Pricing for Failure


Dare you ask for MORE?

Check if you are pricing for failure here

Any NOs to the following questions indicate you are probably underpricing The more NOs the worst the underpricing.

Are you making a living? YES/NO

Are you factoring your materials cost realistically? YES/NO

If you buy materials in bulk the unit cost per product is not the low figure until the whole bulk order is used – Look

If you spent all your  making time on each of your  products  would you cover your living costs ? YES/NO

Dont cheat by using every hour you work a week as making time, as no business can survive that, you need to spend most of your time selling.

The answer to her problem is simplify her product to halve her making time so she can then afford to sell it for half the price as £75 is simply too high for an apron. She could certainly sell some aprons for £75 but probably not four a week.

When you Google each of your products  in up-market  shops, is each in the top half of prices you find? YES/NO

Anything below middle is too low as you are individually hand making.

You will be amazed by the price of things in up market shops.

 If you changed your  packaging  would it be impossible to increase your price? YES/NO

 If you sold in more upmarket venues would it be impossible to raise your price? YES/NO

Picture taken by Hen’s Teeth at Woburn Abbey

Incidentally there is a good  list of online sales places here if you want to try somewhere new

Have you asked successful fellow craftspeople what  they think about your prices? YES/NO

They are the people worth listening to.

Are you selling to customers just like you?  YES/NO

Really? Unless you have a substantial private income or are a very successful craftsperson indeed, is that such a great idea?

Why try to sell to other people who are barely managing to cover their bills? When there are plenty of people out there with spare money ( even if they are not waving it around in the air.)

To find them you have to GO TO THEM (See Customer Segment  post)

Would a really substantial order at your current wholesale prices greatly improve your profits? YES/NO

Consider

  • Cost of materials
  • Impact of time taken making on other income generating activity
  • Possible need to out source the making  and the consequent impact on costs
  • Your enjoyment of repetitive making
  • The loss of exclusive supply of that product
  • Restrictions on your own retail price
  • Waiting for payment
  • Delivery costs

 A really big order at the wrong price can destroy you more surely than no sales at all

Build in a little bit of extra fat into your price even when you have done all your sums as there is always something that will cost you more which you haven’t allowed for.

Don’t be bullied by the retailer into selling too cheaply. Nobody needs a big order at the wrong price

Do you feel proud of  the Quality of your work? YES/NO

Under confidence lies at the bottom of all underpricing. Just as arrogance lies at the bottom of all over pricing.

The injustice is that some over priced goods will sell, just as some under priced goods will. But the under priced maker goes out of business

(To boost your confidence levels read this Coat of Arrogance )

Do you think you can just whack* your prices up anytime you like? YES/NO

*Sorry this subject seems to have bought out my inner Jamie Oliver

You can, I will show you in the next section

OKAY so that’s eleven questions, quite enough to be going on with.

So how many NOs ?

Please take any NOs seriously.

Not to beat yourself up

But to enter Wonderland where your prices work

Its nice here in Wonderland, do join us, each year we make a little more money and don’t have to work quite as hard as the year before

Lose the last of your resistance to increasing your prices here

LESSON ONE

LESSON TWO

You don’t need handmade items, there is always a cheaper mass-produced alternative, there is also always a cheaper handmade alternative

For the craft buyer it is not about price it is about DESIRE.

There you are, what a brilliant teacher, just look at those talented drawings

You do get it don’t you? After all you are not stupid

 How to put your prices up

Nobody minds if you put your prices up.

Previous buyers coming back for more will simply feel that they were clever to have been in on your beginning  when your prices were lower.

There will be some customers who will come back and find your prices might now be too high for them.

That’s okay because you couldn’t afford to sell to them at the old price AND the new price will bring in replacement customers. (Keep reading)

Be experimental about putting your prices up.

Try three different prices at the same time on similar pieces and you will find your customers don’t automatically buy the cheapest.

A Harrods customer knows that Primark sell clothes cheaper but that isn’t what it’s about for them.

Most people assume that a cheap price means a shoddy object. ESPECIALLY  ONLINE where you can’t see or handle it.

Very few people have the self-confidence to buy a wedding tiara from the Poundshop.

Most people think that PRICE = QUALITY

Just as your sense of self-worth is linked to how much you earn. Its stupid, but it is how it is.

So for every person who is enabled to buy by  a low price you will lose another who NEEDS TO PAY MORE

tagssmall

The clever thing is to have a few entry-level pieces and some middle range and some absolute stinkers with huge price tickets

Everything will be brought up by those high level pieces.

WHAT IS THE SENSE in having everything at knock down, hardly worth making prices?

And What of Sales? I know, that will be another post. There is enough here for now ( but I am against them)

I hope that helps, pricing is really difficult, there is no magic formula, it really comes down to  common sense and optimism.

If you would like my guess on the sort of price you could ask for a specific product then leave me a link in the comments and I will tell you what I think an  affluent middle class customer would be prepared to pay and if it’s the sort of thing they would buy. Its my best guess, it’s up to you to try it out. You must try it in the right place with the right packaging and for heaven’s sake remember to re factor in any change in costs that means.

A better life is just round the corner just take the risk, take your hand off the rail and skate out to it by SIMPLY PUTTING YOUR PRICES UP Yeah!

