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Thoughts on pricing, and making money thereof...

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Previous Entry Thoughts on pricing, and making money thereof... May. 27th, 2006 @ 07:54 am Next Entry
How does one price one's handmade goods? On the one hand, you want to make a profit; on the other, the goal is to move the stuff *out* of your house - if you overprice it, it won't move.

Let's start with handspun. (and I'm not touching the whole "art yarn" thing here. That would skew the prices totally out of line - we're talking a nice, pretty much evenly spun yarn, OK?) I've seen various ways of pricing: a) cost of raw materials times X (usually 2 or 3); b) X by the ounce; c) X by the yard; and d) a combination of a,b or c plus a factor for the time involved. I'm sure there are other ways folks price their yarn, but these seem to be the most common. How does this work out?



I'm going to base the figures on the per ounce cost - let's face it, how many of us will sell 1 pound of yarn at a time? How many people will BUY a pound of handspun at a time? ("Normal" people, I mean.) Let's say the base fiber is ready-to-spin wool at $6/pound...it works out 37.5 cents per ounce - let's round it to .40/ounce. (OK, so this adds to $6.40. Call the .40 postage and handling fees to get the wool to you.) (And, yes - $6/pound might be a little low, but you can get mill ends at that price, and we are assuming you want to minimize the cost and maximize the profits.). And, for simplicity's sake, we want to keep the formulas consistent, so that all our yarn is similarly priced - easier to remember, easier to explain to folks why you charge what you charge. Let's break it down by method:

a) Cost of materials times X. For arguement's sake, let's start with a factor of 2. You spin up a 2 ply skein that weighs 4 ounces; 4 x .40 = $1.60 x 2 = $3.20. Hmmm...that's not very good. Even using a factor of 4 it's not great; $1.60 x 4 = $6.40. Still not a very good return on the time involved (although, at 1 pound, it comes to $25.60 using a factor of 4...that's a little better, but not by a lot - a pound of yarn is a whole bunch of spinning! - but your profit would be $19.20. Just for the record)

b) X by the ounce. There's a major problem with this formula - to be consistent, you'll need to charge the same per ounce on *every* yarn. 4 ounces of laceweight is a *lot* more spinning then 4 ounces of bulky weight. What would be a fair price? $1/ounce? No - 4 ounces of laceweight for $4??? Not hardly! $10/ounce? $40 for 4 ounces of laceweight...huh. The last laceweight 2-ply I did measured in at approximately 1,000 yards (and I started with 4 oz of washed BL locks, then dyed them and handcarded them.). And what about bulky weight? $40 for.....25 yards seems a bit steep, doesn't it? (I'm guessing at the yardage here - I don't do bulky, or at least, not often.) OK, let's say the laceweight only came in at 500 yards...that's still only $40, for a whole lotta spinning.

OK, let's try c) X by the yard. Again, same problem as before - what's a fair price for both laceweight and bulky yarns? $1 per yard? That would make our bulky weigh in at $25..and the laceweight at $1,000. (or $500....) Errr, no, *that* won't work.

OK, let's try charging half-rate for bulky yarns. $12.50 for our bulky...but that still leaves the uber-expensive laceweight. What about .25/yard...that would make the bulky come in at $6.25, and the laceweight at $250. (for the record, the 1,000 yards was spread out in 4 skeins - but it was still only 4 oz.) (And at 500 yards - $125.) Hmmm.......guess this doesn't really work, either.

That leaves d) a combination of a,b or c plus a factor for the time involved. What to charge per hour? I make a little over $15/hour at my day job. I can't expect to make that here, doing "hobby" stuff. I don't know what the current minimum wage is - let's go with $6/hour, though.

So.....the best formula, so far, is a. Let's try that. Using the "4" factor, we have $6.40 for our 4 ounces of yarn. Let's start with laceweight - it takes me a couple of spinning sessions to spin up 4 ounces...call it 4 hours, all told. So, 4 x $6 = $24 + $6.40 = $30.40. For 1,000 yards of yarn. Even if you cut the yardage in half, it's still only $30.40 for 500 yards of nice, fine 2-ply.

Let's try the bulky - call it an hour to whip out the 4 ounces (we do want to actually *make* money here!). So, 1 x $6 = $6 + $6.40 = $12.40. For 25 yards of yarn. Hmmm, this doesn't seem to bad.....if we estimate a sport-weight/light worsted at 200 yards, and taking 2 hours to spin, we get 2 x $6 = $12 + $6.40 = $18.40. Hmmm, that seems a bit low, doesn't it?

