How to Price Crochet Projects for Profit

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Finally, crochet pricing can be so hard, but this post helped me figure it out and the downloadable pricing calculator is amazing! #crochetpricing #pricingcrochet #howtopricecrochet #pricecrochetproducts #pricingcalculator #pricingchart #handmadepricing

Finally, crochet pricing can be so hard, but this post helped me figure it out and the downloadable pricing calculator is amazing! #crochetpricing #pricingcrochet #howtopricecrochet #pricecrochetproducts #pricingcalculator #pricingchart #handmadepricing
For many crochet business owners, crochet pricing is the biggest stressor and it’s the question I receive most as a crochet business coach.

Take a Deep Breath

OK, before we get started I want you to take 3 deep cleansing breaths.

1…….

2…….

3…….

Ok, are you ready?

Oh, maybe just one more deep breath….in through your nose, hold and out through your mouth.

Alright, our topic, today, crochet pricing, is one of the most controversial and confounding in all the handmade world.

I know, I know…you could probably feel the adrenalin rush and you want to flee…but please stick with me and we’ll get through this together.

I recently took a poll of my Instagram followers and discovered that many of you find pricing crochet products to be the most difficult part of your business.  I want to help. We’re going to take this step by step and get a basic foundation for crochet pricing that you can tweak to fit your individual business.

Common Crochet Pricing Strategies

First, let’s take a look at some of the most commonly held strategies for pricing crochet products:

  1. The Ridiculous Method (better known as the “3x Supplies” method): I almost don’t even want to waste my time talking about this method because it is so faulty. Simply put, don’t use this method because it devalues both you and your product. (ie. if you make a hat with $3 worth of yarn, this strategy suggests that you sell the hat for $9. So, for one hour worth of labor you’re making $6…and this is just hourly labor, it doesn’t take into account business expenses or profit margin). If you use the 3x method to price for your business, you will be out of business in mere weeks. Let’s just not even consider it.
  2. The Conventional Method: I think the most common method that I’ve seen touted on the internet is this conventional, Supplies + Hourly Wage = Wholesale x 2 = Retail strategy. While this method is better than the 3x method, it still appears to miss the mark by ignoring per piece business expenses and any profit margin.
  3. The Profit Minded Method: This method is the one used by the most profitable crochet businesses – when they can get their exorbitantly priced products to sell. The strategy itself looks like this: Supplies + Hourly Wage + Business Expenses x Profit Margin = Wholesale Price x 2 = Retail Price. While the method does take into account all of the important factors of supplies, hourly wage, business expenses, profit margin, and wholesale and retail pricing, it lacks sensibility for any but the most established and boutique brands.

Why These Strategies Don’t Work

How about two examples to make the lesson more concrete?

(A) The Baby Hat Example: Hypothetically, let’s say we’re selling a baby hat that takes $3 in yarn and one hour to make. We will charge an hourly wage of $12 (a range of $10 – $15 is reasonable for our purposes).  After analyzing our monthly business related costs (website costs, workspace/office costs, marketing, etc.) and dividing them by our monthly sales goals, we will add a $3 fee to each piece sold (this amount will vary based on your costs and goals) and our desired profit margin is 50%. Using each method the price for the hat would be:

  1. The Ridiculous Method: 3 x $3 = $9
  2. The Conventional Method: $3 + ($12/hour x 1) = $15 (wholesale price) x 2 = $30 (retail price)
  3. The Profit Minded Method: $3 + ($12/hour x 1) + $3 (business expenses) x 1.5 (50% markup) = $27 (wholesale price) x 2 = $54 (retail price)

(B) The Beach Coverup Skirt Example: This time, we’re selling a lovely, lacy beach coverup skirt. This project requires $8 in yarn and 4 hours to complete. We will keep the per piece business expenses and 50% profit margin the same.

  1. The Ridiculous Method: 3 x $8 = $24
  2. The Conventional Method: $8 + ($12/hour x 4) = $56 (wholesale price) x 2 = $112 (retail price)
  3. The Profit Minded Method: $8 + ($12/hour x 4) + $3 x 1.5 (profit margin) = $88.50 (wholesale price) x 2 =  $177 (retail price)

Looking at this example, you can plainly see why there are so many varying price points in the crochet world.

These prices are all over the board.

In the first example, the price is not enough to sustain a business. The seller will probably get sales from bargain shoppers, but will not be in business for long.

With regard to the second example, the wholesale price seems reasonable but does not completely cover the cost of doing business…especially as a business grows and starts requiring the hiring of contract crocheters. The retail price in this second example may or may not be a reasonable price based on what the seller’s target market will pay.

The third method, then, results in a price that is well above what most markets will bear. Outside the boutique market, products priced in this manner will simply sit on the shelf collecting dust….and that’s not a great business model!

