BIZ: Pricing the Precious

BIZ: Pricing the Precious #handmade #business #adventuresinmkg

Pricing is such a tricky thing. I often work with artists to try to find the right price for products, and even my experience is limited to research and what I see in my own store. I’ve listed a couple of great resources that go into all the things you need to think about when setting a price on a product, but I just want to talk about one thing.

After you do all the calculations (figure out what you need to make, double it to get a retail price, and balance that with what the market will bear) you might end up with a small range of prices. The bottom one (say $15) would mean you have to work a little harder for a little less. The top one (say $22) would give you a nice little cushion, and make you feel like what you’re doing is really valued by your customers. What do you do?

Even when it comes to handmade goods, customers have a clear idea of what they should be paying for something. Often that figure is a little unrealistic because of big box stores, cheap labor, and (let’s be honest) flimsy options. We’re all working to turn that around– but the reality is if they can buy it from Target for $11, they will be more likely to buy yours at $15 than at $22.

In fact, they might buy your product like mad. You might sell hundreds.

Here’s the rub. You will be the one to make those hundreds of things. And if you are up late at night grumbling the words “fifteen dollars” under your breath as you work your fingers to the bone, you aren’t a happy little maker. Are you?

So here are some things you should think about when you’re finalizing your prices.

Consider the Lower Price if…

You are happy when you’re making it.
Can you sit idly in front of the TV, listen to music, work at the park? Do you feel satisfied while you’re crafting those little guys? If so, I would err on the side of the low rate. Making a hundred of something you love (and will still love after the hundreds go out to new homes) is a pretty great thing.

Your materials are abundant, easy to use, and non-toxic.
If you can easily get your materials, don’t see any trouble getting them in the future, and working with them doesn’t make you sick continuing to do so as you get more and more successful shouldn’t be a problem.

This product is the foundation of your business.
If the success of this one product is going to make or break your business, I think it’s smart to aim for selling a ton of them. If you’re making decent margins with them, then that means more money for you to try new things. Also, this one product might be the success that gets you in the door with stores and customers who will then take a chance on those other products.

You’re emotionally and artistically satisfied.
I know I already addressed this; but really, it’s a big deal!

There is enough variation in your product to keep your brain working.
If you’ve come up with a product that can be different from piece to piece, it will give you more freedom to continue growing as an artist. They may be very basic tweaks (different colors, different designs), but variety is the spice of life!

Your products are really just a copy of an original design and have a limited amount of work involved.
If the majority of your effort and material cost went into the first design and now you can just automate the production of the item, go for the lower price. If you sell a million, you’ll have made more towards your original design…. and your work will be EVERYWHERE!

Digitally printed cards are a great example of items that can be produced easily again and again, once they have been designed.

Digitally printed cards can be produced easily again and again.

 

Think about charging the Higher Price if…

Your materials are rare, or difficult to acquire.
If you think you might possibly run out of your materials in the future, it’s worth considering. (A couple of the things I make use vintage papers that I will eventually have to try to replace. That means time and money on my part, and I eventually might not be able to find those things at all.)

If you are wearing out the tools that you are using.
If you will need to replace or repair tools on a regular basis, that’s something to consider in your pricing structure. Charge the higher rate, especially if it’s an expensive tool.

It’s a niche item.
If you will sell fewer of your items because they have more of a limited audience, charge a little more. Eventually they might pick up in the right crowd, but until then you want to make sure you’re covering your costs.

It’s one of those things that scarcity actually adds value to.
If you are only ever going to make one of these like this, then give it a precious price. People will likely use that price to reassure themselves that what they are buying is a one-of-a-kind item.

You have to keep a lot of material on hand, order in bulk, or make other costly investments.
This is usually considered as part of your material cost, or as part of your overhead- but it’s worth thinking of again. If you have to buy your items in large quantities, you want to make back enough to cover that cost as quickly as possible so you’re not sitting on a lot of debt. Even if it’s not actual debt, those materials were purchased with money taken from your company- and until they are made into products and sold, they have basically no value. (Also, your roommate might not be too happy with how much space they are taking up.)

It’s hard work.
I know, I know, all creation is a combination of expression and hard work­­– but some work is harder than others. If you’re exhausted at the end of each production shift, take that into consideration.

This thing is precious to you, and difficult to part with.
If you put your heart and soul into each item you make, and it matters to you that they go to “a good home” please use the higher price. Then you know the person who bought it will love it, and the extra pocket money doesn’t hurt.

When the vintage maps are gone, so are the notebooks.

When the vintage maps are gone, so are the notebooks.

 

Try to use these to think about pricing in the bigger picture.

The goal is not to make a complicated subject more complicated, but rather to help you figure out why you’re unhappy with one price or the other. Hopefully this will be another tool to cement a great starting price that ensures you’re successful and satisfied. Cause that’s what we want.

 

Other Resources

Craft, Inc.: The Ultimate Guide to Turning Your Creative Hobby into a Successful Business by Meg Mateo Ilasco

Some Thoughts on Product Pricing”, at OH My Handmade Goodness.

(If you have a go-to resource for creative business, please let us know in the comments!)