how to price items

I have two ways that I price items.

Way one, the simple formula, you have seen it, I'm sure.

raw materials + time = wholesale price
wholesale price x 2 = retail price

Now, make sure you pay yourself nicely.  You should probably be charging twice what you want to make, since there will be overhead costs.  So, if you want to make $10 and hour, charge $20.  If it takes you 1 hour to make, then $20 would be your time cost. 


The second way I go about figuring costs is I look up similar items to mine.  I choose seven items, write down their cost, get rid of the highest and lowest item, then get an average.

Example:  

$22
$19
$15
$10
$12
$15
$19
total $80 / 5 = $16

So, I'd sell it for $16


Now, that I have done both, I see if they match up, which a lot of the time they do.  If they don't match up, I pick the higher number, if they are close.  If they are not close, I look at what I am charging and what others charge and try and figure out the difference.  Is it taking me twice as long?  Am I using expensive materials?  Are other people undercutting themselves?  Am I undercutting myself?  All have been true.


I price my items to sell at a reasonable amount I feel.  I also am a type of person that wants to pay less for something, but I don't take into account what I would pay.  (Example, my favorite coat, original cost $99.  I paid $5, and you wouldn't believe the complements I get on it.)  So, I don't feel bad when charging more.  I also have found the more I charge, the more business I get.  Once I started to price this way, and nearly doubled my prices, I sold less, yes, but made more money.

So, go to, have fun pricing, and share any tips you have.