Tag Archives: pricing

Saying Goodbye to the Bargain Hunters

I have a confession to make. It’s a pretty major business decision that I made early on, and I am embarrassed of it now. I read plenty of good advice and chose to do the exact opposite of its instructions. I was stubborn and too sure of myself when I shouldn’t have been, and even a little offended by the advice. I purposefully ignored what all of the handmade business experts were recommending me, and strut off in the other direction.

The good advice I shunned so fiercely: Don’t use price to attract the bargain hunters. You don’t want these people to be your customers.

My initial reaction to this advice was, of course, what’s wrong with bargain hunters?! Everybody loves a good deal, and most of us don’t have money growing on trees in our back yards. Of course we want a good price! I wanted my stuff to sell, so I went low. And by low, I mean, LOW.

beaded bracelet

Here’s where my logic was flawed: a good deal is not the same as a cheap deal.

I was offended by the notion that bargain hunters are lousy customers. This was because I thought of myself as one, being the thrift-store-shopper and coupon-code-googler that I am.

When I first started selling my beaded goodies, I stubbornly set my prices as low as they could go, and in some cases, even lower than that. I was able to get some sales, but wasn’t really making money after supply costs and payment fees were taken into consideration. So, after a few months, I raised my prices a little bit (just a little) so I wouldn’t be recording yet another loss come tax time.

It was after I raised my prices (again, this was only marginally) that I realized I had been attracting some of the wrong customers in the beginning. One particular customer, for example, had me create a gigantic custom order for her. As with all of my custom orders, I only ask for payment upon completion if the customer is satisfied with how the product turns out. This particular customer ended up having me remake several pieces before she purchased. This part was fine with me, I pride myself in the costumer service I offer for my custom items along with everything else I create.

blue necklace

Here’s the thing though: I thought, that after all of that work and the raving feedback this customer had left for her finished pieces, she would be more than happy to purchase from me again–even after my prices had been (only slightly) raised. BUT, a few months down the road, she contacted me regarding yet another custom order, and asked for a price quote. I sent her a quick response, letting her know how much the price would be and that I would love to be able to work with her again. I never heard back.

A few weeks after that, I was casually browsing through Etsy (Christmas shopping, actually, you guise all know how much I adore getting handmade gifts for my peeps), and I spotted a reserved listing, and my previous customer’s name was in the title. I am a guilty snoop: I had to check it out. The listing was for the exact custom order she had asked me to do for her, but from another seller who was willing to go cheaper.

Even though I had worked so hard and gone above and beyond for this customer, a minor increase in price was enough to make her go somewhere else. That is the real crux of the bargain hunters: they are not loyal. Bargain hunters will look for the lowest possible price. You can do the best job in the world for them, but if they can find it lower somewhere else, off they go.

Being thrifty on how much you will pay for a factory-manufactured blouse is not bargain hunting. Bargain hunting is trying to convince an artist to lose money on something they hand craft especially for you. Bargain hunters hurt the handmade community as a whole, and from now on, they can find their cheap deals somewhere else.

If you are a handmade seller, I hope you can learn from my mistake. We all put too much love and work into the creation and design of our pieces to have anyone scoff at the value we’ve placed on them. You are worth so much more than what the bargain hunters will give you, and so am I.

How to run a successful handmade business and keep your day job

Pricing for Time-Consuming Creations

If you know anyone who makes beadwoven creations, or have tried it yourself, you know that it takes FOREVER. Even after years and years of practice and the development of some seriously mad beading skills, most of my pieces still take me several hours from start to finish. Even the simpler pieces take me at least 1 to 2 hours each.

Other time consuming crafters (this post isn’t exclusively for beadweavers) can also relate. When it takes multiple hours to finish a project, following most handmade pricing formulas is daunting. Take this very simple, and often used handmade pricing formula:

(time x $per hour) + 2(cost of materials) = wholesale price

wholesale price x 2 = retail price

The retail price is what you charge in your online shop, at craft fairs, etc. The wholesale price is what you offer boutiques and shops so that they can re-sell your items at full retail price for a profit. It is recommended that, depending on your level of skill, you give yourself at least $20 an hours for your labor.

