Pricing Transparency: What Goes into my Sock Patterns

When I started thinking about addressing the issues I've come across in pricing my knitting patterns, I obviously also started gathering ideas what I could do to help facilitate the change I would love to see in the industry.

One idea stuck - and came back to me over and over again: A transparent pattern creation value chain. The inspiration for this comes from the US-based clothing brand Everlane. Ever since they started, they've broken down the production cost and profit margin of their products for every single item they offer:

 Example for a long-sleeved linen T-shirt (Everlane website)

Example for a long-sleeved linen T-shirt (Everlane website)

I'd love to attempt to do something similar for each pattern category I'm starting to publish designs for, starting with socks.

So here's a break down into what goes into one of my sock patterns:

Internal Tasks

These are all tasks I'm doing internally, i.e. on my own, for now. I've measured the time for each step while working on four sock patterns to account for the fact that I might get faster the more sock patterns I work on. I only took the average of the last two patterns for this break down as I indeed did get faster and more efficient over time.

  • Swatching & pattern writing: 5 hours

  • Tech editing (mostly emails with my tech editor & pattern adjustments): 1 hour

  • Sample knitting (1 pair of socks): 35 hours

  • Test knitting: 2 hours

  • Photography & photo editing: 2 hours

  • Layout: 2 hours

  • Ravelry & website upload: 2 hours

  • Marketing & pattern support: 3 hours

In total: 52 hours. On average. Assuming an hourly rate of €20 (which is, honestly, low for what I would like to pay myself in the long term), this comes in at a total of €1040.

 From swatch...

From swatch...

 ...to first sample...

...to first sample...

 ...to pattern photo.

...to pattern photo.

External Tasks

  • Tech Editing: €35

For now, I've only outsourced tech editing, nothing else, so that the total amount spent on external tasks equals €35 for a sock pattern.

Expenses

So far, we've only looked at the labor side of things. But! There's more to a sock pattern than just the time spent on it:

  • Yarn (in case I haven't received yarn support)

  • Knitting needles & notions

  • Ravelry, Paypal & Stripe fees

  • Software & services such as Squarespace, Convertkit (for my newsletter) and Adobe InDesign

  • Hardware such as my camera, external hard drive and laptop

  • Health & business insurance

  • Savings for sick days

As I haven't sold a single pattern yet, I'm not entirely sure how much these expenses - especially the variable ones like payment fees - are. In addition to this, some of them like the Ravelry and payment fees are dependent on how many patterns I sell, so I need to make an assumption here. Very conservatively, I'd estimate 20% of the internal labor costs to be added as expenses. My gut feeling is that this is more - maybe even quite a lot - but until I can actually measure it the way Beatrice has done it, this feels like a fair assumption.

At 20% of internal labor cost, all of these expenses amount to €215. 

Taxes

So, all in all, we're looking at a total cost of €1290 for a sock pattern. And then come taxes. My current average income tax rate is roughly 22% which means I need to make €1574 in order to recover the costs associated with creating the pattern. 

In addition to that, I need to pay VAT which is 19% for all EU-based customers. To simplify things, let's assume that that applies to 50% of my customers, meaning I need to make at least €1723 in order to recover all costs after taxes.

What does that mean for pricing?

€1723. That's a lot of money. In order to come up with a sustainable pattern price, i.e. one that covers all these expenses, one thing is still missing: I needed to make an assumption as to how many patterns I could realistically sell over the lifetime of a pattern.

This is hard, you guys. I tried to extrapolate how many sock patterns were sold on average by looking at how many Ravelry projects were associated with quite a lot of sock patterns, but that doesn't seem to be a very good proxy as I learned from multiple conversations. Then, I did a poll on Instagram asking whether designers sold more or less than 100 sock patterns per design - and a whopping 79% of about 20 people said that they sold less than 100 copies. 

Whoa. If I assumed I'd sell 100 copies of each sock pattern, I'd have to set my pattern price at €17.23.

For a while, I was stumped at this. If I followed my own advice, I would indeed need to start selling my patterns for €17.23. Holy shit. But then I also decided that I am confident that I can, on average, sell more than 100 copies of each sock pattern over the lifetime of said pattern.

For now, I'm working with the assumption that I can sell between 250 and 300 pattern copies, which gets us to a price between €5.74 and €6.89. I'm settling for €6.00 for now and will keep close track of how many copies I sell, how my cost base develops and whether that is a sustainable price in the long run.

I hope this longer post brought a bit of light into the darkness of pattern creation and provides you, the knitter, with a good understanding of how I come to charge the price I now charge for a sock pattern. If you have any questions or comments on that, feel free to send me an email or comment down below!