As makers we typically underprice ourselves. Several factors have converged on me lately that have forced me to relook at my pricing.
I did my taxes- ugh!
My online retail prices are forcing me into lower wholesale price points than I can work with as the wholesale percentage of my business grows.
And, I read an article about my work that said I "simply solder" a little eyehook to a car part with a soldering iron and visit a hardware store.
Now the writer of that article was talking about ingenuity and simplicity in form and function and meant no disrepect to me or my work, but it did make me realize that my price points and my own language about my process (
I have never used a soldering iron in my life) reflected a certain value to her.
(it is totally up to me as a maker working with recycled and lower cost materials to educate people about the process that goes into each piece and the design behind the piece that adds to that value)as well as the fact that "simple" design leaves the maker with no place to hide imperfections and isn't usually anywhere near as "simple" as it appears
Pricing our work is a complicated part of this handmade journey and a process for most of us.
Mistakes I've made with my pricing:
1. I did not think about wholesale pricing when I set my retail prices.
2. I set my prices based on my own pocketbook (which was likely empty at the time; it usually is)
and 3. Because I am related to a talented artist and could not see myself in the same way- I didn't understand my own skill set.
Bottom line-
I didn't see my own value. And, I didn't see the potential wholesale problems with my pricing.
The mistakes I made are all about my own mindset and I have been adjusting them over time ever since.
I would say to hubby- but I can make X amount in X amount of time and he would say, "right, because you have done this thousands of times, other people can't- your
customer can't".
As you become better and better at what you do, you will usually get faster and more productive. Does the fact that you work faster mean that you should charge less? Where else do we expect to pay less for experience?This is why you can't just calculate your actual production time (although you
must know how long things take you to produce).
And what about all the time it takes to do the kind of things we need to do to grow our businesses- how do we calculate that time in, when it is often more time than the actual making?
Factoring in our direct costs (raw materials), indirect costs (taxes, overhead, fees, etc) and labor time for each piece (production, marketing, packing, shipping, etc) is a good place to start with our pricing.
And then we need to take a look at the more complex issue of value.
Pricing needs to take into account all these varied aspects. What is the value of your work to the customer?
Maybe starting at the end zone is a good idea -
(
and working through a pricing exercise)
the price my item would sell for in a retail store that my target customer would be shopping in.
Value will take into account what other items are selling for in the marketplace, the uniqueness and skill set of our work and materials and the fact that our work is handmade and designed.
(we need to factor in costs and labor time when pricing our handmade work and we need to think about value, too - what is the value to our customer?)I recently asked a few boutique owners (that I do not wholesale with, but have my target customer) what my product would sell for in their shops. I would recommend this if you struggling with the value component of your productline.
I will likely need to reduce costs by 10-15% and increase prices by 10-20% to get to a place where I can focus on wholesale. I want to stay fair to my retail customers (by doing what I can to reduce costs and expenses), but learn to be fair to myself, too.
One easy fix - in my Polarity shop I have always charged less for my small lockets even though they cost me exactly the same amount and take me exactly the same amount of time to make as the regular size locket.
A customer buying a medium size shirt in a department store would not expect to pay more than someone buying a small shirt. It is me who has trained my customer to see this as the way it should be by the way I have set up my pricing. No one buys my smaller locket because it costs less- they just want a smaller locket.(and I will also be changing the wording in my locket listings from "I solder" to I clean, drill, braze with a flame at 800 degrees, grind, paint, polish and seal - well, maybe not exactly that- I don't want to put anyone to sleep, but maybe something that reflects the actual nature of the work a little bit better)
*sigh*
"... too many choices.
