pricing basics 2

Pricing Basics For Makers:
What Should I Charge?

This is what you're aiming for.

I can’t tell you exactly what price to charge for your work. Every artist, every product and every market is different.

But what we’re aiming for is “makes sense” pricing for your specific business.

That’s pricing which is emotionally neutral for your buyers. They don’t feel like your stuff is a steal, but they also don’t feel like they’re being swindled.

When they look at your product and your brand as a whole, and then they look at your prices, they immediately understand why you charge what you charge. Your price tallies up with their impression of you. It feels like a fair trade.

They say “That makes sense” and place an order.

They may not be hugging themselves with glee over your price. They may even wish that it was a bit lower, but it doesn’t stop them making a purchase and they don’t feel cheated.

On your side of things, “makes sense” pricing allows you to make all the money you need and still sleep at night. Your business is profitable but your customers don’t hate you.

There’s no need for guesswork or stress around pricing because you know that your price is respectful in both directions. Your right to earn a living is being taken into account, and your buyer doesn’t feel fleeced.

Both of you are comfortable and that makes sales flow.

So although I can’t give you a precise figure for what you should be charging, I can show you how to work out “makes sense” prices for the lovely things you make.

Once you know how to do that, you’ll never have to feel guilty or defensive about your pricing again – even when it’s time to put your prices up.

That’s what we’re going to talk about in this Pricing Basics For Makers series.

But before we do, let’s have a quick check-in.

I’m assuming that:

1. You’ve properly worked out your wholesale and retail prices.

By which I mean you’ve sat down with a calculator and a pile of receipts and worked out each part of your current wholesale and retail prices in detail.

Don’t guess. Don’t just pick a figure that seems kind of okay. If your wholesale price isn’t solid, you can actually end up losing money every time you make a sale.

That’s like trying to build a house on a foundation of jelly. While using jelly for bricks. And wearing a jelly hat.

2. You’re in the right market.

As we talk, it may be become clear that you need new customers.

If you find yourself repeatedly thinking “Wow, that would never work for me” or “my buyers wouldn’t go for that in a million years,” you might be selling to the wrong people.

Most artists can charge more than they think they can, and we’re going to proceed on that basis. If, however, you know beyond all doubt that your current buyers simply can’t or won’t accept a higher price, it may be time to find new ones.

3. You understand that retailers need a mark-up of at least 2.

As I’m sure you know, retailers multiply your wholesale price by at least 2 to arrive at their retail price.

Depending on the store, it can be closer to 2.3, 2.4 or even higher, but 2 is the baseline.

When I gave a talk at a trade show recently, a lady asked if I thought that mark-up was set in stone. She talked about the financial pressures her company is under and wondered whether retailers would ever lower their requirements to help suppliers out.

I had to say no.

Running a shop is an expensive way to make money. Your stockists have their own financial pressures and every bit of their mark-up is put to work. So if you’re going to increase your prices, you need to do it with your eyes open.

Retailers won’t suddenly agree to make a bit less when they sell your stuff – they still have bills, rent, tax, rates and staff to pay. If you put your prices up, they’ll have to do the same. The secret is making them feel like paying more is absolutely worth it.

But let’s start at the beginning. Hardly anyone asks “What is price” because we all think we know… but we really don’t.

We’ll talk about that in part two of this series, which you’ll find right here.

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