Thursday, January 03, 2008

Pricing Formula

Tonight I decided to develop a new pricing formula for the books in my Etsy shop. Until today, I had a really simple pricing structure which was basically a set price for each of my standard book sizes - regardless of any other factor. This has been working quite well for me but I recently purchased some paper that costs substantially more than the paper I've been using so I was wondering how I would price books made with this new paper.

So I have developed a pricing formula that seems to make sense so far. Concerning the materials costs, it is the cost of the paper which varies the most in my books. So that is part of the formula. Then I decided to actually price out the cost of the leather, per square inch. In some cases there are other material costs such as paper linings on the leathers so that is included. I have also devised a pricing scale for the various types of bindings that I have. So the more time-consuming bindings will get priced higher...whereas until now, I was charging the same price for a quick binding as a complicated binding.

Now my Etsy shop is full of uneven prices. Earlier today I had a bunch of books that ranged in price from $30 to $33. Now those same books range in price from $29.50 to $37.25. I am curious if anyone thinks the range of uneven prices is not as user-friendly as the more generic pricing with all round numbers; however, the changes were not very drastic with this particular selection of books. Once I start using some of this more expensive paper and doing some different bindings, then I think the formula will be more important.

[Edit: after trying this pricing formula for a while, i've decided to go back to using the round numbers. The formula resulted in prices similar to what I was using anyway, so at least I know it is still the same ballpark. I can still use the formula when I do something new or if the cost of supplies change and that will help keep everything priced fairly, but I'll still be rounding it off to match similar books in my shop.]


Amy said...

I think it's so important to price your books so that you're covering your costs. I don't mind the differing prices, and in the end, it may end up being a good sales strategy. The higher price implies better materials, thicker books, etc. Some people really go for that. At any rate, if I wanted to price my books all the same I would price them at the highest price point. That way you don't take a loss. You can always lower your prices later, if needed.

As a binder my biggest problem with Etsy is that I don't think people price their books high enough. You probably clear enough to pay for your materials and a small amount for your time, but there isn't any real profit built in. Not too good for those who would like to try to earn some sort of living from their craft. But, as a consumer of books, I guess I win! So who am I to complain? All I know is that when I was in Italy this summer, every shop I went into was selling leather bound books starting at 35 euro. At today's exchange that's $51.

Maiko said...

my pricing's a bit arbitrary and pretty generic... i made up a little excel code to combine materials, wage, fees, etc, but haven't really used it yet haha!

i've just been going off of a guesstimate of materials, size of book and how much effort i put into it. i've been worried about really calculating any wage into my pricing, because it takes me a couple of hours at least to make a book... which would throw prices up a bit higher than they are now, and i don't make many book sales as it is :P that's probably not very good for me to do to the market, but that's what i'm mostly trying to do, market-value pricing.

i think i should start using that little code, but to do that i'll have to split up material costs (i've been really lazy and will throw an entire cut of fabric or something under a single item, instead of pricing according to how much i actually used, or sticking it under my general materials costs, which means i don't really get an idea of how much profit i actually made).

so anyway! back to your question :D i'm a fan of round numbers just because it makes things simple, but if this system works for you and you're happy with it, then that's what matters. i mean, i don't think a buyer will not want one of your books because there's a .25 at the end of it :)

GetKIVA n NlitenedSoulz said...

I think, in the case of basic binding, a more rounded number would draw more attention, maybe round up or down to the nearest dollar. In the case of more complicated structure I would use your formula, people buy what they like, Pricing is often not as important as we think. You should, however, always make your money back for cost and effort!!!!

I love your work and that braided journal is FAB!!!

Love is...