That beautiful wool shawl that is safe to put in your washer? The yarn probably cost $50 minimum. That acrylic baby blanket made to for a standard crib? Even cheap yarn has a cost it it was probably around $15-20.
Not to mention tools and supplies (consider the maintenance of needing to replace needles, the cost of that stuffing even though 1 bag will make multiple plush toys, the price of the pattern, etc). This may be stuff that is "on hand" or "the cost of doing business" or an initial investment that can be spread across multiple products. But just because I can reuse that pattern or tool, doesn't mean you shouldn't consider it in to the material cost. If you wanted to make the thing you bought, you would need the materials (yarn) AND supplies (pattern, needles, etc).
I'm still working on it, and it took me a couple hours to get just half a sleeve. But let's look at this as an example. How do determine your cost of such an item. Just the yarn was about $160, the pattern was $7, and the needles were $16. Now estimating the time it would take...2 hours for half a sleeve, we will be conservative and say 4 hours per sleeve, plus the actual back. Let's estimate that at another 4 hours. So 12 hours total work (and I honestly think it will be more). What is a fair hourly rate for my craft?
I make over $20/hr at my day job. It doesn't sound unreasonable to charge that for my craft, as it is still work. Sure, I can take it with me, work while hanging out with friends or watching a movie. But you know what--I have a highly digital job and work from home. I get many of those same benefits, but I don't get paid less because I can work in the comfort of my own home with flexible hours and my chosen environment/background. I get paid a fair wage because I am performing a highly skilled task.
So let's assume $20/hr is a fair rate, plus of course the materials. We are looking at $240 for time and $160 for materials, which brings us to $400 for a shrug. Half of a sweater, out of an 80% wool blend. That's not particularly fancy yarn. It's nice, and comfortable, and I love it. And of course part of the cost comes from the fact that someone took the time to dye it by hand! I have to account for her materials and time and artistry. I don't know how to dye a large quantity of yarn in 1 repeat of a gradient (not yet, MKD will be venturing into yarn dying, but that's another post for another day). It's gorgeous, but I paid for the knowledge, expertise, hours of work, and materials.
Anyway, I'm getting off topic. Back to the point: At a fair hourly wage we are looking at a $400 shrug, and that didn't even account for the supplies I needed to get started like my pattern and needles. Is it fair to account for the full price of such supplies? Who knows. I may not ever make the pattern again that I bought for your product. That is more of a personal decision to the crafter, if they want that supply investment to be cost of business or be reflected back on their customer. But either case is completely reasonable.
Now let's say I make the same item out of cheap yarn. And I don't say that with any prejudice. I prefer cheap (acrylic/man-made) yarn for baby items because it is sturdy, holds up well to repeated washing, won't felt or accidentally shrink, avoids a lot of allergy issues you might have with natural fibers, won't fade in the wash, etc. If you get a good brand it is super soft too, but even if you get the scratchy, stiff stuff, it will soften up after a few washes just fine. Anyway, with cheap yarn I would be spending about $20 on materials, but if I charged an hourly rate this would still be a $260 shrug.
Some people are willing to pay that price, sure, but your average person won't especially when the materials you are using aren't considered special. So a while back I did some research to learn how other yarn crafters price their items. Many recommend an equation of (materials + supplies) x3. I finagle that a little bit, but generally it is a pattern I follow. So now that shrug made out of acrylic is $60, which means I am only making $40 for about 12 hours of work (that's less than $4/hour). This is where some judgement calls are made, and honestly I would probably adjust the charge to $80-100 (giving me a profit of $60-80, or $5-7 per hour).
You want it out of that fancy yarn I talked about? I'm not going to charge you $480, that's even more than if I charged an hourly rate of $20. But it's going to be expensive because the yarn is. You would still be looking at $240-$260, and that is with my hourly rate well below minimum wage. But I accept that because I find knitting fun and relaxing, I like having new and unique projects to work on, and I actually do take into consideration I can work on your product while watching netflix, Chilling in bed, or over coffee with friends.
Using a basic 3x material/supplies equation, my take home is about 65% of the price you see. If I am listed on etsy I actually price up everything 10%, but I don't see any of that--it all goes to covering my etsy and paypal fees. If you order a gift set or a lot of items, I will often offer a discount. Usually sets all come from the same yarn, and I do not always need to go out and buy more. As such I will usually offer about 20% off (not always as there are certain other considerations, like if I actually do need more yarn to accommodate, is there an upcharge for the type of work being done, etc). However that 20% discount for you is a 30% loss of sales for me, because I am still paying the same price for materials and supplies. If you supply your own materials/supplies, I will often offer a 35% discount. This actually does not cut into my income, but gives you freedom to pick whatever materials you want and only pay for labor (which again is well below minimum wage).
Finally, I want you to consider time in a different way, not as billable hours. Say you decide a price is too high and that you can buy the materials and learn how to make the item yourself. How many hours are you actually going to invest to learn the craft and then make your item? How much is your time worth? If it take me 12 hours to make that shrug, how long will it take you to learn to knit, purl, and cable? Not to mention the time to learn to knit flat vs in the round, and picking up stitches, plus whatever personalization you may have wanted (for example I wanted longer sleeves with thumb holes...how long will it take you to learn to alter a pattern, understand how to lengthen a sleeve, and figure out a thumb hole?). I would bet a good deal more than 12 hours, plus your craft time could be very different from mine. Just think about the other benefits of paying an artisan. It's not just materials and hours. It's knowledge, skill, problem solving, and more.
So, if you are buying handmade, consider why the prices are so high and what you are actually paying for. There is a value artisans offer to you, and it is more than just the cost of supplies. Even if you see a price you think is too high, they might not be making a livable hourly wage off their craft. And if you are family or a close friend, and you think you deserve a special discount, I'm sorry you don't. It's either a gift or a purchase. You aren't any more special than another customer and you are taking away time from more lucrative projects if you are requesting a deep discount.
Apologies as this turned into more of a rant than I intended. I just often find myself negotiating prices and allowing certain people to guilt me into discounts, and I've seen friends and fellow artisans posting how they barely make any profit on their products. I felt it was time to re-address the situation and make sure people understand the WHY behind high prices for artisan products. Certainly some crafts lend themselves better to fair prices where the artisan makes a fair profit and the customer feels the high price is reasonable (leather craft for example seems to lend itself well to fair prices), but that is not universal. And regardless, don't question a person's worth. You don't know what is going into your product, and if you want something cheap go buy it elsewhere.
