The Art of Pricing by Stacy Rajab from Retro Modern Art.
I believe that there is a true art to pricing products and goods, specifically handmade creations. I just have not mastered this art. There are so many things to take into account. Making art and then slapping a price tag on it seems simple enough. But you need to weigh so many things. Here is a list of things to take into account when pricing handmade items.
- Cost of competitors items: the last thing that you want is to be much greater or much less than the competition. However, you need to stand behind your item and actually believe in what you sell is better than theirs.
- Cost of goods: How much does it cost to make the item? How much are supplies? How much is shipping? How long does it take you to create your masterpiece and then take pictures and actually market the product? What is your time worth?
- Cost of doing business: How much is your insurance? Gas? Electric in your studio? Internet/web hosting? Tax preparations?
- What is the competition charging? Is it fair? Do they make a cheap product? Do they have a low cost of living where they are? Are they just starting out and giving their product away for positive reviews? Are they trying to lose money for "tax," purposes? Are they over charging?
- What you are doing to market the product? Paid advertising? Time on-line for promotions, craft shows? Business cards? Logo's and designs?
- What are you able to write-off as a home-based business? Square footage, phone, cable?
The next thing to consider is if you are just starting your business and you want to start off low. When do you finally say it is time to raise prices? Do you creep them up slowly or all at once? Do you lower your prices because you overvalued your item in the beginning?
These are all things that I have been considering with my own hand-carved, hand-pulled prints. It takes me about 4-6 hours to carve a single design into the lino. It used to take MUCH longer. All of those hours and the time to market, plus the cost of the ink, paper, supplies, etc. come together into my small price tag. Well, I have decided to raise my prices. Yes, you heard that correct. I am telling you upfront that I am raising my prices. By a dollar. Steep, maybe, but necessary to carry on my trade. When I began selling my art, I was basing my prices mostly on the competitors prices. Now that I am more established, I want to set myself apart and produce growth in my company. So with that, welcome a dollar increase.
Now, telling you that prices are increasing is probably not the most politically savoy thing to do, however it's the honest truth.
If you are an artist of any sort, how do you price items? What tricks can you share? Are you comfortable with where your prices are at or do you want to change them?