Thoughts on Value and Pricing in Handmade

Creative Entrepreneurship, Empowerment | 9 comments

thoughts on pricing + value in handmade | the merriweather council blog

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.

in 2015, I ran a special pricing offer on my embroidered initial necklaces as it was my 27th birthday, I had these pieces priced at $27. I NEVER run sales, so this was sort of a big deal for a few reasons.

Normally, the pieces are $38 and up. So this was a pretty steep discount. Some folks had me feeling bad about this, like was doing myself a disservice by lowering the price. I couldn’t disagree more.

Let me explain.

This post isn’t about the “treachery” of occasional sales at all. And that isn’t even really a concern for me. Occasional sales are useful, effective and fun. More importantly, they have their place in your bigger profit picture.

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 in stores 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 work-life. 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.

Under pricing 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 absolute best option available? That should be a factor.

Other considerations:

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?

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August 2019: This post was originally published April 9, 2015, but I am reshaping it because I feel it is relevant now, again, more than ever!

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Oh, hi! Welcome to The Merriweather Council. I’m Danielle and I am a maker in business and mentor to other makers in business. I teach you how to turn your crafty tendencies into profits!

Oh, I’m also really into crafts, boy bands + iced coffee. Email me anytime to say hello or send cute Backstreet Boy videos or dog pictures .. or whatever! danielle (at) merriweathercouncil.com Thanks for stopping by.

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9 Comments

  1. was struggling with this topic as I prepared for an Instasale. Timely!

  2. You are always full of amazing ideas and advice. I’ve struggled with pricing since 100% of my products are digital downloads, a “formula” has never worked for me in figuring out what to charge. I have to rely on how I’m feeling about the price of my product when offering a discount code. I loved your comments on increasing price when adding more value to the product. Great thoughts!

  3. I love keeping my ear open to your wonderful advice! Your article is so what I needed right now!

    Pricing has been my biggest uncertainty regarding my handmade business. There are so many others who sell similar items to mine at crazy low prices. I think this makes it hard for Etsy visitors to buy from me. Most of those who do purchase from me on Etsy have found me through Instagram, Pinterest, or Facebook. This is also why I’m transitioning more to my own website.

    Your comments that sale pricing doesn’t make that product now poor quality, really connected with me. I’ve had lots of friends (along with my hubby) that I need to increase my prices and add more sales.

    I read the paragraph after “Is there room to grow in this price?” several times. I’m getting more attention through Instagram as well as a huge show in May, plus a new, revamped website. So I’m thinking this is the perfect time to increase (slightly). After all, I’m not in this business to “pay others” to take my jewelry – I want a profit!

  4. I LOVE this – you know I do! Thank you for posting. Extremely reassuring and so educational.

  5. Excellent advice! In the early weeks/months of running a business it’s so easy to lose confidence and think “I’m not getting sales because I’m charging too much”. I’d say it’s much more likely to be your marketing that you need to work on. People who buy handmade goods are always prepared to pay more – they expect it. It takes time to build up your business. Stay strong and don’t feel bad for charging that bit extra.

    It really annoys me when I see cross stitch patterns on Etsy priced at £1.50-£2.00 (not sure what that is in dollars). Not only does it suggest that the seller doesn’t really value the item, it can create demand for lower prices from other sellers. Don’t play that game – it’s not a race to the bottom!

  6. A.) I can’t believe you’re retiring the necklaces! I love them so much! I wish I would’ve seen this & purchased one before they were discontinued. B.) I was just teaching about under pricing the other day! I have a post drafted. My analogy was this: I put a FREE sign on my AC window unit at my garage sale. It worked GREAT I just wanted it gone. No one took it! My Dad said, “Put $5 on it and see what happens. ” I did. It was gone in 10 minutes. No joke. When you under price items it leads people to believe something may not work, may not work as well, may not be made as well, etc. Great article! I’m heading to your shop to see what’s new now!

  7. How would you approach changing your prices to reflect your value if that actually means tripling the price? I feel I’m in a bit of a conundrum since I’ve realized I actually pay to sell my goods and all the pricing calculators I use tell me I should be charging 2.5-3x what I charge now. I know that my market and ideal customer will change as will where I can ecommerce & craft show. Would it be best to take everything offline, build a site independent of etsy & then relaunch? I’m a little terrified of losing/alienating the customer base/newsletter base I’d been building since 2008.

    • I think you could probably work it up incrementally til you get there. You don’t have to do it all at once or shut anything down just work up to it. Also giving existing customers notice would be nice! You can also offer sales if you’d like once the price increases. I would also suggest adding value to packaging or shipping experiences to support the price increase even more. Some things are low cost to add but increase value a lot!

  8. Love your “think about it” questions on determining pricing on your items! Time to adjust some tags in my shop! Very helpful! Thanks