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Monday, November 5, 2012

Boutique Basics: How To Price Products

Shannon here and I'm baaaaaack for another installment of Boutique Basics where I help boutique owners learn the business of owning a boutique! This week we are going to be discussing something we get asked about a lot and we all HATE figuring it out: pricing products properly. So let's put our big girl pants on as well as our thinking caps and get down to business. I suggest you don't just skim over this article either; get out some paper and a pencil and really work on this. You will be thankful when it's all over and you have a plan in place for properly figuring out the pricing of your products.

First, things first, you need to download this excel spreadsheet that will help you easily calculate your prices. I will go through it step-by-step with you discussing and explaining every number you input into this form. I can't take full credit for the spreadsheet, in fact, I found it online myself. I did, however, modify it a little here and there to work for us boutique owners. Wish I could remember the site that I got this from, but I can't. Sorry! If you happen to know, please let me know as I would love to give them proper credit!
Before we begin, here is the spreadsheet simplified. Looks easy enough to understand right?
Calculating Materials:
So once you have this spreadsheet downloaded, saved to your computer, and opened, you can begin by choosing an outfit you've recently made (or plan on making) and we will determine the pricing for it. I will be using the Marilyn's Slim Fit Peasant Dress since that is a free tute that everyone can follow along with me on. The first thing we will be determining in the spreadsheet is the materials. For this example, we will be using the cover dress in  size 4T. There are two fabrics being used; one for the dress and one for the ruffle and sleeves. The dress body's fabric uses 5/8 yards of fabric that costs $8/yard.
5/8= .625 yards
.625 x $8= $5
$5 is what you will mark in Materials 1 purple box.
The second material uses 1/4 yard for the ruffle and 1/4 yard for the sleeves. This equals 1/2 yard or .50 yards. We will use the same $8 price for the fabric.
.50 x $8=$4
$4 is what you will mark in the Materials 2 purple box. Next we will be determining how much elastic we are using and how much it costs. For the neck we need 17" and for each sleeve we need 7.5"and our elastic costs $.28/yard.
7.5 x 2=15"
32/36=.888889 yards
.888889 x .28= $.24888889 (we'll round up to $.25)
So next to the Materials 3 in the purple box we will write $.25 for how much elastic we use.
At this point, your spreadsheet should look like my image below. You don't need to change the materials' names but feel free to do as I did! If you have sizing labels, care labels, or logo tags, consider adding prices for those as well in the materials section.
Calculating Packaging:
The next thing we will be working on is the packaging cost, ie how much it costs to package up each item for shipping. My preferred shipping method is using polymailers. The 9x12 size is perfect for 1 to 3 dresses. I usually buy them from Ebay or Amazon, wherever I find the best deal. I didn't search too hard for this example, but we will use this listing for our purposes. So for 100 polymailers it is $9.35. That equals to $.09 per mailer. So in the purple box next to envelope/box be sure to put $.09.
Now we can determine the price of special extras like tissue paper, bubble wrap, twine...whatever! I never used any of that myself so my spot would be kept at $0.00.
Now we can determine the price of including a business card. You MUST include a business card in my opinion, 2 or 3 if you can spare it. You never know who they will share your card with. I liked to purchase my cards from Vistaprint. They used to be free (except for shipping) however, now they charge. Let's just say you buy the 1000 business cards for $20 and shipping is (totally guessing here) $5. That makes your business cards $25.
25/1000= $.025 (we'll round up to $.03) each
Next to the business cards in the purple box write $.03. If you include multiple business cards add the prices together for all of them and put that there.
We can now calculate for the shipping labels. If you don't print them off through PayPal--which I suggest you do because you save money on shipping--you can ignore this row. I prefer to use these labels myself. Again, I purchase them from Ebay or Amazon. I didn't search too hard to find a good deal, but I will be using this example where the labels are $9.21 for 200 labels.
9.21/200=$.046 (we'll round up to $.05) each
Input $.05 in the purple box next to shipping labels. We can now move onto ink. Even if you do not use your computer to print labels, you use SOMETHING to write the addresses with. I do use my computer and my ink cost $9.99. I have absolutely NO idea how much ink it takes to print a label, but since the labels were for 200, I will guesstimate that the ink will last for about the same amount.
9.99/200=$.049 (we'll round up to $.05) each
Input $.05 in the purple box next to the ink. At this point, your spreadsheet should look like my image below. If you have anything extra you add in your packaging consider adding prices for those as well in the packaging section.
Calculating Labor:
This is where things get a little tricky. You may be looking at the wholesale and retail prices thinking, "this all seems pretty accurate as it is." But you haven't included labor yet and you deserve to be paid for your work too! What you decide to charge for yourself is all up to you. That being said, don't sell yourself short--especially if you are experienced at what you do. How would you feel about having to get a job and make just minimum wage at $7 (or whatever it is in your state)? The least I would consider charging for myself is $12/hour, and honestly, I may be selling myself short at that rate considering I am quite experienced, but that's what I'm comfortable charging so that's what I'm going to go with. Since this dress is easy for me, I can get it done in at most an hour. So in the purple box next to hourly wage, I will be writing $12. If it takes you a little longer, say 1.5 hours than multiply 12 by 1.5 and insert that amount in the purple box.
Next we move on the the final box: packaging wage. It probably takes me 10-15 mins to package up an order and print out shipping labels. I also am able to put all outgoing orders in my mailbox so I don't have to pay for gas (thank goodness!).
15 min/60 min=.25
12 x .25=$3
In my packaging box I put $3 down. At this point, your spreadsheet should look like my image below.