While this formula works all fine and good for one of my quick projects, for example, a glasses lanyard that takes me 20 minutes to make, it gets tricky when using it for one of my more time consuming projects, such as a cuff bracelet that took me 4 hours. (I’m totally making up my supply costs here, so just bear with me.)

Glasses Lanyard:
(0.333 x 20) + 2(3) = $12.67 <- wholesale price
12.67 x 2 = $25.33 <- retail price

While over $25 feels a bit high for me still, it’s a reasonable price and I could live with it.

Now let’s try it with the bracelet cuff…
(4 x 20) +2(6) = $92 <- wholesale price
92 x 2 = $184 <- retail price

Okay. Let’s take a moment to process this. According to one of the most conservative handmade pricing formulas out there, I should be getting close to two-hundred buckaroos for one of my beaded bracelets. TWO HUNDRED DOLLARS.

I would LOVE to actually sell my pieces for that much, but let’s be honest here. I’m not working with solid gold or silver, I’m not incorporating diamonds or rubies, my items are made up of mostly glass seed beads. Who is REALLY going to pay me that much for a new accessory. I’m simply not targeting the affluent, upper-class fashionista audience that apparently I should be. While my customers are happy to support handmade, and are willing to pay a bit more for a unique piece of jewelry that they won’t be able to find anywhere else, I have a hard time imagining that they would be willing to pay anything more than $80 for a bracelet like this, and even that’s pushing it with most of them.

So what’s a time-consuming crafter to do? How can we continue to create the unique, labor-intensive items we love, be able to actually SELL them, and make enough money off of our sales to consider our model a realistic business venture? Here are a few solutions from yours truly, a time-consuming crafter who does not charge for her time, but still manages to make money selling handmade… (Totally just referenced myself in the third person. Do I get an award for douche-baggery now?)

Figure out ways to speed up the process.
For me personally, this means prepping several projects that utilize the same supplies at once. This can also mean making multiples of the same project, one right after another. You’ll have all of your necessary supplies out and ready, and the repetitiveness of creating the same thing over and over again will result in better timing for each one.

Mix your time-consuming projects with non-time-consuming ones.
Just as in the glasses lanyard example above, I buffer my Etsy shops and craft fair booths with plenty of “filler” pieces that take much less time to make, but ensure I have a full inventory. Some of these simple items take me less than five minutes to create, and I can easily make several at one time. As a result, these projects often make up for any profit-loss that the most time-consuming projects take-up regarding labor spent.

Optimize what you sell.
What else can you sell besides your finished handmade pieces? Can you make and sell patterns of your original designs? Maybe you can sell left-over supplies as destash lots, or get paid to teach a class in your art form. If there are other ways in which you can supplement your income from selling, it never hurts to explore those options.

Keep all of your costs in mind.
When coming up with prices for your items, don’t forget that your costs aren’t all included in your labor and materials. Remember shipping charges, packaging materials, craft booth fees, Etsy and PayPal fees, time spent photographing and writing descriptions for your items, marketing time and costs, and so on. Even if you are like me, and planning on ignoring the results of the basic pricing formulas for handmade, you still need to make sure you are covering all of your bases.

Consider your target market.
If you are targeting geek-item-loving college students, chances are, they don’t have a whole lot of cash to spare and you need to do your best to keep your costs down so you can charge less for your items. However, if you are targeting an older, more well-to-do audience, you may be able to splurge on some high-end supplies and charge a bit more for your creations.

Consider the tangible nature of your product.
Some items can command a higher price simple because of what they are. Others have much lower expectations, due to the very nature of the item. For example, everyone expects a T-shirt to be a basic, low-priced piece of clothing. Even if you were to spend hours and hours hand-embroidering a design onto one, most people would still balk if you commanded anything higher than $30 as the final price. However, those same people would probably expect a wedding dress to be a much higher-priced item, and often come prepared for that when shopping around for one. If the previous hand-embroidery had been completed on a vintage wedding dress, even if it initially cost you the same as the blank T-shirt, you could command ten-times the asking price, and no one would question it.

