Isaiah, nice to see you’re progressing. I’ve watched your project for a while now.
I simply set the price to fit my minimum needs in order to continue making them. > I really can’t afford to compete so I abandon the notion altogether. > I’m not exactly sure why but I really want to see my creation be successful and well received. I try and keep the price at something reasonably attainable so that that can happen in time.
Can’t compete? Then why do you continue to do this? This isn’t a hobby, is it?
There are some pretty basic formulas at work when manufacturing. There’s no reason (other than retail price resistance) that you can’t manufacture these per your own techniques. BUT, you’ll have to charge what they really cost you, or you’ll soon be out of business. Do you know what they cost you? Labor and materials aren’t the only things to consider.
Cost of Goods (all the materials required to manufacture the item (fabric, tooling & fixtures, thread, knife blades, board, adhesive, etc.)) + Labor (the hourly rate you have decided that you or your employee should be paid x the number of hours required to make the item) + Direct Cost (rent, electricity, phone, utilities, insurance, advertising, packaging, etc.) = Cost divided by the number of units you will manufacture (or anticipate that you will) This is the point that you break even. You haven’t made a penny. Sell them for this and you’ll be out of work pretty quick.
But breaking even isn’t enough, you deserve to make a Profit on each of your items so add 10-15% to the cost (this covers purchasing more materials, and paying for thinking up new products, etc.)
e.g. $10 cost x .15 = $1.50 + 10.00 = $11.50
Then multiple this x 2 (this figure can vary from 2-3) to determine your WHOLESALE price - the price you would sell them directly to “dealers”. Nowadays anyone can pretend to be a dealer so I’d suggest a minimum order amount (dollars or units).
The dealer will then double this price to determine the RETAIL price so that he can make some money too.
None of the above is cast in stone. It varies from business to business and by industry. Candy-makers, for example wouldn’t use this same formula. You will need to sharpen up your pencil and work out your own numbers (it’s a PITA but you need to do it).
If you are selling the item directly to the end-user then YOU charge the retail price (and pocket the margin). If you charge the end-user the wholesale price and your dealer(s) find this out they will, more than likely, drop your line (nobody like to be undersold).
I’m not a business administrator by any means, but these are things you need to consider.
Food for thought: