $37.24

This is quite a bit higher than I would have priced it and I'm not sure how people would feel about paying that much. If you read Danielle's article she goes on to discuss finding the right buyers and marketing to people who value handmade items but I think thats a story for another blog post. I have quite a lot of items sitting waiting to be photographed and I will be much more rigorous about calculating their cost when the time comes.

We haven't even looked at task 2 yet but I think this post is long enough. Most of the articles on the reading list are at least interesting so check them out at your leisure if that appeals to you :) A couple have given me ideas for future posts so look out for them here...

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