Handmade Items Price Break Down/ My Horrible Business Model

Good Morning Guys!

I have been meaning to write this post for some time now but just haven’t gotten around to it. I wanted to do a price break down for you of a handmade item from my shop. I chose my latest creation, the Wristlet Diaper Clutch to demonstrate with. I know that even for myself, when I see the prices of handmade items, at times  I think “yeah right! That’s expensive!” Often times the prices are slightly higher than the cost of say, Wal-Mart and I usually use that as my judge of a good price (call me a cheapo!)

A Few Disclaimers First:

-obviously I am not buying in bulk or wholesale so that will be reflected in my overall price. I am not a large company, nor do I receive any company benefits, coupons, discounts

This post may contain affiliate links, which means I’ll receive a commission if you purchase through my link, at no extra cost to you. Please read full disclosure here.

-my items are handmade specific to each customer’s request. Therefore, they receive something based on their actual want/desire

So here we go…

To Make This Wristlet Diaper Clutch:

diaper4

You Need This Amount of Fabric:

Screen shot 2013-05-01 at 6.30.33 AM

(Why buy online and pay for shipping? If I drove to the store, I would have a gas bill much higher than the shipping cost and not even be able to purchase these fabrics, a very small selection would be all I could offer my customers)

Fabric Cost: $13.04

Etsy Fee: ($0.20+ 3.5%) = .90

PayPal Fee: ($0.30 + 2.9%) = .88

Mecklenburg Sales Tax: (7.25%) = $1.45

Thread, Velcro, Button, Metal Clasp, Tag = $2.00

_________________________________________________

=$18.27

Hourly Rate: ($8.00) = $8.00

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should be                                    =$26.27

*Actual customer charge       = $20.00

(leaving it at $1.73 actual income)

Recap:

As you can see this is not the business that you will get rich in! …or even barely make enough to make it worth it.  For a $20.00 customer charge I only profit $1.73 off of it. Shark Tank would never hire me!

I simply have my Etsy Shop because I enjoy crafting and making custom items for people.

Again, I wrote this post to show the actual cost it takes to make those handmade items everyone loves (as well as to show myself that you’re making no money girl! haha). My hope is that next time I look at a price tag on a handmade item, specifically one exactly the way I would want it, I would be much more understanding and appreciative of the costs.

Go forth and buy local, buy handmade, support those little businesses that make your heart sing with their products!!

Oh…And A Few More Disclaimers: 🙂

I did not write this post to point out how stupid I am for even having an Etsy Shop 🙂

I did not write this post to make anyone feel bad or guilty about not wanting to pay custom creation prices – you are receiving zero percent pressure from me to purchase any item from me

Obviously buying in larger quantity of fabric for example helps the cost some…only enough to make it so my profit is slightly higher than $1.73 per item, making it around the $4.50 mark for overall income. 🙂

 photo Screenshot2013-02-13at93841AM_zpsc3476c69.png

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