Tuesday, February 5, 2013

Creating Success from the Inside Out - 5 Money Traps to Avoid When Pricing Your Work

I was inspired this week to talk about setting prices for our work after participating in a webinar about money blocks, given by the Lucky Bitch, Denise Duffield-Thomas.  It got me to thinking about what money traps we artists on Etsy may fall into as a result of our own money blocks.

1. Setting your prices at wholesale level in a retail environment

I have gone through several iterations of pricing formulas and read lots of articles to figure out the best way to price my work.  The conclusion I reached was that I need to price my products so that I can sell wholesale, establish pricing consistency no matter where a customer might find my product, and still make a profit.  If I sell a pair of earrings for $40.00 on Etsy, then wholesale buyers will need to buy those earrings from me for 50% of that price, at most, so that they can sell those earrings in their shop for $40.00 and still make a profit.  This also means that I need to price my products so that when I sell my earrings to a wholesale buyer for $20.00 I am still making a profit.  If you are thinking to yourself, “I don’t sell wholesale, so I can set my retail prices lower”, I ask you to reconsider this as you read the rest of this post.  I believe this thinking is potentially damaging to your wellbeing as an artist.

2.       Not paying yourself for labor

If you’re like me, you love every minute of creating your handmade items, so it doesn’t often feel like work.  However, there are two points to consider here.  The first is if you want to scale your business up and potentially hire a person to help you in the future, then you need to build labor rates into your product prices.  If you don’t charge yourself for labor now and then you find yourself hiring someone later (whether it’s a person to help you bead, sew, knit, balance your account, or ship product), you will have to recalculate all of your prices at that point, which could affect an established customer base.  More importantly, your time has value.  Your skill has value.  You should get paid for that time and that skill.  And I don’t mean $3.00 an hour!


3.       Assuming that YOU are your customer

I fall into this trap all the time!  As artists, we may not have an income level that matches that of our customer.  It certainly depends on your market, but it’s important to avoid pricing your items according to what YOU can afford.  You may have an item that, when you calculate the price, you think, “Oh, no one will buy that at this price!” If you are assigning an appropriate value to your items then the customers who love what you offer and see the value in the product will be happy and willing buyers.  If you sell the item for less than what it is worth, then you are in danger of devaluing yourself as an artist. 

Another aspect to this trap is that we spend so much time with our products that sometimes we can grow too close to them to assign an appropriate value.  Familiarity can cheapen the value of the item, in our own eyes.  Try to look objectively at your work.  Put each item on a pedestal and adore it!  That customer who has been hunting for just the right thing will adore it, too, when they find it in your shop.  And they will pay money for it.

4.       Looking at what your competitors are charging and pricing your items accordingly

I believe that setting your prices according to your competition is detrimental to your wellbeing as an artist and a business owner.  When I browse products on Etsy, I’m amazed at how cheaply some sellers price their products.  It can be hard to offer an item for sale that is sometimes double what other sellers are offering for a similar product.  Don’t let other people’s money blocks dictate the cost of your items.   Come up with the formula that feels good to you, that helps you meet your business goals, and that reflects what you are worth as an artist.  You will be more at peace with yourself and happy doing the work because you know you are getting paid fairly for it. 

5.       Feeling guilty about asking for the true value of your work

I love lifestyle business guru Leonie Dawson who explains that there is a balance to the Universe in the exchange of goods and services for money and that when one person gets more value than the person on the other side of the transaction, it’s not healthy for either party.  That’s not to say that you can’t offer sales or promotions.  When you offer a promotion, you aren’t just selling your items more cheaply.  You are doing it for a reason; perhaps to create more buzz for your shop; to get more customers to sign up for your newsletter or blog; or for other non-monetary reasons that still have value to you as a business owner.

Do any of these money traps resonate with you?  How have you overcome them?  Are there other money traps we, as artists, should consider?

4 comments:

Deanna Davis said...

Thanks for these good points! I'm always struggling with this issue.

Marilyn (Pulp Sushi) said...

Such sound advice, I always struggle with my pricing, thanks for sharing this!

Eyelah said...

Really great advice. I have troubles pricing my items. Something that I'm constantly working on.

Lisa Walbridge (Merry Alchemy) said...

Pricing is certainly not easy. I still struggle with how to capture overhead in the price of each item. Any thoughts?