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139 thoughts on “Pricing for Failure

  1. 3dDave, says:

    Hi Dixie, just a thought on this. If, as a crafter that has a salary from another job, so only producing products in spare time, also being in a position where they don’t have to craft to supplement a wage due to reduced hours etc, would a fixed percentage uplift added on to all of the component parts used to produce each item work as a viable pricing structure? The craft calculator does not work in my case.

    • Dixie Nichols says:

      Dave there is a moral issue here which only you can decide how to respond to. If you price to reflect your own circumstances you are likely to undercut those whose living depends on your craft which means that the public will think that they are overcharging and so you are sucking the oxygen form your business.
      My basic view is you should experiment to find the price ceiling for what you are making. Experiment simply means offer a spread of prices until you find the level at which the sales totally dry up. Not scientific but pragmatic.

      • 3dDave, says:

        Hi Dixie, the only reason I ask is because I am a paper cutter. Generally cuts take sround the 30 hour mark. The craft calculator method would just be unrealistic unless I wanted to earn £1 per hour! I read a book on starting your own craft business that said if you are replacing a wage you should charge at least the minimum wage per hour…that would overprice what I produce or if you had a salary so were not having to cover what would be a wage, then you should break down your production costs per item and add 75-150% uplift. I want to charge what other cutters charge but I cannot figure out their pricing strategy, Ineantbto avoid a finger in the air method. That said, as I have a salary, I have no problem at all going in at the highest price and walking away with hardly any sales just to find “The sweet spot” Luckily enough the public have usually not seen or heard of papercutting so would have not much insight as to what a piece of work would cost, also virtually none exhibit at craft fairs.

        As always your advice makes more sense than the question asked, thanks for your time on this one.

        Dave.

  2. jonburgessdesign says:

    Well, I’m bookmarking this. . . Followed a link from the Folksy forum, I’m lurking and reading. . Fantastic advice. Tough love and a reality check is what most artists need. Along with a herd of your big dogs to pee on the crafters and makers who don’t need the money and sell good quality stuff really cheap ;-)
    Trouble is, you are dealing with a dream here, ‘making money from your art’. A long hard look at pricing etc could make you come to the conclusion that you will never make it work. Uh oh. . . End of dream ;-( . People would rather have the dream than the reality, every time, to the detriment of all creative people, sad to say. We are dragging each other down.

    Jon, who hasn’t sold anything on Etsy yet, but you never know, its early days. Now to read up on how to find your audience, I NEED that advice badly.
    is it OK to put in a link? please remove if it isn’t.
    https://www.etsy.com/uk/shop/JonBurgess?ref=si_shop

    • Dixie Nichols says:

      Francesca had a play with that calculator but it doesn’t work. I put in £1 for making materials, put my competence level at Competent and varied the making times and had the profit at 10% For 1 hr it said price at £8 for 2hrs at £11 and at 3hrs £14 so I thought lets see what its going to say for £8hrs answer was £30
      So its not safe Pity

  3. Doodlebags says:

    You are just what I need! Your advice is sound and I would value your opinion if you have the time. My Facebook page is http://www.facebook.com/oneoffs and I make bags and accessories using upcycled furnishing fabrics. I mainly sell at craft fairs and markets where my prices are similar to that on Facebook but minus the p&p. I believe my work is worth more as the textiles I use are high quality and my finish is excellent (it’s hard to say that so confidently but I believe it to be true). I don’t factor in the cost of my materials as they are almost all donated, so it’s my time that dictates the price at a basic of £6 an hour. I feel there is room for my prices to increase but I am scared to put them up in case people stop buying. I have a domain name but no website as yet and have been approached by some online sites that specialise in “green” products but have yet to sort that side out. Thank you. Helen (aka Doodlebags)

    • Dixie Nichols says:

      O doodlebags Why are you charging your labour at the minimum wage, is it unskilled? Don’t be so silly.

      You don’t believe your work is worth more or else you would charge more.

      As you are such a scaredy cat move your prices up like this- make three prices for each category so three bands with in make up cases and put each case into one of those bands so best materials can be more expensive. Then light the touchpaper stand back and see what happens.

      I think that some people will go for the more expensive ones.Then once encouraged you loose the bottom price band and put in a higher one at the very top That way you will find what the market will pay. If the most expensive ones sell more slowly that does not matter as they are making so much more profit .

      Also when showing your products on facebook put that price clearly and proudly it is not a dirty secret its the bit I need to know in order to buy.

      Come back and report what happens.

      I refuse to say good luck as you cannot loose, as at worse the current prices will look extra attractive as they become the most affordable.

      If you don’t do what I say a big dog will come and pee all over your goods at your next market- Its up to you

      • Doodlebags says:

        You are funny and very very helpful. As I said, you are just what I need. Thank you so much for taking the time to give your advice.

        My next market is tomorrow and I won’t have time to do anything before then, so will keep my eyes open for the big dog. I will definitely do as you suggest and I like the painless way in which you suggest I do it.

    • Kirsty Fretter-hall says:

      My lovely Miss Doodle, Please Please PLEASE value your talent and skill at more than the minimum wage…. remember I have some of your lovely things and they are worth a lot more than you charged, in spite of the battering that Miss Chloe gives her little handbag it still looks like new :) x

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