It is not always easy determining how much to charge for your crafts. Every crafter should realize, however, that they must be able to cover the costs of their crafts, shipping and handling, and the time necessary to create the craft. Pricing is an important aspect of a home-based craft business. Charge too much, and no one will buy. Charge too little, and you will end up losing money.

Finding a happy medium means that you have to understand what prices to cover, determining how much your potential customers will pay for your craft, and getting an idea of what others in your field are charging for their crafts. In this article, we will discuss these aspects, as well as a number of pricing strategies that may help you determine how much to sell your crafts for.

How Much To Charge?

Be prepared to spend a certain amount of research checking the prices of other items, similar to the ones you are making, either in local retail stores or at craft fairs, and on Internet auction sites, such as eBay or Etsy. Do not forget that you can always change your prices, but try to set a price and stick to it for several months at a time. You can always lower your prices and offer sales as an added incentive for potential clients to buy your product, or you may even decide to offer special deals for credit card purchases, bulk orders, or as promotion.

First of all, you need to determine what expenses your prices should cover. Basically, these include the cost you pay for materials and supplies, your time, and the amount of money you must necessarily spend on marketing or advertising. The most important of these is your overhead.

Your prices should be able to cover the costs of, at the minimum, the amount of money you have put in your business; your telephone bills, a portion of the rent for your home or garage, insurance, supplies, and other expenses need to be considered when determining a price for your crafts. A short list of common overhead expenses may include, but are not limited to:

• Office equipment
• Internet access
• Website hosting fees
• Business cards, stationery, newsletter production and other office supplies
• Utilities such as phone lines, or telephone bills utilized for your business
• Magazine or journal subscriptions that focus on your business

Depending on how you operate your business, you may also be able to write off a certain portion of your home or mortgage on office costs, depending on the size of your office, whether it is used exclusively for your business, and other stipulations defined by the Internal Revenue Service.

Your pricing should also take into consideration direct costs of operating your business. For example the price you have to pay for fabric for your quilts, or wood for birdhouses or cabinets, are considered direct costs.

Determining Your Prices

Determining your final prices may be a trial and error endeavor. It takes careful consideration to determine the cost of your crafts. Your pricing will not only determine how much profit you can make, but may also be used as a barometer or guideline to the future success of your business.

As mentioned in the introduction, if you set your prices too high, you will not sell very much. You can spend a lot of time on supplies, making your crafts, and trying to sell them, but you may not receive many bites if your prices are too high. At the other extreme, setting your prices too low will not put much money in your pocket, either.

The best way to determine potential prices for your crafts, is to look and see what others are charging for similar crafts. You can do this by visiting physical, as well as online stores. Take the time to understand your competition, what they are selling, and how well they are doing. Find home-based craft business forum boards, or discussion groups on the Internet, and find out what others are charging for their crafts and how successful they are with those prices.

It goes without saying that in order to generate sales, you will need to price your crafts a little under what your competition is charging for some items; and if you are striving to create a brand name or premium craft, you will need to charge a little more than your competitors, but be prepared to explain why.

A variety of online stores that sell a wide variety of crafts may be found at:

• eBay
• Etsy
• Amazon
• Google
• Craigslist

Spend a day, or a week, browsing online stores, and try to find items that incorporate at least the number of materials and time spent that your craft does. Look to see how detailed other competitors' crafts or products are, and what customers are willing to pay for such crafts. Find a middle ground. Ask yourself whether or not you would pay that much for your craft. If you would not, it is doubtful that your customers will, either.

About Pricing Strategies

A pricing strategy is a fancy name for determining how desirable your crafts are, and then fixing a price for your craft. For example, a pricing strategy may depend on supply and demand. This basically means how much of a supply there is for your type of craft, and how many people are demanding it.

The skill and time it takes to create a craft may increase its demand. For example, handmade twig furniture, or hand-blown or stained glass, may be in higher demand than stuffed Teddy bears. Every year, a certain number of toys, products, or services are offered to consumers that seem to exceed supply. This creates demand. This is especially apparent at Christmastime, when you are looking for that certain popular toy that is all the rage. The same concept of supply and demand may help you determine the price for your crafts.

Regardless of how you determine your prices, pricing strategies -- and the success of those strategies -- rely on a few basics. For example, you want to give your customers the best product you can. Choose only the best and most durable materials to make your crafts, offer excellent customer service, and go above and beyond when it comes to dealing with customers, potential complaints, refunds, or exchanges.

The most common methods for testing the prices of home-based business crafts can be to offer introductory rates when you are first starting out. This will offer potential customers lower prices for your crafts because you are trying to gain a clientele. After a couple of weeks, you may opt to sell your crafts at the "going rate," which means the same prices as many of your competitors are selling the same type of craft.

Conversely, you may decide to find a middle ground between a starting price and the going rate, but you can always suggest this price later, depending on whether or not you feel you are getting your money's worth for the time and effort you put in your crafts, as well as your ability to meet your overhead expenses.

You may also decide to offer sales to generate extra business, which are often known as bargain basement sale-pricing strategies. However, keep in mind that with this type of pricing strategy, you may barely break even, or may even lose money.

If you have a unique and highly marketable craft that is in demand in your area or region, you may try premium pricing, which means setting your crafts above the price offered by your competition. However, when doing so, make sure your crafts are of extremely high quality, are not offered widely in your area, and cater to individual tastes or design.

