Profitable Crafts - How to Price for Higher Profits

More profitable crafts to make and sell. Six ways to maximize perceived value, so you can increase prices and profits for your craft business.

How much can you charge when you sell your handmade jewelry? or soap? or pottery? or handbags?

It depends on the perceived value of your products.

What is perceived value?

The perceived value of an item is the worth customers place on a product when they consider making a purchase. It's the amount they feel is reasonable to pay based on a number of factors.

You may be surprised to know that some factors that influence perceived value have very little to do with the product itself.

6 Ways to Design More Profitable Crafts

1. Understand Your Target Audience

Before you can increase the perceived value of the crafts you make to sell, you need to know your customers. Who is buying your products and what they value?

Don't make the mistake of confusing what you value about your products with what your customers value. They may not be the same thing. Highlighting the elements of your work that you cherish won't help you raise prices and create more profitable crafts if shoppers don't hold the same factors in high regard.

You need to know who is interested in buying products like yours, then you can determine the needs they have that can be fulfilled by your product.

Getting to know your target market can take some time.

Unfortunately, you probably won't have much information in the early stages of building your business. Your early sales opportunities can be important occasions to observe, listen, and learn as much as you can about who buys your product, and who doesn't.

In those early stages, you can also get some preliminary information by researching venues where you plan to sell your crafts, such as specific craft shows, to get a feel for typical customers. You can also check out similar, but more established businesses, to see the types of needs they address in their marketing communications.

Trend reports can also provide helpful information about what shoppers are looking for and valuing. You don't have to change your entire line of products to meet every trend that comes along. Instead, look for trends that fit with your existing products, and highlight those features.

Once you have a good feel for who your target customer is and what they need and value, you can communicate to shoppers all the way your products meet their needs and high expectations.

2. Make High-Quality Products

To maximize perceived value, you need to start with a high-quality, well-made product. Whatever you make, invest in getting really good at it!

Make sure the items you sell reflect a high level of craftsmanship. Your products may be exceptional as a result of the techniques you use, the materials you work with, or the skill and attention to detail you put into creating each item.

In addition to conveying quality, investing in your skills as a maker can help boost your confidence, so you'll believe in the value of your own work and be better able to communicate that to customers.

3. Communicate Quality with Presentation & Packaging

The way you present your products has a huge impact on their perceived value. Specifically, excellent product photography, effective displays, and high-end packaging can help you communicate quality to your customers.

Product Photography

Product photos communicate more than simply what your item looks like. Your photos convey messages about the quality of your products and how customers will benefit from owning the item.

High quality photos are an essential tool in marketing your business and conveying quality whether you sell online or in person. Online, photos are the primary tool you have to build interest in your product. When you sell at in-person venues like juried art shows, you need to include great photos in your application to be accepted into the best shows where shoppers expect higher prices.

I've seen very basic handmade jewelry — made using readily available materials and skills a beginner could master quickly — successfully marketed with the help of fantastic product photos. This jewelry sold at a high price point and was extremely popular in part because the product photos were so effective in telling a story of luxury and building a desire to buy.

Unfortunately, I've also seen jewelry made with a higher level of skill and craftsmanship languish becase the product photos were unimpressive.

Craft Show Displays

If you sell at craft shows, your display can impact the perceived value of your products.

A display that makes good use of quality materials that highlight your products' best features, effective lighting, and strategic visual merchandising techniques will go a long way to convey value and quality. Displaying fewer items in your booth can also increase the perceived value of some products as fewer items means they are more rare and special.

Product Packaging

Using luxurious craft packaging is another simple way to maximize perceived value of your products. When customers receive their item wrapped in luxury packaging, their feeling that they have bought a special, high-quality item is affirmed. You can include a photo of your beautiful packaging in online sales and promotions or make your packaging visible in your in-person displays.

Using higher-end packaging will increase your expenses. However, you can recoup those costs because the increase in perceived value allows you to raise your prices without any added labor.

4. Share Your Artist's Statement

It's important to communicate to your customers all of the factors that make your products special and high-quality.

Writing and displaying an artist's statement is one way to communicate specialness and quality. Many people who buy handmade enjoy the personal touch and a feeling of connection to the artist. A thoughtful artist's statement can help people get to know you and your work and feel that connection.

You may write more that one version of your artists' statement, os you have something that's suitable for different situations. You may include a longer version of your statement on your website, where people are less distracted and have more time to read.

A shorter version of your artists' statement, one or two paragraphs in length can be read quickly and would work well displayed at craft shows. An even shorter one or two sentence statement would work well on product packaging and hang tags, and would help you talk with customers about your work more clearly and effectively.

5. Use Premium Materials and Advanced Techniques

Customers are willing and expect to pay more for products made from certain materials or made using superior techniques. For example, gemstone and sterling silver jewelry carries a higher perceived value than jewelry made from lower-end materials.

If your goal is to sell your handmade items for premium prices, consider switching to premium raw materials or more sophisticated techniques if you can.

If it takes the same amount of time and skill to make an item from more luxurious materials vs. lower-end materials, you can make more from the labor spent making your products if you use materials customers will pay more for. If creating products using more sophisticated methods allows you to sell at higher prices, it may be well worth the investment to learn those techniques.

Be sure customers know you use superior materials or methods. You can include that information in product descriptions, on hang tags or on signs throughout your display.

Let customers know why your materials or methods are superior. Your product might make a more special gift, it may be more durable, more functional, or more beautiful as a result of the raw materials and/or techniques you use. Don't assume customers will automatically recognize this - be sure to tell them in your promotional material.

6. Value Your Own Work

New craft business owners often under-price their work because they don't appreciate the full value of their skill and the specialness of the products they make.

As you build more confidence in your skills and the quality of your product, you'll be better able to communicate that to customers. You'll also be more convinced that you deserve to be paid a fair price for the items you sell.

No mater what method you use to come up with a selling price, it's smart to calculate the full costs involved in creating your products. Once you know that, make sure you also know how much time you spend making each item. It's important to get a clear picture of the cost of materials, overhead, and labor involved in making your products. If you've never done this type of calculation, might might be very surprised.

Back in step 2, we talked about investing time to become exceptionally skilled in the making your products so you can create high-quality, more profitable crafts.

Building these skills isn't only valuable so your customers will recognize well-made products. It is also valuable for you. The more confident you are in your skills, the more confident you will be asking a fair price when you sell those products.