How to choose a pricing strategy for your designs
Susannah Bradley from Etsy UK has kindly agreed to write some guest blogs for us, to help designers and makers with the business side of things. This is her first article on pricing...
As a designer maker, setting a price on your own work can be one of the more intimidating parts of starting your business. Many new business owners aren’t sure how to value their own work, especially in the context of today’s market which is largely mass-produced items. How can your prices compete with enormous companies that have every advantage of large scale production?
The short answer is you can’t. The good news is you don’t have to. People understand there is a different value in a handmade or personally designed product, and they expect to pay more for that difference. Remembering that value can help you feel a bit more comfortable charging prices that cover your bases and give you a reasonable profit.
This blog article in the Etsy Seller Handbook details our favourite pricing equation:
Materials + Labor + Expenses + Profit = Wholesale x 2 = Retail
If you’ve never worked out this math, you may have a bit of a shock when you see the initial numbers; there’s a good chance the prices you come up with will be quite a bit higher than your original prices. But remember to keep in mind exactly who your ideal buyer is. If your friends and family aren’t included in your target market, be wary of asking them for advice or expecting them to pay the prices you calculate are appropriate to charge. Etsy seller, Charlotte White from theforgottenlibrary reminds us, “Conduct research with your target market, not everyone you know.”
Remember too, that you yourself may not be part of your target market either! “Often we don't want to price things ‘too high’ because we wouldn't buy it,” advises Hannah Dade from PalindromeCrochet. “But a lot of people I've spoken to have said that they simply couldn't afford their own merchandise. The buyer isn't you, you are the seller, so set a fair price that gives you a profit worth the work you put in.”
Pricing your handmade items correctly will attract the right buyers who value craftsmanship and authorship. Karen Johnson from karenjohnsondesign warns, “It is possible to put off customers with work that is underpriced. They may think that something is wrong with the piece.”
Once you’ve updated your prices, you may find yourself nervously awaiting those first sales after the change. Etsy seller Marieanne Cavaciuti from damsontreepottery echoes what many designer-makers discover when reviewing their prices though, “I have often found that sales have increased with price rises and certainly not decreased!”
If you do find you are getting fewer sales, review your numbers again. Though bringing in fewer sales can be frightening at first glance, if you are now simply doing less work for the same profits, the change was likely worthwhile.
Still not sure? Check out this article in the Etsy Handbook that gives a few more pricing exercises to consider.