Product Development and Pricing for Etsy

Lately a topic of conversation here and here has been about pricing and starting an Etsy store. Many of you already use Etsy as a main sales channel for your business, while other at home crafters use it as their only outlet for their own crafting. While still others are thinking about should I start an Etsy store at all.

I fall into the third option - I am just thinking and developing some plans at the moment. However, I wanted to share some advice for those thinking about this. Now you may ask what do I know as I don't have an Etsy store - well in a previous life I was in Consumer Goods Marketing with multi-national companies and an area of expertise was product development. So I just wanted to share some thoughts with you.

CUT COSTS AND ADD VALUE

1. Do not over engineer your product

It's very easy to add cost by including elements that do not create value to the consumer. Do you need that extra button, the longer zip, does it need to be that size, can I reduce the amount of interfacing? Is there a sewing shortcut I can take to reduce time handling. I am not suggesting you reduce the quality of your product but look at it through the eyes of your potential consumer and see what creates the greatest value and impact of all your components. Put the money in there and reduce it elsewhere. It may be very important to use designer fabric in your article but make sure you get the credit for using certain branded materials in your design and sell the benefits of it.

As by way of example I will use three "Celine" bracelets of mine that I have been perfecting. Same pattern, different clasps and different colourways on the bugle beads, Swarovski Crystals and seed beads.

These take me about 4 hours to make, I can't get around that, but I can change the componentry. The Swarovski crystals are all different prices and for me they make or break the design (along with the clasp)The metallic gold ones are three times the price of the clear crystals in the middle design and double the price of the metallic silver. But I will only have one retail price of $25 on these bracelets. I think the middle design looks cheaper and not good value when compared to the silver design on the left and the gold one does not give me enough profit margin to continue. So if I go ahead with a gold design I need to find a cheaper Swarovski crystal that gives me the same look but not the price. So that is my challenge and until then it stays in development. I will not go forward with the middle design either because it does not look like good value.

2. How can you cut costs

Etsy is a global marketplace so you need to be competitive. It's always better to have a unique offering to sell than copy others and you need to know what retail price is sensible given the competitive nature of Etsy and the huge range of options to purchase for gifts.

You could investigate buying at wholesale prices, negotiate better buying prices with your favourite craft supply stores. What about starting a buying group with other like minded craft bloggers in your area. Better still are you buying fabric online at US prices (same as your US counterparts).

Do you need to buy designer fabric/components ? Can you get the same look using a cheaper fabric/components? It's all about getting the biggest bang for your buck!

Building on what I said above can you be smarter with the use of fabric by not over engineering. Can you make a smaller pattern and cut 5 widgets instead of 4 out of your fabric? Smaller zip? No point supersizing something if there is no benefit to the consumer and it is just adding to your product costs. Just have a rethink as how to take cost out but not the quality.

COMPLETE PRODUCT COSTING

For every product that you want to sell it is important to take the time out and do an individual product costing. If you can't do a spreadsheet what about jotting it down in a journal.

It should cover:

1.Component Costs

Fabric, thread, interfacing, zips, buttons, paper, ribbons, beads, clasps, crimps and much more. Make an estimate on the amount of cotton you use or any other component like that

2.Packaging Costs (presentation packaging not postal packaging)

Box, Tissue Paper, Ribbon, Bubble Wrap, Business Card

3.Paypal and Etsy Charges

There is both a fixed cost and variable cost element here - work it out

Add all that up as a sub-total

4. You may wish to add electricity, heating, sewing machine time/repairs, needles etc petrol to get to the post office -  I know some sellers who state they only send out twice a week to reduce time going to the post office.

5. Then what about your time - factor that in. Of course you still need to be competitive with your price point and it is your time that becomes the most variable and you can end up working for next to nothing.

Make sure that your Postal charges cover all costs for your post and packaging - you do not want to be subsidising this either

So in summary

CUT COSTS by re-engineering your product, buying better and being smarter with your time

ADD VALUE by re-engineering, think about what creates the best impact and value for the consumer and in return get a better price point

Please do PRODUCT COSTING ON EACH ARTICLE

Hope you find this of interest and please share to those who may not see this article on my blog. Look forward to hearing your comments.

Sharon

Copyright Sharon Carter 2008