Whenever you start to get caught up in calculating your labor time, your supply costs, your marketing tactics, etc., it doesn’t hurt to take a step back and consider what your item actually is. A t-shirt. A necklace. A scarf. You can cover a toilet seat with Swarovski crystals, but it’s still just a toilet seat. If you REALLY want to push the limit of what customers expect to pay for your product (like Starbucks did, for example), then you need to preprepared to work on some serious branding efforts to change people’s mind-sets.

How high is your craft-barrier?
Your craft barrier is the design and creation skills you possess and use to make your items. Basically: how many other people can make what you make, or easily learn how to? If the answer is anyone who can shop at Micheal’s, then you won’t be able to charge very much for your items. If you price too high, people will simply get their goods from someone else selling the same thing for less, or they will figure out how simple it would be to make it themselves. If you have a low craft barrier, you won’t be able to make much of a profit in order to compete.

On the other hand, if you have a high craft barrier, you get to command a higher price. The more skills and experience required to master your craft, the more people can expect to pay for it. Before slapping a price on your goodies, keep in mind how many others are already making what you make, and if they are at the same level of skill as you or not. If the number is small, you have good reason to ask for more.

What did I miss? Please share your tips for pricing time-consuming items in the comments below. I love hearing from you!

Paying for the Buying Experience

Think about the last place you got your hair cut. Did you feel comfortable there? Did you like you stylist? Did you come away feeling like you had a pleasant experience? Do you plan on going back?

Obviously, whether or not you were pleased with the resulting product (your hair cut) will factor into your decision of returning to the salon. But there are a gazillion places to get a hair cut, so whether or not you become a repeat customer has to do with so much more.

Customers are willing to pay for a great experience.

There may be a salon that offers decent enough hair cuts, at a measly $10 bucks a pop. They have price going for them, and that’s cool. But that may be ALL they have going for them. If the stylists are less-than-friendly, the music tasteless, and the atmosphere stale, I won’t return. (Ever been to a place with blank, artless white walls that reminded you of a metal hospital? Bleh!) Having to spend two hours waiting in line at a location where all of the employees seem to hate their job isn’t even worth the 10 bucks, as measly as that amount is.

Now take the salon down the street. Maybe, you decide to try it out next time, after your less-than-fun experience at the 10 dollar place. Right off the bat, you notice how much friendlier and nice the stylists are. They welcome you with a smile, and get you in the door right away. As you are getting your hair snipped, you are offered hot tea to drink, and the atmospheric music relaxes you into a near-slumber. The interior design of this salon makes you feel luxurious and comfortable. No details are missed! (Even the bathroom is Pinterest worthy!) All this, for just $45.

Price means nothing when the experience can’t be matched.

When you are offering your customers a shopping experience that they will enjoy, they will want to return and feel that sense of enjoyment again. They will tell others about how great their experience was, and the word-of-mouth promotion will multiply. The same effect can occur with online shopping as with any other brick and mortar location.

Sushi Roll Ring

Think about it: have you ever been to a web site with terrible, blurry product images, annoying music, flashing graphics and ads, and stuck around for the “great online shopping experience”? No! At a certain point, it doesn’t matter if the knitted hat is only $5 when it’s torture trying to locate the add-to-cart button.

So if you have your own web site, make sure the design is easy on the eyes, and simple enough to navigate. If you sell on a marketplace website like Etsy, keep your photos clear and your product descriptions easy to skim over.

