A lot of people say “that’s too expensive” not even considering why the price is what is it. So let’s look at why I price the items my small business sells the way I do. No I don’t just pull the numbers out of my butt. No I can’t just change the price to $10.
I am an artist running a small business. I am not a factory. People are used to amazon prices. So first just for the shell of it let’s look at why Amazon is cheap. How does that work?
Let’s use this cute mermaid tail fidget toy as an example. (Since you shouldn't buy mermaid tails from amazon) Here they are direct from the factory that makes them. You must purchase 100 of them per unit for $1.94 each. Here they are on amazon for $9.99 each.
Amazon works by ordering in bulk from the factory and sending that item to the amazon warehouse. They get marked up and sold and boom that person is making a profit. They put in $194 and get $999 then subtract the percentage Amazon takes. (According to google that’s either 99¢ per item sold or $39.99 a month) so if they pay monthly and sold all the toys in a month, that’s $959 in profit.
That seller made nothing by hand. They don’t need a business space. They don’t pay for packaging or shipping or materials. Small businesses have to pay for materials, a space to make things in, power, water, wifi, etc. in their workspace, labels, product photos, a website and online store, packaging, and shipping. Plus the owner of that small business is actually making something by hand and doing work that they need to get paid for! That’s why small businesses cost more.
If you want quality and passion and skill a small business is the way to go.
My Small business uses this pricing formula:
Materials + labor = price
A lot of others use this formula instead:
Materials + markup + labor = price.
So let’s use my formula to price a mermaid tail. We will use a fabric tail as the example here.
Materials:
Custom printed fabric - $100+ per tail
Monofin - $40-$250 each
Thread, elastic, zipper, etc. - $50
Let’s say we are making a tail custom in my size a design I already have and putting a mermaid linden fin inside. $100 for fabric, $60 for the monofin, $50 for other stuff
Total: $210
It took me a year-ish and a lot of practice tails to learn to properly sew mermaid tails. (I have been sewing since I was 11) it’s a specialized skill that I deserve to be paid fairly for. A lot of people get paid hourly for work. So let’s pay me $20 an hour for the labor it takes to make this tail.
Taking to the customer about the design, making the design into custom printed fabric and sending the order off to actually be printed, receiving and checking the fabric, measuring and cutting, pinning, sewing, finishing touches, product photos, packing the tail, shipping the tail. I have to do all of that on my own. Let’s estimate that takes me a total of 12 hours. 12 hours x $20 an hour is $240
Materials ($210) + labor ($240) = $450
If I used the other formula where I markup the materials let’s say 20%
Materials ($210) + markup ($42) + labor ($240) that’s a total of $492
According to my pricing chart that tail would cost $325. So I’m UNDERCHARGING.
lets see what others charge for custom fabric tails… (keep in mind a lot of these don’t come with a monofin you have to buy one separately. also Mertailor has affiliated designers you have to pay a design fee to have one of them make your design on a Mertailor Template then you pay for the tail to be made so you will pay $100+ for the design fee and then pay for the tail)
So I should definitely raise my prices and charge $300 for just the fabric and the monofin is an additional cost to add...
Want to see that again with a silicone tail?
Materials:
silicone $250 a gallon unit (I only use about half a unit for each tail so $125)
Thick scuba knit or neoprene $20 a yard
Monofin $60 (for this example let’s go with the mermaid linden fin again)
Silpoxy $40 a tube
Pigment, gloves, mixing sticks, mixing cups, packaging, etc. $75
Also I have to use an industrial sewing machine made for sewing leather to sew these tails. That Machine cost $1500 plus repairs but the customer doesn’t pay for that, it’s not factored into the tail cost. that is just another thing I pay for In order to run this business.
Materials: $325
Materials if I calculated based on the full unit of silicone I have to purchase to make the order not just based on the amount I use for this one tail: $445
Labor:
Talk to customer about design, create a mock up design, get design approved, order materials, do color sample swatches, update customer and get color selection, pour silicone pieces (multiple layers with backing), pull and trim silicone pieces, measure, sew, assemble fluke, glue fluke to body, finishing touches, take photos, send customer photos, package tail, mail tail.
Let’s estimate that takes a total of 20 hours of work total. it’s more like 24+ but let’s be optimistic…
Learning to make silicone tails took me years and thousands of dollars! If I can get paid $10-$12 an hour working a drive thru I should be getting paid $35+ an hour to make silicone tails. If I got paid $20 an hour that’s $400 in labor.