OK, d) seems to be a pretty good formula, but it's still not great. Let's forget about handspun yarns, and try something else....for the sake of arguement, a handwoven dishtowel. (What can I say? I'm primarily a weaver.)

This one I am going to work a bit backwards - the "local" weavers seem to all charge about $15/dishtowel. Let's see if we can break it down and see how much they're actually making. (And, folks do NOT mind paying $15 for a handwoven dishtowel, especially if they're familiar with them. I've got people *begging* and hinting for more towels, they are that wonderful. *heh* Must go chain myself to the loom to (finally) weave this warp off!)

Assume you're using 8/2 unmercerized cotton. It comes on cones, at $10.99/pound (and approx. 3,360 yards/pound) (From Webs. You can get mill ends cheaper, but I don't like working with them - I've had too many broken warp ends from them...and none so far with the "real" yarns). To maximize the profit, you'll want to put on a long warp (and since I've already done *these* calculations, we'll use the dishtowel warp that is currently on my loom for this.) - 10 yards; 480 ends. (I just went and double checked - yup, I'm using 8/2 cotton. Sometimes I use 10/2...wanted to be sure my numbers were right) (The 480 comes from the sett x the width on the loom, taking shrinkage and take-up into account. I won't bore you with the details - suffice to say, that's what I put on the loom (I think....I'm not going back and counting them!) - the numbers are close enough for this exercise)

So: 480 x 10 = 4,800 yards for the warp alone....or about 1.5 pounds. $16.50 for the cost of the warp.

Weft....*sigh* I *didn't* calculate this (well, I did, but I can't find my worksheet), so let's assume it'll take a full pound of yarn to weave this warp off. (I'm using various colors, so I can't weigh my cones and figure it that way) - another $10.99.

So, just in yarn we have invested $27.49 = let's round it up to $30. So far, this looks good - sell just 2 dishtowels and you've made back the initial investment. I'm not quite done with this warp....I have at least 10 towels finished (which means I'll theoretically have a profit of $120 - I think I have more, but....won't know until I pull the cloth off of the loom. Read on...)

Sounds great, right? Well, yeah - until you figure in the sheer amount of *time* involved. Let's see - it took me a good 2 hours to wind the warp (and it was on a warping reel, which speeds things up considerably!). Another.....6 hours to dress the loom (480 ends is a *lot* of teeny-tiny threads, all of which have to be pulled thru the reed, then put correctly into individual heddles, then tied on the back beam, then wound on......mistakes must be fixed...oy vei. Let's leave it at 6 hours, OK?) We've already got 8 hours invested in this warp. 8 x $6 = $48 + 30 = $74. Hmmm, that makes a profit of $76. Not quite as good, but not too bad.....

Weaving it off just takes stamina. On a good day, I can knock out a towel in 15 or 30 minutes. On a not-so-good day......don't go there. Let's leave it at 2 towels/hour (because you either prewound all the bobbins you'll need, or you have a helper that will wind them for you.) So, for those 10 towels, we have another $30 in time invested.....the profit now sits at $46.

Hmmm.....$46 for 14 hours of weaving....or approx. $3.30/hour in profit. At a charge of $15 per dishtowel.

Now - I pulled the #10 out of the air - I don't *know* how many dishtowels I've already gotten out of this warp, or how many more I can get out of it. 10 was just a nice, easy, round number to figure with. The time figures are pretty accurate - for *me* and *my* loom. Other weaver's investment might be a little different - but this are pretty good numbers.

What about scarves? I just warped one up (out of handspun) - it took me maybe 1.5 hours, all told. I've worked on it off and on....maybe...3 hours total weaving time (it's on an old, cranky table loom - slower than my floor loom), and I'm almost done. At $6/hour, we're looking at a base price of $27, without factoring in the yarn! What would be a fair price on it - $50? $75? Remember, it's handspun - that time should be factored in there somewhere. Would somebody *pay* that for a wool/silk/mystery fiber handspun/handwoven scarf? (This is all immaterial - this particular scarf is a gift. neener neener!) I've seen scarves woven out of purely commercial yarns priced at $35 - I think that's too low, but how to prove it? And - are they moving at that price? Would they move if the price were upped?

And, what about folks that sell hand dyed rovings? They are more limited in what the market will bear - why should you pay more for their stuff when you can go to one of the big vendors and get something similar (but not exact - hand dyed colorways are more lively and fun then the commercially prepared ones) much cheaper? I don't mind paying for their expertise.....but when the price gets too high (I'm thinking of Chasing Rainbows and Mountain Colors here - I love their colorways, but I just *can't* pay their prices right now.), I'll go elsewhere. Don't get me wrong - I am NOT saying they are overpriced; what I am saying is that I can't pay $18.50/4 ounces (or more, dollar-wise) with them when I can go to a smaller, independant dyer and get something just as pretty for $15. Or even less, if I hit eBay for my fix.

