I had a draft of this post in WordPress from November, and I decided it’s actually still really relevant because people have strong opinions about pricing handmade.
As you know, I am currently running a special pricing offer on my embroidered initial necklaces as we lead up to their retirement on saturday! Since saturday is my 27th birthday, I have these pieces priced at $27.
Normally, the pieces are $38 and up. So this is a pretty steep discount especially if you ordered a longer chain necklace which could be as much as $46! Some folks would have me feeling bad about this, like I’m doing myself a disservice by lowering the price. I couldn’t disagree more.
Let me explain.
What originally prompted me to draft this post, was a thread I read in a Facebook group I am in. It was started about a week prior to Black Friday and the poster wanted to know who would be running a sale (the group is full of handmade artisans.)
Most folks replied and said things like “No, I can’t compete with Walmart pricing” or “I never have luck with sales” or “I don’t run sales because then I’ll lose money” or “People aren’t shopping online until monday” …
My reactions were as follows:
Okay, fair enough – people generally do shop at malls or store on black friday.
I can see a person having a hard time running a sale, there are lots of ways to struggle with that.
For the record: Walmart is not a competitor of handmade goods. Your ideal customer isn’t going to compare your prices on handmade jewelry to the price of a necklace at Walmart and think “I’ll just buy the piece from Walmart.” If a person does that, they aren’t your person. There is no competition here.
Finally, then there were a few surprising comments:
“It’s unfair to the people who paid full price the rest of the year.”
My eyes about popped out of my head.
It’s unfair? Things go on sale all the time – I think most consumers realize this is a normal marketing practice for retail merchandise. Is it annoying to buy something and then three days later it’s on sale? Sure. But in the case of Black Friday, I think most consumers are aware there is a good possibility that the thing they buy on tuesday might be cheaper on friday, so really, that’s sort of a decision on the consumer’s end.
But it’s less about price and more about value and those aren’t the same.
From the consumer’s POV
It’s of value to me to buy the gift I need for my friend on the tuesday before Black Friday so that I don’t have to go out shopping with all the madness on Black Friday. It’s a trade off. I’m going to pay a bit more, but I won’t have to be in the store on Black Friday nor will I have to elbow someone out of my way to get the last one.
If the store i’m shopping is online, maybe the value for me is that i’ll have it before I need it – let’s say I have a party to go to on the tuesday before Black Friday, so I order the gift a week or two before that date to be sure I have it in time. Yes, I paid a bit more than the item might be on Black Friday, but I’ve got what I need, when I need it. That is valuable to me. I don’t consider this to be in any way “unfair” to me as a consumer. I see value in paying full price for any number of reasons – as I’ve stated above.
From the seller’s POV
When I price reduce an item, it’s because I want to sell it quickly or clear space in my studio or even my head. If I have things for more than a few months I begin to get antsy and want to clear them out. My prices are such that when I do price reduce them, I still make a profit. (This is important because obviously I don’t want to be essentially “paying” someone to buy something from me, because that’s very bad business.) The value to me as a seller is that I’ll make my money back and profit (less profit, but still, profit) and i’ll free up physical and mental space in my worklife. I cannot tell you how much I value that.
Another way to see value in reduced pricing as a seller is that I’ve now brought in funds to move forward. Money always comes and goes, that’s how it works. You need to spend some to make some, always! The money I make off sale items is more valuable to me than the items themselves at that point of sale. Now I can invest in a new project or tool. Follow me?
In the case of my necklaces being price reduced right now, I see immense value in selling a lot of these at a reduced price RIGHT NOW. I want to sell these NOW. Not in six months, not over time… NOW. It’s very valuable to me to clear out some supplies, make some money and move forward. I explained my reasons for retiring these pieces in this post a bit more fully if you are interested. I’m going to gain so much – in many forms, not just in the form of cash – from not making these pieces any more. So there is great value for me in selling them at a reduced price for a short period of time.
It’s not all about money. I’m going to gain space, and time to create new work. If you are an artist who sees no value in that, I’m sorry but I don’t understand.
Back to the consumer for a minute…
Does the consumer see a price reduction as a reduction of quality?
I don’t think so. The product is exactly the same as it was last week when it was full price. And people know that. This is the difference between pricing correctly to begin with and underpricing thinking that’s the best way to get things sold.
Underpricing communicates “cheap” or lesser quality. Sale pricing doesn’t.
Sellers shouldn’t be afraid of the occasional sale. (I don’t think you should run a sale every day of the year, but you can run a sale without fear of cheapening your entire brand, basically.) Sale pricing is temporary, incentive driven marketing: buy it now and save money — again, that’s VALUE to the consumer.
And you already know this but there is plenty of value as a consumer in paying MORE for something as well.
You’ll pay more for a wedding dress than you would for a bridesmaid dress. You’ll pay more for a souvenir at Disney World than you would pay to buy the same thing elsewhere. You know that. We associate objects with moments and memories, and we pay more for those because we value our experiences. How much did you pay for your wedding album? Or your baby’s first birthday outfit? Or your wedding rings? People are happy to pay more for things that represent the things they value most. Additionally, consider those little cheaper (or free!) things in your life that have a lot of value to you: chopsticks from the restaurant you went to on your first date with your husband, or the pair of socks your baby wore home from the hospital. Price and value are not one in the same.
When pricing your work, you should not simply run a formula and call it a day on whatever number pops out of the calculator. I like to think pricing as a whole picture sort of thing.
Is there room to grow in this price?
There should be, in most cases. If you are just starting out, leave some room to increase the price without it being totally insanely OVERpriced for what it is. If you get a major feature, you should increase the price. If your orders begin to come in at a pace you cannot keep up with, you should raise the price. If you do something to make your brand stronger – invest in graphics or a new site or better photographs, you should raise the price. Leave room for that
Is there something additionally special about this item?
Is it cusomizable? It should cost more than if it weren’t. Is it made of 100% organic materials and packaged in eco friendly cardboard mailers? It should cost more than if it weren’t. Why? because people value those things as well. (Does your ideal customer value those things?)
Are you the only one making it?
Are you on a whole new level? Is yours the absolutely best option available? That should be a factor.
Is it limited quantity or exclusive in some way? Does it ship super fast? Has a celebrity worn it on TV? Did Justin Timberlake sneeze on it?
When pricing your work, think about the value this product has, and communicate that through your branding, copy and presentation.
Likewise, consider what you value for yourself and your lifestyle as well. Can you run a sale on this item and still make money? Are you happy to fill orders at this price, or miserable?