It has happened to all of us. We go to a craft fair and spot "THE PERFECT" thing-a-ma-bob.
"Oh it is perfect!" "It is so beautiful!" "I want it! I want it! I want it!"
Then you glance at the price tag and almost drop it!
You think "What? Why is this so expensive? I can get something similar at Walmart."
Lets clear this up right now, yes you can find a cheap, low quality thing-a-ma-bob at Walmart any day of the week. That is not why you went to the craft show. You wanted to find that perfect, handmade, high quality thing-a-ma-bob. Not the same one that twenty of your closest friends will buy from Walmart next week!
But that does not tell you why it is so expensive, does it?
Well I am going to take a minute to try to break down some of the costs involved in pricing for craft shows. Lets look at this Labradorite Pebble Necklace that is marked $75.00.
Opps, we forgot to subtract the cost of the raw materials used to make this piece. To make this simple, lets say I have about $15 of raw materials in this piece (that is pretty close, I think it was somewhere like $17.34). That would bring my hourly rate down to $6.00/hour.
I also have to pay sales tax on the final price of the piece. I include it in the total price to make it easier during check out at a craft show, since I really want to offer you excellent customer service and not make you wait for me to calculate the tax at the show. In my state the sales tax is 6.75%. So on a $75.00 piece, that is $5.06 that goes to the government's pocket, rather than my pocket.
While I am looking at the total costs, I also need to account for my operating costs. This includes items like marketing materials, bags, tags, displays, tools, electricity, and transportation costs. All of that has to be factored into the prices.
According to a paper by Sageworks.com, the average overhead for a private retailer is approximately 22% of their sales. So for this piece that would be $16.50 in overhead.
So where are we on hourly rate now? Lets see.....
$75 (price) -$5.06 (tax) - 16.5 (overhead) - $15.00 (materials) = 38.44/10 hours =$3.84/hour
But there is one more piece of the price puzzle. The show fees.
You may not realize it, but artisans and crafters have to pay to sell at craft shows and fairs. A great show can run upwards of $1000/day. However you can find a relatively good show for about $100/day in my area.
To cover the costs of the show, the fee is split among each item sold. If I sold twenty items during a show, each item sold covers $5.00 of the fee.
So my final per hour cost would actually be $3.34/hour. Not close to minimum wage or even a living wage (currently touted as $15/hr).
If I were to charge a living wage to make this, it would actually cost $214.89. Wow. Was that $75 really that expensive after all?