Some additional ways you can ensure a great buyer experience:

  • Thank the customer as soon as you can by sending them a convo or e-mail letting them know you got their order. Let them know when it will be shipped out and through what provider.
  • Ship as soon as possible. Customers return to sellers who swiftly send their items.
  • Package your items safely to minimize the chances of damage along the way. Include a business card, a repeat discount code, or thank you note. Make your customer feel appreciated.
  • Handle bad situations swiftly. If your item does break, no matter how well you packaged it, offer an immediate refund or replacement. When this has happened to me, I do not require the customer to go through the hassle of sending me the broken item back, I want the process to go as smoothly and stress-free for him or her as possible. Same goes for an item getting lost in the mail. Sure, it may not be your fault that the post office misplaced a package, but it’s your job to make your customer happy.
  • Finally, offer refunds for items that came over fine, but that the customer changed his or her mind on. Sometimes people don’t read the details in your descriptions, regardless of how clear they may be. Sometimes they just seem to look different, or feel different than they thought they would by looking at your pictures. Sometimes people forget to check measurements and things don’t fit right. Sometimes people just changes their mind for no apparent reason. Regardless of the reason, the customer’s experience (and how they will talk about that experience to others) is much more important than a single sale.

When you strive to offer a better buying experience, you can begin to sell it for a price that is happily paid in return.

My Thoughts on Charging for Your Time

Pricing handmade items is a tricky ordeal. The advice and the formulas are varied,stretching far and wide. Passionate debates over how to price handmade items are fierce and all over the internet and craft fairs and even at art galleries. If you price too low, other crafters and artisans will despise you for lowering their market value and for being unfairly competitive. If you price too high your potential customers will scoff at you, and your items may look silly (They want HOW much for THAT?!?) Needless to say, asking for $580 for a plastic cabochon ring will probably get you laughed at, not thrown into the prestige world of high-earning customers (unless the ring is made of gold, of course.) Needless to say, it’s a challenging decision to make. One that is make exceptionally challenging by those of us whose craft takes FOREVER to complete.

I’m a beadweaver. Beading a billion tiny seed beads one teeny-tiny, itsy-bitsy bead at a time can take a long time, as other beadweavers will tell you. A simple, free-form peyote bracelet will take me about 3 to 4 hours, and one of my beadwoven headbands typically takes me about 6 to 8 hours. I buy a lot of my supplies in bulk, so that I can save on costs there and keep my overall prices down. However, if I actually followed many of the pricing formulas out there, the prices on my items would still be outrageous. Especially considering that the recommended hourly wage is $15 or higher.

Take this typical, simple formula for pricing handmade items:

[(time x $per hour) + cost of materials] x 1.5 = wholesale price

wholesale price x 2 = retail price

Okay. If I were to use this formula on one of my headbands, say, one of my simpler one that took me 6 hours to make, the formula would result as this:

[(6 x $15) + $3] x 1.5 = $139.5 (wholesale)

Retail = $279

Even if I lowered my hourly wage to $10 an hour, my retail price for this basic beaded headband would still result at $189. Better, but still outrageous. We’re talking about a headband I would typically charge $19.95 for. There is a HUGE difference between $279 and $19.95 (a whole frikin $259.05 worth of difference!) I would feel exceptionally silly if I charged that much for my items. Now please don’t think I am devaluing handmade, or that I don’t think I am a very good crafter. I have been beading since I was 5. I know I’m good at it. I’m not trying to be unfairly competitive, or devalue anyone else’s work either, I am simply trying to be reasonable. I’m sorry, but I just cannot imagine even coming close to following the price points that the above formula suggests.

In my mind, lower prices (but not too low, just REASONABLE) keep the merchandise moving off of the shelves. High prices may be great if someone actually buys something, but if they don’t then the finished pieces will just sit in my studio without a home to go to. Not a best case scenario in my book.

I think that it’s more important to calculate time into your pricing formulas if you are a made-to-order seller. Meaning, you make the items only AFTER the customer has paid. you will be needing to charge for your time so you don’t get overwhelmed and backed-up on orders. However, if you are like me and make the items beforehand, it’s important to price what the market will bear. Otherwise the items simply won’t sell. I try to keep a variety of price points in my shop and in my booth at craft fairs, ranging from $5 earrings, to ornate necklaces at $60. If I tried to charge $60 for the earrings I would look ridiculous, same with if I tried to make the necklaces $5 (browsers would be wondering, what’s wrong with it!?!)

These are just my thoughts of the subject. I knows it a touchy one with other crafters and artisans, so even if you completely disagree with me: I would love to hear your thoughts!