I run into this a lot too. People see the art I create on my artblog and ask me to make custom pieces for them. I have to tell them no. The economics don’t work out. The price I’d have to charge them to make it worth my while would be far beyond the thing’s value. And yet, I’ll sell or give something away for less than its actual value. The creating it is the reward. Selling it is just recouping some of the cost and having an impetus to get the thing out of my house so I can make room for the other things I want to make.
The reasons are complicated. For one, you get social capital, which has value beyond price. Gifts or subsidized sales strengthen social ties. The second reason is that if you do something for pleasure or social reasons, it activates much different parts of your brain than if you do it for money. You might give up your Saturday to help a friend move, and if they offered you a thank you of $10, you’d be happy. But if a stranger asked to hire you for $10 for the whole day, you’d tell them to take a hike.
The other reason is the shift from art to manufacturing. You might have been really inspired to create that painting of ducks playing poker, but that doesn’t mean you want to do nothing but churn out panting after painting of ducks playing poker. If you’re selling something in a commercial venue, even in an etsy store, people have expectations that you’ll have a consistency and the ability to meet demand. One painting of ducks playing poker can be art. Three hundred of the same painting, and suddenly it’s a commodity. Part of the joy of creation is the challenge of something new, and doing the same thing over and over sucks the fun out.
If you are making things to sell to strangers, consider my advice: I have learned from experience that it’s better to overcharge for my work and not sell it than undercharge for it and sell it for less than it’s worth. If the buyer doesn’t pay enough for it, they won’t value it. You can’t expect to compete economically with things that are made in third world countries or by machine. I’ve sold a lot of amazing, one-of-a kind things for little to no profit, trying to lower the price as much as possible, only to later feel like I sold my work too cheaply. If you don’t value your work, other people won’t either. And those things that don’t sell at the higher price can become gifts. If your crocheted hats always sell for $75, that hat is a gift worth $75. If you sell them for $15 because you think that’s what people will pay, you have knocked $60 off the value of every gift you give.