If your prices are in need of a little tune-up, there will be signs. Let’s take a look at thirteen excellent reasons to put your prices up.
1. Your prices are all within the same range.
Retailers and customers are looking for variation in your price range, because if every item falls within a narrow pricing band, it’s harder to figure out the differences between them.
If I’m new to your jewellery, for example, and want to try a couple of entry-level pieces in my store, which ones do I choose? When everything costs pretty much the same, it’s not clear what counts as entry level.
Pushing your prices apart by making some things more expensive actually makes your collection more shoppable.
2. You’re hardly making a profit when you sell wholesale.
Your wholesale price is the smallest amount of money you’ll ever accept for your lovely thing. But that doesn’t mean it’s a rock-bottom, bargain-basement, welcome-to-debtors-prison kind of price.
A healthy wholesale price is like a helium-filled balloon – it covers your direct costs, your overheads and your time and labour, but there’s also a significant dose of profit to give your business lift. That’s where things like new tools, a better studio and a happy feeling when you check your bank balance come from.
If you’re not making much when you sell directly to stores, something is definitely off.
3. You’re hardly making a profit when you sell retail.
Your retail price is tied to your wholesale price, so if the former’s out of whack there’s a good chance the latter is too.
But hardly turning a profit when you sell directly to the public? What’s the point?
You’re putting something wonderful out into the world and getting very little back. That’s not a business; it’s an expensive hobby. If you’re okay with that, great.
But if not making any money from selling your work makes you feel confused, sad, dumb, angry or hopeless, it’s time to do something about it.
4. You’re in demand.
If you’re hot stuff right now, you’ll know it. Customers coming out of your ears. Wholesale orders stacking up. Your lead time lengthening.
Little notes from retailers comparing you to a summer’s day, then pleading for five more boxes by Friday. Assuming you have time to notice them, the clues will be obvious.
Being in demand is a big, flashing indicator that it’s time to put your prices up. In part it helps clear your feet, because charging more puts off your most price-sensitive potential buyers.
Not having to serve those people, as well as everyone who loves your work so much they don’t care what it costs, can make your workload more manageable. Plus, if demand for your product at its current price is threatening to outpace your ability to supply it, that suggests there’s plenty of room for an increase.
5. You’re working all the time and still aren’t making much money.
Being run off your feet can be exciting for a week or two, but you’re not a medieval turnspit dog. If you’re constantly working at maximum capacity but still don’t have much to show for it, something has to change.
The most valuable asset in your business is you.
To function at your best you need rest, comfort and time to think. If a normal Monday for you involves chewing a dry Berocca tablet (because getting a glass of water takes too long,) bursting into tears over an advert for toilet paper (because that puppy can go for a nap whenever he wants) and worrying about your bills, it’s time for a re-think.
6. You’re just starting to sell outside of a bubble.
Those types of marketplaces are bubbles. They’re big, sometimes very big indeed, but they’re still separate from the market as a whole. Because they’re flooded with sellers who are grossly undercharging for their work, it’s easy to get a skewed impression of the price spectrum for your product.
A price that seems astronomically expensive by Etsy standards, for example, may actually be on the low side for an upscale gallery or boutique. So if you’ve been selling in a bubble but now you’re striking out on your own, there’s a pretty good chance your prices are too low for the outside world. Your frame of reference may need a little adjustment.
7. Your prices are low compared to your competitors’.
Closely pegging your prices to your competitors’ isn’t smart because your business is unique. There should be a correlation, though.
Of course, it’s important to choose your competitors wisely. In comparison to mass-market companies, your stuff will always look expensive – they can produce goods for much less than you ever could.
But when you look at other designers, craftspeople or makers in your field, people at a comparable level who make and sell something similar, and discover they’re charging significantly more, it’s time for you to catch up.
8. You’re pricing according to costs, not value.
Imagine it’s the end of a long, happy day of making. You turn to look at your work and feel a burst of pleasure and satisfaction.
What’s the source of that feeling for you? Is it:
a) The deep joy of channelling your imagination, skill and experience into a unique object which shines with quality, personality and presence.
b) You saved your customer the trouble of putting it together themselves.
It’s the first one, right?
This is why your prices should reflect the value you create for your customers. You’re not assembling raw materials like a robot in a factory. In your hands, those materials become much more than the sum of their parts. You’re adding a little magic.
If your current prices are based simply on what it costs you to make your product, they’re not taking that extra value into account.
9. You haven’t increased your prices for a long time.
If it’s been forever since you last put your prices up, or if you’ve been in business for a while and have never raised them at all, they’re almost certainly stuck in a time warp.
Even though your costs, brand, skills and your competitors’ prices have all moved on, your prices are still wearing Uggs and listening to Justin Bieber. That’s not good for anyone.
10. Your material or business costs have risen.
If the cost of the materials you buy from your own suppliers has gone up, an increase in your own prices can bridge that gap. Artists sometimes hesitate to do this, assuming that they should absorb the extra expense and struggle on.
That sort of strategy can work (for a while) for huge corporations, but since you probably don’t have shell companies in the Cayman Islands, an army of flinty-eyed accountants and a throbbing altar to Mammon in your basement, perhaps it’s best to bite the bullet.
If it costs you more to make your lovely thing, it should cost other people more when they buy it. The same goes for your overheads. If your electricity bill has permanently increased, or if you’ve taken on staff, it’s time for your price to go up.
11. You’ve had buyers say “Wow, that’s a lot less than I thought it would be.”
If there’s a big disconnect between what you think your product is worth and what your buyer thinks, you’ve got a problem.
Customers use your price to help them assign value to your product.
Have you ever looked at an attractive item in a store, turned it over to see the price and then thought “Nah. If that’s all it costs, how good can it be?”
We don’t want potential customers making this kind of snap decision about you. If they’re telling you they’d have paid more, start listening.
12. You have loyal customers.
At first glance, hiking your prices may not feel like a very kind or respectful way to reward your most loyal customers. After all, they’ve put their trust in you (and cash in your bank account) time after time.
But for this happy state of affairs to continue, you must keep earning that loyalty. It’s wonderful that retailers and customers trust you, and you should feel very pleased with yourself for making that happen, but it’s not a one-time deal. Just because they bought something today doesn’t make them yours for life.
You have to keep giving them reasons to come back, and that relies on couple of things.
First, your business has to still exist in the months and years to come. If you aren’t making a substantial profit on every sale, that’s unlikely.
Second, even the most enthusiastic customer will eventually get bored with the same old stuff. If you’re going to keep their interest you need new techniques, collections and ideas. It’s pretty hard to come up with those things if all you can think about is how you’re going to pay the rent.
So if you’re holding off on increasing prices for the sake of your loyal customers, you’re actually not doing them any favours.
13. You’re feeling resentful.
This is perhaps the clearest indicator of all that a price rise is overdue.
Do you dread starting work in the morning? Do you feel crushed when a new order arrives in your inbox?
Do you feel annoyed, used or screwed over by your customers?
Does it seem like no-one appreciates you – least of all those brainless ingrates who buy your lovely thing for a song, then bug you about why it’s not available in blue?
Do you hate-read the Instagram feeds of your competitors, who seem to be living like minor royals, while you re-use your tea-bags?
Is there a yawning pit of acid where your stomach used to be, and a sucking chest wound where once there dwelled a heart?
Here, have a tic tac. Go on, take two.
Now, how about putting your prices up?
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