Customer Service

Customer service is more essential, from the perspective of a home-based craft business, than any other. Crafts are generally considered a luxury by consumers, so they are naturally going to expect quality products and crafts for the money spent on them. Understanding customer behavior, earning customer loyalty, and learning how to deal with difficult customers, are all part of owning and operating a home-based business.

The Basics of Customer Service

Customer service means providing your clients and customers with reliable services, a quality product or craft, and reasonable prices. Your customers are going to want to receive what they perceived they have paid for. While customer service may mean a variety of different things to different people, it is essential that home-based craft business owners understand the basics regarding customer service.

Customer service is not just for customers who want to make a complaint about something. It is an ongoing endeavor that increases the value and goals of your home-based business. Today, pleasing customers is increasingly difficult with the availability of Internet services and products. Go ahead and log onto the Internet and type in quilted crafts, home crafted bird houses, homemade fishing lures, or any other type of craft, and you are likely to see 1 to 20 pages of individuals offering such products. You need to compete with these people.

The quality of customer service greatly influences the popularity and growth of your craft business. Happy customers are more than willing to spread the word about your products to others. At the other end of the spectrum, many customers are even more willing to warn away friends and family members, as well as get onto the Internet and lodge complaints on forums and discussion boards, regarding poor customer service, poor product or craft quality, or any other situation where the customer walks away unhappy and disappointed.

Understanding Your Customers

Depending on the type of craft you make, you may be dealing with a variety of different age groups as your customer base. Generally, customers are categorized into different generations:

• Mature generation - those born before 1946
• Baby boomer generation - those born after 1946, but before 1964
• Generation X - these individuals were generally born between 1965 and 1981
• Millennial generation - those born after 1981

Individuals born after 1981 are incredibly computer- and Internet-savvy. These customers will more than likely order from you online and expect online payment options. Individuals born to Generation X are fairly adept at technology but may tend to want to communicate with you regarding your product or craft: what types of materials do you use, how do you ship, do you offer guarantees and return policies?

The baby boomer and mature generations are going to want or insist on quality for their money. They may be more cautious when ordering online, and may be hesitant to offer you their credit card information online. Some will absolutely refuse to pay online through such venues as PayPal. More often than not, those of the mature generation will insist on paying you by check or money order.

Learn the specific needs and attitudes of different generations so that you can continually provide excellent customer service and understanding to your customers. Even if their method of payment may require a little more time and effort on your part, do your best to adapt your business to meet their needs.

Ensuring Customer Loyalty

Customer loyalty and reputation are essential for a successful home-based craft business. The manner in which you treat your customers will generate their loyalty, or cause them to go elsewhere. Remember the old phrase, "The customer is king?" It is true.

While this does not mean you should allow your customers to walk all over you, or make unreasonable demands, it basically means that without customers, you do not have a business. Therefore, you should do your best to make sure their expectations are met. Provide them with quality products, deliver their products when you say you will, and back up your crafts with a return or money back guarantee.

Customer Do's

• Always treat customers with respect.
• Manners go a long way to ensuring customer satisfaction. Always say "please" and "thank you."
• If a customer is in any way dissatisfied or unhappy, determine the problem and do your fit best to fix it as soon as possible.
• Offer a return policy, as well as money back guarantees, as long as you have stipulated the guidelines for such policies prior to sale.
• Develop an efficient and timely shipping schedule.

Customer Don'ts

• Don't argue with a customer. Do whatever you can to retain that customer. If they are unhappy with the product or your service, do what you can to fix it, within reason. Offer them a discount, or equal exchange on another product. Bend over backward to make an unhappy customer happy, and you may have a customer for life.
• Don't keep your customers waiting. Respond to orders or questions promptly.

Dealing With a Difficult Customer

Individuals running any home business, and that goes for home-based craft businesses, will likely run into a customer who was unhappy with their product. They may be unhappy because the product is not what they expected, or it may be the wrong color or size, or they may just decide that it was not what they were looking for.

Some customers may demand a money-back guarantee, or a discount or coupon on another product. The first thing you need to do as the business owner, is to determine the veracity of their complaint. Do not just get angry. Sincerely try to work out an agreement that will benefit both of you.

Studies have shown that an unhappy or irate customer has incredible power to put a damper on your business efforts. Word of mouth between unhappy customers is much higher than positive word of mouth. Do your best to make sure that you take as many steps as possible to try to keep your customers happy.

If the customer is angry or verbally abusive, let them vent their anger and avoid the urge to respond in kind. Offer a courteous, even tone, and suggestions on how you may solve the problem. If this does not work, ask the customer what they require to alleviate the situation.

Again, this does not mean allowing them to walk all over you, or to make unreasonable demands. However, not allowing yourself to respond in kind, or in an angry tone, often facilitates "taking the wind out of their sails," so to speak. If you refuse to debate, raise your voice, or engage in a disagreement with someone, they have no one to argue with.

Customer service is the foundation of your business, but it will not always be easy to deal with a variety of customer demands and expectations. One of the best things you can do as a new business owner, is to visit your local library and read a book or two on customer service. The standards for customer service apply to home-based craft businesses as much as they do to major corporations.