Spinning and knitting are time consuming activities, so how do I go about setting a fair price for my work affordable to both myself and my customers? I have spent quite a lot of time over the past three years discussing the matter with others, mainly in the Etsy forums.
I drafted this particular post three months ago and forgot about it until I merged my blogs. I thought about deleting it but as I read it, I spent a great deal of time on this subject and decided to publish it in the hopes it will be helpful to someone else. The main change made to the original draft was to provide a price example for each of the methods I tried using one of my favorite items to make: a 4 ounce scarf.
While I currently consider my fiber creations as a hobby because I have a full-time job, I started this pricing adventure to determine if I can take my hobby to a business that replaces my current income.
One final note on my pricing: I felt I could not charge an hourly rate commisserate with my skill. All of the pricing methods used an hourly rate of $10, while low (minimum wage in Washington when I started this project), but the reason I chose this amount will become apparent by the end of the post.
Method 1. The first method I tried is the one most used by the Etsy jewelry artists: cost of materials times 3. The wool roving I typically buy is $1.90 per ounce. For my 4 ounce scarf, the rounded up price using this method is $23 ($1.90/ounce x 4 ounces) x 3. A place to start, although it seems low considering it takes me nearly a week's worth of effort to design, prepare fibers, spin, ply, and knit that scarf. At this point, I threw out this method, looked at other knitters prices for similar items, and adjust my prices accordingly. The 4 Ounce Scarf has a revised price of $50.
Method 2. I really wanted a formula to apply to my work so that if someone asked, I had a good answer. This time, I approached the pricing from a different angle, inspired by my former experience as a direct sales consultant: figure out how much I want to make (my annual salary since it's going to be the new full-time), break it down by week and divide by the average price of items in my shop to determine how many products I'd have to make.
To simplify the math for this example, I want to sell $52,000 of product every year or sales of $1000 every week. With an average price of $50 per item, I would have to make and sell 20 4 Ounce Scarves every week. Given it takes me nearly a week to create a single scarf, it does not seem physically possible to make this scheme work. This method requires generating 80 ounces of spinning and knitting each week.
In the meantime, I did a test to figure out how much time it actually takes to spin and knit a specified amount of fiber. Compare the real time by the amount of time I thought it took. The result is the Blues Time Test. Six hours of work for 1 ounce of yarn, the swatch measured 12 inch by 13 inch swatch of stockinette stitch. That's 24 hours of spinning, plying and knitting for the 4 Ounce Scarf.
In a 40 hour week, I can generate 6 ounces of yarn per week. At this point, it is not possible for me to make Method 2 work, unless I make some serious changes. Again, not the focus of this post. Besides, I still want a reasonable pricing formula. Method 2 is not a pricing formula as much as a sales projection.
Method 3. Using the Blues Time Test, I know it takes me 6 hours to spin, ply and knit 1 ounce of sportweight yarn. I repeated the test for fine and bulky yarns and created a spreadsheet.
This pricing formula is the (cost of the fiber X total ounces) times (time spent creating the yarn x total ounces) + (cost of the fiber X total ounces) times (time spent knitt the piece x total ounces).
The price Four Ounce Scarf in sport weight yarn is $192 wholesale, or, if you will, the amount it costs me to make this item (my time and materials only). I have not taken into account any profit, rent (if I had to pay for my studio space), utilities, commissions, posting fees, shipping and handling fees. At this point, I had to decide what profit level I was comfortable applying. I factored in shipping, handling, posting and reposting fees (5 reposts), and Etsy commission, and 15% was the most I felt comfortable with. The sample 4 Ounce Scarf retail price is $220.
Next time: who knows? All blogs are one. Anything could happen.
Happy crafting, my lovlies!
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