How to Set Prices for Embroidery Work

2024 Author: Samantha Chapman | [email protected]. Last modified: 2023-12-17 09:13

One of the most difficult aspects of selling embroidery work is knowing how to set prices. Determine a base price by adding the total costs and the profit you want to make, then adjust the price to meet the needs of the market.

Steps

Part 1 of 3: Calculating Costs and Earnings

Step 1. Calculate the cost of the material

The main cost to consider is that of the material you use. Make a list of everything that makes up your embroidery work and the prices of each item.

• The fabric you embroidered on and the thread you used are the most visible material, but beads, pendants, and accessory decorations should also be considered.
• If you frame the work, you must include the cost of the frame.

Step 2. Determine the cost of labor

You will need to get paid for the time spent, especially if you plan to sell the embroidery through a declared business.

• Set an hourly rate. If you want to keep prices low, use the current minimum compensation.
• You can keep track of the time you invest on each individual piece or the average time spent making a certain embroidery.
• Multiply the number of hours spent on each embroidery by your chosen fee. This way you can determine the cost of labor for each individual piece.

Step 3. Establish overheads

Overheads are about the money you spend running your business. They could also be referred to as "management fees".

• Make a list of all the equipment used and the annual costs related to the maintenance of those tools. This includes the expenses required to purchase or rent embroidery machines.
• List other expenses incurred in running your business over the course of a year, including the cost of any business concessions and authorizations, venue rental, or Internet connection (if any).
• Calculate the number of hours worked each year, then divide the result by the cost of annual expenses. You will get the costs for your business for now.
• Multiply the costs per hour paid by your company by the number of hours spent on each embroidery to determine the price of each item. Do this if the handling fee value will be needed to calculate the final price.

Step 4. Include related expenses

Related expenses are the money you spend when you plan to organize sales in certain places.

• You don't have to calculate them all the time, especially if you sell your designs exclusively over the Internet.
• If you are planning to organize a sale at a craft fair, you should add the costs of the stand, travel expenses and all those related to participation in this event.
• Calculate how many items you intend to sell at the fair.
• Divide the total amount of related expenses by the number of products you plan to sell to determine the price for each item. This figure will be needed to calculate the final price.

Step 5. Predict profit value

If you want your embroidery business to flourish, you need to calculate the profit value.

• If you intend to support yourself by doing this business, you will need to calculate a larger profit beyond your compensation. Add the firm's total costs (material, labor, overhead and related expenses), then multiply the result by the percentage of profit you want to make.

• If you intend to support yourself by doing this business, you will need to calculate a profit that is greater than your compensation. Add the firm's total costs (material, labor, overhead and related expenses), then multiply the result by the percentage of profit you intend to make.

  • A 100% profit percentage will allow you to break even with expenses.
  • If you want the earnings to exceed the company's expenses, you need to multiply these costs by a higher percentage. For example, you can multiply your total costs by 1.25 if you want to make a profit of 125%. This way you will recover your expenses and make an additional 25% profit.

  

  Step 6. Add it all up to determine the price

  Calculate total costs by adding together those for material, labor, overhead and related expenses. Add in profits as well.

  The sum of these items will give you the final price of the product

  Part 2 of 3: Market Considerations

  

  Step 1. Know where your business operates

  Consider where you're going to sell and the customers you're targeting. The price of your items will have to predict these factors.

  • If you are planning to sell your work at a craft fair, research the consumers who usually attend these kinds of events. Normally, the customers of a craft fair hosted at a school or church have a lower budget than those who attend fairs organized by boutiques or those who raise funds on behalf of companies.
  • If you sell exclusively on the Internet or in a shop, consider the kind of items you pack and how you promote them. Clothing offered for sale at a boutique and embroidered as one-of-a-kind items should be sold at a higher price than a mass-embroidered clothing brand distributed through a small website.
  • You can lower the price based on location and clientele either by lowering your compensation or by reducing the percentage of your profit margin, or by using less expensive materials. Conversely, you can raise your prices by calculating a higher fee, increasing your profit or using more valuable materials.

  

  Step 2. Watch out for the competition

  The prices you set for your embroidery work should fall within the price range expected by the competition. If not, edit them appropriately.

  • If the prices are too high, you will obviously lose sales opportunities and the competition will take advantage.
  • If the prices are too low, you risk that consumers will consider the product to be of little value or of inferior quality. Again, you may miss the opportunity to do business and your competition may take advantage of it.

  

  Step 3. Improve customers' perception of the value of your items to increase the price

  If you want to convince customers to buy from you at slightly higher prices than the competition, you need to offer something that makes them like your product more.

  • Design plays a very important role in these dynamics. If it's more beautiful and original than your competition, your customers will likely consider your items more valuable.
  • Customer service is another aspect to consider. If you put all your effort into satisfying customers or are willing to customize your embroidery, customers will be convinced that the shopping experience they find with you is much more valuable than what they have had or would have with someone else.

  Part 3 of 3: Additional Considerations

  

  Step 1. Clearly indicate prices

  Customers are more likely to buy when prices are clear and easy to spot.

  • If you organize sales at craft fairs or have a shop physically present in the city, each product should be duly marked with its price, displayed in a visible way. Most customers don't stop asking about the price of an item.
  • Likewise, individual embroideries sold online must be clearly priced, as many customers will not try to contact you for information.
  • If you are selling custom embroidery, provide a price list that clearly lists the cost of basic products, customization, and other aspects. Make it easy to find and stick to the figures listed to gain and maintain credibility.

  

  Step 2. Provide several options

  Offer potential customers a range of options that may suit their financial needs.

  • For example, you could sell a richly embroidered item made from the finest materials for a higher price. After that, put in a few parts of that model and use slightly lower quality materials to create something similar to sell for a much lower price. Put both products on sale, so that those who can't afford the most expensive item have the opportunity to consider the similar one, at a lower price.
  • If someone orders a job but can't afford to pay your proposed price, offer to lower it, reducing costs. Tell them what the difference would be if you used a certain number of colors, fewer stitches or if the embroidery was smaller.

  

  Step 3. Offer incentives and discounts with due care

  Special offers can be a great way to grab the attention of new customers, but also to renew the interest of old ones. However, try not to make them fond of this genre on these occasions.

  • Special sales should only be available for a short time. They include "buy one, get two" offers and promotional gifts.
  • Loyalty incentives should last longer. In fact, they include, for example, loyalty cards and discounts for those who bring new customers or for those who have already made a first purchase.
  • You can also apply fixed quantity discounts. For example, if the price of an embroidered bag is € 25, three bags could cost as little as € 60, so discount to € 20 each.

  

  Step 4. Be firm

  Once you have set a price, have no doubts and show your customers your steadfastness.

  • If you have a direct relationship with customers, make eye contact and speak clearly. Never apologize for the price of an item.
  • By being firm, you will instill confidence in the customer. If you are confident in the prices you have set, customers will recognize that they are fair and that you know what you are doing.
  • If you hesitate or seem uncertain, customers will be more likely to think that you are trying to sell the item for a higher price than it should. They may change their minds and walk away or bargain to lower it.