Speaking of eBay, there's a minefield right there. A lot of the prices are too low.....I don't see how the sellers are making a profit at all. I bought 8 ounces of handcarded batts for my "winter" socks...for a whopping price of $18 ($2.25/ounce). We're talking silk/merino/angora/angelina, here. As a comparison, I paid a little over $14 for some (not quite as nice) batts that weighed in at almost 2.5 ounces. ($6/ounce). eBay is great for the bargain hunter, but it's horrible for someone that wants to actually *make* money at this game.

We haven't even *begun* to discuss knitting. Another potential minefield. I don't know what hand-knitted items are going for....I do know that socks cranked out on a circular sock machine generally go for $15/pair. You can whip out a pair of socks in 1 hour once you get familiar with your machine (and this includes set up and kitchenering the toe)....but the profit will depend on how much you spent on the yarn. (I'm guessing $5 for the yarn, which leaves $10...at $6/hour for the time, you've made a whopping $4 in profit). I'd hate to calculate how much time I spend actually handknitting something.....my Irish Diamond shawl (handdyed roving, handspun yarn, handknitted) took me a good year - year and a half of steadily working on it (at least 2 hours a day, almost every day) to get it finished. I have jokingly put a price of $1,500 on it - and I've had people nibble at it! :shock: Would I sell it? NO. But if someone whipped out $1,500 cash....it might just go home with them...even though there's a lot of memories knitted into it.

Now, *I* don't generally factor in the time involved - I spin while the kids are watching TV, I weave in the mornings before they wake up (and sometimes at night while they're watching TV), I knit when I'm not near the loom/wheels....in other words, I work on stuff when most people are vegging. *I* can't just sit not doing something....so why count that time? Other people don't agree with this, and think I'm undervaluing my work. (And, to be truthful, after looking at the calculations...yeah. I so need to revise my thinking!) And, I haven't factored in any prep-work I do for some of my yarns...dyeing/carding/scouring the wool.....



So, what's the answer? What's the best way to price your stuff so it moves and you make a decent profit on it? (I'm not trying to make a living doing this stuff, but I would like to make enough to support my habit). How do you figure prices? Is it working for you? Do you charge a little less for less-than-perfect yarns/rovings/finished items? How much less? (I'm thinking demo stuff, here - my consistancy goes by the wayside when I have to stop/start/explain things 200 times a minute. The yarns are still good...but not my best work.)
Current Mood: contemplativecontemplative
spin a yarn
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From:hugh_mannity
Date:May 27th, 2006 01:59 pm (UTC)
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No clue. But at $20 a 4oz skein, commercially spun, hand dyed merino tencel sock yarn is just flying out the door at Minds Eye Yarns. I don't know what the yardage on those skeins are, but it's more than enough for a pair of socks (in fact I've got A Cunning Plan for my leftovers!)

I'm a knitter, I often spend $100 or more on a sweater's worth of yarn (between 1,600 and 2,500 yards for an adult sweater, about 1,000 for an adult vest, depending on the yarn grist)

As for knitting time, I mostly knit when I'm doing something else. If I sat down to knit a sock it would take about 10 hours (Alden's "spinner's hours" - 40 minutes each). In reality, knitting in spare moments, it takes me about a month to make a pair of socks. Sweaters take me ages. But there again, I'm not making them for sale.

My (in)famous pi shawl took me over a year to spin and knit and it was my major project for most of that time. I once jokingly priced it at $1,000 and the interested party came close to writing out a check!
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From:redmelde
Date:May 27th, 2006 05:28 pm (UTC)
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I price based on yardage, fiber, and weight. Finer yarns are a little more than bulkies, plied yarns are more than singles.

You don't have to have an exact pricing structure. You're making it and you can set the prices. When I started figuring out my prices, I looked at popular sellers who were spinning yarns similar in style to mine. Basic, pretty, workable yarns, and then figured out their prices per yard. After that, I figured my price per ounce and tripled it to see if I was getting enough back.

Things that I feel are not my best get a 10-20% discount.

Don't compare ANYTHING you make to commercial goods. It's not the same, and you are not expected to compete with those prices. You are catering to a different audience than those who are expecting a $35 scarf from Dillard's.

Part of the problem for determining prices is that I tend to think "well, what would I pay for this?" My appraisal comes out shockingly low, because I wouldn't pay for it. I'd make it myself. You're not pricing for makers, or for those who don't understand the value of your time. Be mindful of that when you're doing your math.
(spin a yarn)
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