So what should we do? How can handmade sellers calculate their prices in a way that values the time and skill of the maker, sustains a profitable and growing business and results in a price within the range that the target market will pay…therefore moving product off the shelves and profits into your bank account?!

Looking for an Automated Crochet Pricing Calculator? Subscribe to my Newsletter and a Price Calculator and Other Subscriber-Only Crochet Business Resources, Free.

 

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A Crochet Pricing Strategy that Works

Well, keeping in mind that each business owner is going to have to work out the specifics herself based on her target market and business goals, here is how I have come to price my products:

The Balanced Method: Supplies + Hourly Rate + Business Expenses x 1.3 (30% Markup) = Wholesale Price x 1.54 (54% Markup) = Retail Price

Taking our baby hat example, this pricing strategy would yield: $3 + ($12/hour x 1) + $3 x 1.3 = $23.40 (wholesale price) x 1.54 = $36.00 (retail price/rounded down)

And our beach coverup example: $8 + ($12/hour x 4) + $3 x 1.3 = $76.70 (wholesale) x 1.54 = $118.12 (retail price)

As you can see, both of these examples, using The Balanced Method for crochet pricing, yielded a price somewhere between those calculated by The Conventional Method and The Profit Minded Method. For my target market, these prices are both reasonable, viable and profit-producing. Yay! It always makes me happy when that happens!

But What if it Doesn’t Result in a Viable Price?

What if I work out my calculations and the price that I need to sell my crochet product is not reasonable and would never sell?

Ugh!

You want to know my honest answer?

Seriously, you may not want to hear this, but this is what I do….

If, after I’ve completed my calculations based on The Balanced Method, I reach a price that is neither reasonable nor viable for my market….

I simply don’t add that product to my regular inventory.

I may love the pattern. I may love the product. But if I can not produce the product in such a way that the product will sell with a price that is profitable, I don’t make the productnot to sell anyway. I will tuck that pattern away and use it for gifts, for charity donations or as a giveaway….but it doesn’t get placed in my regular product line.

And that’s the price of doing business…the necessity of making smart decisions.

Pricing Crochet Items Doesn’t Need to be Difficult

I know we’ve all been made to believe that pricing crochet is confusing and frustrating, but by choosing a formula that works for your business, you make the process so much more simple!

Again, I have chosen to use The Balanced Method because it has worked for my business, even as I needed to hire (and pay) an assistant and 20 contract crocheters (for a time), I still made a profit.

This method calculates the crochet product price in such a way that it is fair and competitive while also placing value on your skills and talents as an artisan and offering sustainability to your business.

I believe it’s the way to go.

In order to help you with your crochet pricing, I’ve created a Balanced Method Pricing Guideline PDF and the Handmade Product Pricing Calculator that you can save to your computer or print out at your convenience. Simply click here and subscribe to my newsletter especially meant to help you grow your business and get the subscriber-only pricing resources and more!


Get Your Crochet Product Pricing Calculator and 

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Pricing is the number one struggle reported by crochet business owners. Well, no longer! Here's a pricing strategy that is perfect for building a profitable crochet business! #crochetbusiness #crochetseller #pricingcrochet #crochetpricing #pricinghangmade #craftfair #craftfairpricing
Pricing is the number one struggle reported by crochet business owners. Well, no longer! Here's a pricing strategy that is perfect for building a profitable crochet business! #crochetbusiness #crochetseller #pricingcrochet #crochetpricing #pricinghangmade #craftfair #craftfairpricing

3 thoughts on “How to Price Crochet Projects for Profit

  1. Lynn Georgiady

    You are paying for an assistant and 20 contract crocheters, you truly have a business! Or, at least more so than most of the people I know who enjoy crocheting and selling items they make. I like your balanced approached, but even that won’t work for me or most people I know. I think this is why pricing an item is a big bugaboo. Depending on the location you are selling in, that will determine what goods will sell and the price point people will pay. Most of us do this on the side for extra money. I applaud you for being able to actually have a business!

    • Hi Lynn,
      I’m so happy to have you here! Just to clear up any misunderstanding. I had an assistant and 20 contract crocheters when my messy bun hat went viral. I’m back to a solo enterprise now (with a little help from my hubby and my model/brand rep). I understand that raising prices can seem scary and that it feels like no one will pay your prices, but when all of the pieces come together, if you’re running a business, you need to make a profit – otherwise you’re just playing at a hobby – and if that’s what you want to do, that’s fine, but if you’re running a business, you must charge business-building prices. On this blog, and in my upcoming coaching and courses, I help get you to that place…and the great thing is, if the people in your area won’t pay the prices you charge, there will be someone on the internet who will. I promise it is possible. I hope you’ll stick around and maybe learn some ways you can tweak your products, product line and branding to show people that you deserve to be paid a premium for your amazing products. <3
      Pam

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