January is the best time of year to change your prices and clear out your shop and that means that now is the best time to analyze your prices.  I’ll be honest and say: I BET your profit really isn’t what you think it is.

Why can I say that?  Because I just spent the last 6 months thinking my new product was super profitable but after packaging dozens of it for craft fairs and wholesale orders, I realized it was far from that.  In fact, it was so NOT profitable, that I’m retiring the product at the end of this season.

So, are you curious if you’re living the same delusion about your profit margins?  (And I mean delusion in the nicest sense because I was happy with my prices until I did the math.)

Let’s do some math!

For the next week, keep track of how long it takes you to make each product in your shop.  There are online programs like Toggl.com and tons of apps you can use to do this.  Then, multiply that by how much you pay yourself.  Yep, you read that right.  You should be paying yourself AT LEAST $20 an hour because there’s no way you’d pay yourself minimum wage!

Okay, now you need to break down each product and figure out exactly how much its supplies cost.  Everything from ribbon to cellophane to the box you ship it in.  How much does it cost to make each product in your shop?

Now, take the supplies cost plus your time cost to see the base price for each piece.  Obviously value is going to come into play here too but I think once you see just how high your base price actually is, you’ll realize you’re not pricing high enough for your wholesalers, let alone your customers.

So…I’m curious to know…how were your prices?  Did it surprise you that your profit was as low as $10 for wholesalers?  Or did you do an amazing job when you first priced and you’re dead on?  As an example of one woman rocking her prices, Megan Auman sells a set of earrings that in supplies AND time costs her $5 for a retail price of $60.  Jealous?

{Featured image via INgrain}