Materials ($325) + labor ($400) = $725
I charge $600.
Materials total ($425) + labor what I should get paid ($700) = $1,125
Again I charge $600!!!! I am UNDERCHARGING!!!!
now this one Is a bit tricky, there is only 1 other person who makes basic silicone tails with skin safe dragonskin silicone and they charge $600 but charge hidden fees making it more like $800.
there were several people who made the same thing as my basic silicone tail but not from skin safe silicone 🤦🏼♀️ these are the prices of those (made of low quality and possibly toxic silicones)
So if they can get $600-$1000 for a low quality possibly toxic tail I should be charging $1250 but I’m trying to make an affordable yet still skin safe option.
Customer service and social media management:
Both of these things are full time jobs! There are people who’s full time job is customer service or social media management. According to indeed the average pay for this is $20 an hour. I answer all dms, pms, and emails for my business. I manage all my social media (Facebook, Instagram, tiktok, YouTube) and run my website. I handle all the materials ordering, the bill paying, the product photos, the video editing, and I actually make everything by hand. I should be getting paid at least $20 an hour for that work that I do for free to run my business. If I started calculating that work into the prices they would be about double what they are now but do this because it’s what I’m passionate about. I love making mermaid tails and art and in order to afford to continue making these I need to sell some in order to afford the materials and the space.
Other business expenses:
*Work space - You have to have a place to make the items, somewhere to store them, somewhere to do product photos, somewhere to store the materials, and somewhere to package and ship them
If you run your small business out of your home you need an extra room or a garage or a bonus room, etc. let’s look at what that is costing the business owner.
The cheapest apartment I could find in my area is $1000 a month for a studio. It’s $1219-$1239 for a 1 bedroom. So that extra room is costing $219-$239 extra per month.
The apartment we lived in when we first moved here in 2019 is now $1177+ for a studio and $1414-$2491 for a 1 bedroom. (I have no idea why there is such a big range in price or what the difference is.) again an extra $237 per month for that extra room.
2 similar houses in the same area but the extra bedroom adds $15,000 to the house price.
If you don’t have the space in your home and need to rent a space that is $650-$775 a month.
If you have an actual retail space that’s $13-$20+ per square foot per year.
A small strip mall retail space is $3,300 a month that’s $39,600 a year to rent the space.
Here’s a nice big one for $931,280 a year. That’s 77,606 per month.
*Utilities - you have to pay the power bill to keep the lights on and use a lot of the tools needed to make stuff. You also have to pay for water, sewer, gas, insurance, wifi, and property tax.
*maintenance - replacing broken equipment
*website fees - Shopify cost $39-$399 per month depending on your plan. That’s $468 a year I’m paying just to have an online store and website. Etsy is free to run a shop but they charge 20¢ per listing (that adds up and if no one orders that’s gone) and they take a percentage of your sales. Etsy take up to 20% of each sale. I have to mark things up so I get what I charge after they take their fees. If you want your own domain (mine is www.Haleymermaid.com) that cost extra.
*packaging - you have to wrap the order up and put it in a cute package with a thank you card!
Bubble mailers cost 50¢ to $1 each
Boxes cost $1-$5 each
Thank you cards cost 50¢ each
Shredded paper cost 50¢ per box
Stickers, tissue paper, bubble wrap, etc.
So how much am I paying per month to keep my business running?
So let’s say I’m paying $200 extra monthly for my workshop (factoring in a portion of the property tax and homeowners insurance). Wifi is $80 a month. Power bill is about $100-$150 monthly and water is $30 a month.
If my air compressor dies it’s $100-$300 for another. Mine cost $250 originally. If my airbrush breaks that’s another $100 to replace. If one of my molds break it’s going to take 4 months of labor and $200 to make a new one. It cost $150-$250 in materials per mold and I have 3 scale sheet molds, 7 fluke molds, 4 top molds, and about a dozen fin molds. All of which I paid out of pocket to make. That’s $1500 in molds alone.
I pay $50 a month for my website and online shop
It’s costing me $1-$7 each package just for the packaging.
So in conclusion, I should be charging a lot more but I’m trying to make things affordable. Don’t judge prices if you have no idea what goes into making it.
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