If you are thinking of selling the crafts that you make, one of the most important decisions you can make will be how much to charge for your items. If you do not price your items correctly, you will either have no sales if an item is priced too high, or you will go out of business if items are priced too low for you to profit. While there are many formulas out there to figure pricing, they all rely on certain common elements.

First, know your market. If the items you make are priced higher than what people normally buy in your area, either you need to have a lower price, or sell in the market that will support your prices. Trying to sell high end jewelry pieces at a flea market won't work, but finding a specialty boutique or juried fine arts show will. Once you have decided who your target market is and what they are willing to pay, then you can start working your numbers.

Make a list of all your expenses related to creating your crafts. This includes materials, labor, overheads and profit. When calculating costs for materials, this includes everything from glue, thread, markers, etc. Don't forget to include the shipping costs for those materials if you have to order them through the mail. Calculate how much the material costs for each piece to produce, this gives you the raw item price.

Calculating labor is a bit more personal. How many items can you produce in one hour's time? How much do you want to be paid per hour? If, for example, you can produce five of your items in one hour and you want to earn $10 an hour, then your labor cost on each item would be $2. Obviously, this amount will vary depending on how many items you can produce in an hour and how much you want to be paid. Add this amount to your materials cost per item.

Overhead is tricky. While most crafters work at home, don't think that you do not have overhead costs. There is the space taken up in your house for your work, the pens, paper, phone, electricity, etc. that gets used during your business process is all counted towards overhead. The easiest way to do this is to keep good receipts and open a separate checking account for purchasing anything for your business. For utilities, take an average household bill (such as electric) and divide the total amount by the percentage of square footage your business takes up in the house. Once you have this total number, you can divide it into a daily or hourly number to make calculations easier. Add this figure to the labor and materials.

Profit is one of those things that people either tack onto the labor calculation or do separately. It depends on whether you have someone helping you make the items or not. Profit is really the number that you want above and beyond the cost of the item to make. So, if you want an extra one dollar of profit on each item above your labor, then add that amount to the cost of each item. If the cost of making your items puts your retail price lower than area averages, you can add profit on and raise the price, still keeping it in line with average pricing.

Once you add these four items together, this is the price you want to sell your item for. As you can see, the profit number is what you can adjust to keep your item price in line with your market.

What if your numbers make the item too expensive for your market? The first thing to look at is the cost for materials. This may mean finding new sources for your materials, or buying in bulk to bring the costs down. Don't forget to look at the internet for your supplies; you can often find great prices on materials that way. You could also lower your profit down, or possibly your labor - although these are last choices to make.

Take the time to work the numbers and you will be more likely to succeed in business selling your crafts.