Pricing to sell

(and build a sustainable creative business)

 

Honestly, pricing is tricky!

You want to sell to make a profit, so your first thought is to reduce the price to attract more customers. But let me tell you something… this strategy will only go one way, leading you to disappointment, demotivation and exhaustion AND the wrong customers. Let me explain.

 

The disappointment from low pricing

Setting your prices too low will devalue your products. You might sell more products than you would if you priced higher, but your products will not be appreciated, loved or seen as being of good quality. Surely if they were good quality then they would cost more, says the cynical customer. Putting yourself in that situation is a real blow to the creative process. Disappointment takes over and you lose interest. Something you once loved and that filled you with hope, now leaves you feeling like you failed.

The demotivation from low pricing

I work and work and work, but I just can’t make ends meet. It’s a vicious cycle. Setting your prices too low will leave you with more work for a lot less money. You probably won’t even make enough to survive. Proper demotivating stuff right there.

The exhaustion from low pricing

Lower prices will probably result in more sales, but to get any kind of income you will literally be working your fingers to the bone. Body, mind and soul will be exhausted.

Who are the wrong customers? Anyone who pays is a good customer right?

Wrong! The right customers will love what you create. They will be loyal, they will happily pay a higher price because they get it! They understand that a real person made something beautiful and they are so so fortunate to have found you. They will follow you and tell others about you. The wrong customer on the other hand, will most likely only buy from you once and only because your product was cheap. They won’t love it, they won’t look after it – because it was cheap. And they won’t give you the courtesy of their time, or share a kind word about you – Because they’re cheap!

I know you're shuddering at the thought

of losing customers

Now I know what you’re thinking. You’re shuddering at the thought of losing customers by pricing higher. You don’t want people to walk away. But remember, not every customer will buy. You’re looking to attract the right customers for your own brand of handmade products. The ones that are genuinely interested in what you do, and even who you are as a maker.

So let’s look at the other end of the spectrum.

The silence when you price too high

There is no doubt that pricing too high will leave you with very few customers. Your handmade products will attract people, but it will be more of a ‘painting in an art gallery’ kind of scenario, nice to look at but too expensive for most people to buy. Even most of those that follow you and love seeing you pop up in their Facebook or Insta feed will most likely not reach for their wallet. You will have few sales and a very unpredictable income.

Jeez, well what is the best solution, right now both sound pretty rubbish right? Well I have some news for you. There is a way to use both low and high prices to create your own pricing strategy.

Firstly know who your customers are. You can put all of your ‘right customers’ in to two categories.

Customer A

Appreciates that a higher price often means higher quality. They will pay more for items they love. They will not want to buy the cheapest item because they feel that this does not offer good value. They want the best that they can afford. They have the luxury of not necessarily buying the cheapest items and can spend more on something they feel will give lasting satisfaction.

Customer B

They may have a keen desire to own your products but they maybe have a lower budget. They will buy the cheaper item first to check you out. Then if they love it they might come back for more when they can afford it. Think of them as someone that admires you from a distance, and they pop in to say 'Hi' every once in a while.

Creating your own pricing plan

A smart pricing strategy looks something like this - You need three price points, and to make these work you need to have done your homework so you know exactly how much your items cost to make and how much time you spend making them. Your three price points will look like this.

Entry level items (Low price)

Description: These are the items that you can make quickly, they also use less materials than other products.

Purpose: These items will most likely be some of your best-sellers. This is where people can easily purchase without thinking twice. This allows them to see the quality of your work and hopefully fall in love. The wrong customers will stop there. The right customers actually had their eye on a higher priced item, but hesitated and bought something cheaper. Maybe they are limited by their income or maybe they’re just carful with their money. But now, you have them hooked. They will probably still desire the higher priced item, and aspire to come back and buy it one day. These products are for customer B.

The dream products (high price – too high for most)

Description: These products are a labour of love. You use lots of time to create these and you use high quality materials. Given the number of hours you use to make these, you will never get a good return. But they are like that painting in the gallery, or those designer shoes. Your customers will admire it, they will remember it, so they will remember you. But they probably won’t ever be able to afford it.

Purpose: These items are there to prove how super talented you are. They are showcase pieces. You are anchoring your customers perception of what your products are worth. You are giving them a way to compare the prices and merits of your products. The purpose is to plant the seed, get people interested but direct them to items they can actually afford, like our final price point.

The sweet spot (Mid price)

Description: These are the products that you want people to buy. They are the products with the most profit. They use mid-range materials and you use a moderate amount of time to create them. You love to make these, but you want to sell them for a good price. They are good examples of your skill but still not super time consuming to make.

Purpose: These are the products that will give you the most profit. These are the products that the customers that desire the high-priced items, will actually end up buying. They cannot afford to buy the item they really want, and they don’t want to buy the cheapest item. So they go mid-range. They’re still super happy with their purchase because of the choice they made. These products are for customer A.

Get it? You can use your prices to guide your customers to buy what you want them to buy. The beauty of it is that I just have given you the criteria you need to figure out what it is you want them to buy. Now you need to figure out which of your products you can put in to each of these categories.

 

That's all from me for now. But just a little reminder that you can get more information on pricing by going to my No-nonsense approach to creative businessing library. You'll just need to sign up first, if you haven't already.

 

 

BREAKING NEWS!

I've created a workbook to go with this article. This workbook will help you to create your own price point strategy for your handmade products. Sign up to my mailing list to get full access to all of the free workbooks and checksheets in my resource library: https://handmadeinnorway.com/free-sign-up/