March 22, 2008

some thoughts about pricing

I've given up on formulas.

Until about a year ago, I used 'pricing forms' I'd made on excel.
For every jewelry component I purchased, I calculated the price, down to the last pearl, and listed the price on every little compartment or container in which I stashed all these parts. When a piece of jewelry was completed, I listed the cost of each and every bead, jump ring, clasp, ear wire, every inch of wire used. And of course, I kept track of the time it took to make the jewelry. I knew my mark-up, my percentage of profit....all that...and the time it took to do all this was sometimes greater than designing and making the jewelry!

I've scrapped all these time-wasting calculations and am back to pricing by my gut, the way I did when I started out, and I feel so much freer to just enjoy the process of making jewelry.

However, I've gotten some useful advice from customers and friends that I've used to guide me in 'pricing by gut', and I'd like to share some:

Pricing is not just about cost and mark-up. It's about perception. Customers usually know when you are under-pricing yourself. While this may not lead them to the conclusion that your work is shoddy or your materials are sub-par, it will give them the impression that you lack confidence! They will wonder why you don't value yourself, let alone your product. It will unconsciously feel icky to them (pardon me for not coming up with a better word, but I think 'icky' explains it pretty well). Be aware that when you handcraft an item, it becomes imbued with your feelings - about yourself and about the process, even about the customers you are hoping to attract. Your customers will pick up on your feelings and your lack of confidence will subconsciously repel them. Strange but True! Conversely, the love, respect, and joy, that you put into what you make will be felt and appreciated by the customer. Really! And when they pick up on that, price becomes less of an issue for them.

Pricing is about your market and where you want to place yourself in that market. If your market expects to pay more, raise your prices! I've had the very good fortune of selling primarily at craft shows and retail shops in the very-high end resort areas of Colorado. I realize not everyone is so fortunate, and you must consider your own unique market, but do allow that your market may be more high-end than you realize. You are not, after all, competing with Wal-Mart. People who are looking for the cheapest price are not your customers! Your customers are people who are looking for unique handcrafted items, and they expect to pay more. (And if you are looking to wholesale and your product is unique and well made, consider seeking out shops in resort areas. No kidding! If you want the money to come to you, go where the money is!)

Do use your common sense and intelligence when pricing. Don't price silver plated earrings as if they are sterling (and vice versa!). Be honest and reasonable in your pricing and your customers will respect you for it. Know that a 'good deal' is not the lowest price. It is about getting the best quality product at a fair price. Price to be fair to your customer and to yourself and you will both feel like you got a 'good deal'.

This post is already much longer than I intended, so I will leave it here and maybe return to the subject another time. Thanks for bearing with me if you've made it this far!



steve said...

Hi Carol

Couldn't agree more. Biggest mistake hand-makers make is pricing too low. "Too good to be true" prices do nothing for buyers' confidence. And, if you don't believe in your work, why should they?

Setting higher prices (not the bare minimum you can afford) sets you apart from the hobbyist and distances you from the lady 'round the corner who knits tea cosys for the village fair.

How do I know this? Because as a retailer representing numerous handmakers I have the benefit of seeing first hand the effect of pricing on sales. And, I also know over 50% of handmakers under-price their work (so proves our Hand-making Heroes competition).

BTW, I try to convey what I learn through retailing on to hand-makers at my blog You can find more advice on settting prices there.

All the best


Carol Emma said...

What a great blog!!
It's been added it to my favorites, of course.
I've been working my way through the archives, reading each and every great post!
Thank you so much for stopping by and leaving your comment. I will certainly be a regular reader of your blog from now on and I hope my readers will also benefit from the wealth of insight you offer.

High Desert Diva said...

I tend to price by the gut, too. I think spending so many years as a bookkeeper has completely turned me off of spreadsheets. I just can't buckle down to all that tidiness again.

Thanks for the blog comment, btw. The blog make-over was long overdue!

sulu-design said...

Smart post, as always. I've never been able to work with a hard and fast formula and always price by the general thought that I want a fair price for me and for the customer. I really enjoy the "behind the scenes" posts that you've been doing on your business here. Thanks.

knitsteel said...

I suppose I do a little of both. I combine that gut feeling with a sense of time and supplies to come up with the end price. It's easier for me to price jewelry than the larger work.

beki said...

Such a good post, thanks so much for sharing!

Kimberly Monaco said...

great post! (as usual)... question: love the photo.. where did you get that "hand"??
very cool...

Little Brown Sparrow said...

All my thoughts exactly! It frustrates me when people offer their goods too low- not just because they're underselling themselves, but they create unrealistic competition for other people in the same field who aren't keen on losing money.

I find gut instinct to be the best way of marking my work. Using vintage and antique items means things can get expensive (if not the high prices in this country, the shipping from overseas!) but I try to create an even balance between being affordable to the common girl and still making what I deserve.

Valerie said...

You know, I've sworn by a pricing formula for a while (as it was my way of being "fair") Though every now and then I really do get sick of going and looking up all the pieces and parts, and sometimes it feels good to just price by instinct.

I love the idea of how emotions can go into a piece being made---something to remember!