Calculating Totals:
This part is the easiest because now everything is done for you and you have the final prices there. Here are what my final prices were for the simple Marilyn's Peasant Dress:

"Hold on a minute," you may be thinking, "this is WAY too much to be charging my customers."
But my question to you is: "Is it?"
Think of all the overhead costs that are not being considered in our formula including Etsy and/or website fees, PayPal fees, the wear and tear you are putting on your sewing machine, the time it took to take pictures, edit pictures, and make listings. This also isn't including the time it takes to advertise the new products or the price of advertising them anywhere like Etsy or Facebook. It also doesn't include things like electricity or the paper and ink you used to print off the pattern pieces for the pattern. All these little things are called "overhead" and there is A LOT we aren't accounting for in our spreadsheet. It's amazing how quickly all of these little fees add up. With the addition of these fees, we are probably looking at the final at-cost price being nearly equal to the wholesale price. 
Something else that needs to be considered is who you want your customer base to be. As most of us are probably mom's that began sewing because we couldn't afford boutique clothing, you shouldn't be thinking of yourself as your target customer. Lord knows I could have NEVER afforded the stuff I was sewing for my daughter if I had to buy it from someone else. I'm what you call a "starving artist" lol. There are plenty of people out there willing to pay these prices but the majority of us continue to underprice our items because we, ourselves, could not afford them.
The main problem right now is the boutique world as a whole is generally undervaluing handmade products and the costs associated with these items. We all just want to sell our items and make that fast cash that we continue to underprice ourselves to "compete" with the new boutique on the block whose quality is than ours. New customers continue to search for the lowest prices forgoing the quality of the boutique items for the quantity of boutique items they're able to afford. A lot of these people don't realize there is a difference in quality or just don't care. They are new to boutique clothing and are under the impression that if Wal-Mart can make a tank top for less than a dollar (and then charge $10 markup of over 1000%) then why can't we? Btw, our spreadsheet has a markup of only about 250%, if I were able to pull a Wal-Mart mark-up than this simple dress would be listed at $250.  
The fact of the matter is, pricing is a difficult task and there is no clear cut answer. For me, I would be charging somewhere in between the wholesale price and the retail price for the Marilyn's Slim Fit Peasant Dress in my store because it is SO simple and fast. If we all priced our products based on what they were worth then the whole boutique community would benefit tremendously. When you price items lower than similar shops you are hurting yourself because you will be losing big customers who spend lots of money on boutique clothes because they may think your products aren't as well made. Additionally, if a big shop comes around and asks for your wholesale price on items because they would like to carry your items (it happens a lot!) and you're already charging the wholesale price then you are taking away from your profits and actually hurting yourself! If you're not comfortable selling at the retail prices we suggested in the spreadsheet find a number you are comfortable with between the wholesale price and the retail price. If you get so many orders that you are having a hard time keeping up, you then know it's time to raise your prices.
If you are looking for some more info on how to calculate prices, I suggest reading this article from Etsy. It includes a much more in depth worksheet with a recording to walk you through it all. There is also a video to watch that I included here :)

Watch live streaming video from etsy at
 I hope this was somewhat enlightening and helped you learn a little better how to price your items properly. Again, this is not a hard fast formula that needs to be followed, but rather a  method that worked well for me as a boutique owner and will help you release what the least you should be charging is.
Happy Calculating!


  1. Thanks SO much!!! You hit the nail on the head. O have been pricing my items where I (and the people like me) could afford them. In return I don't make enough profit to be able to sustain. I have wondered if people would feel my products are subpar based on pricing. My question is, now that I've been offering items soooo cheap, how do I raise prices without losing some very loyal customers?

    1. Just make a note on your page/store or website ect...letting them know after the new year prices will be going up due to shipping cost, your supplies costing you more ect...

    2. after raising your prices, offer discounts to loyal customers via a promo code.