Today’s post comes to you from my friend and fellow creative Danielle Spurge from Merriweather Council. Danielle is a maker maven known for helping turn others’ crafty tendencies into profits. Today Danielle shares a bit of tough love with us when it comes to pricing for profit. Visit the Merriweather Council here.
People ask me a lot, “How do I make more sales?” — first of all, the question should really be, “How do I make more profit?” The number of sales you make is a vanity metric. It matters to you… and to your haters. And that is it. No one else cares.
Further, you could sell ten items for $1 or 1 item for $10. Same thing by the time it hits your bank account, but in your life, it’s completely different because you aren’t managing ten orders, you’re managing one.
Maybe you’ve heard silly little things from family and friends like, “People won’t pay that much,” or “You can’t charge that much for something like this.” EYE ROLL FOR DAYS. Ignore, delete, trash bin all of that commentary.
Our families and friends mean well and we love them but holy heck, no. They are wrong. They just don’t get it. You can and should and need to charge the right prices for your work. Spoiler alert: People WILL pay it. Not everyone, but the right people will.
If you’re reading Danielle’s post, I bet you’ll also be interested in a free video training I co-hosted with Danielle – the Three Key Signs You Need to Fix Your Prices ASAP. Check it out here!
You need to charge what your work is actually worth. Okay? Please? Here’s why:
1. The rest of us are mad at you.
Not really, but… kinda. Whenever I see someone selling something similar to what I sell for less than half the price, I know they are not making money. And that makes me mad because it doesn’t really do the rest of the community any favors. You don’t want to be that person, do you? Consumers will see the prices of other similar items on marketplaces like Etsy, even if they aren’t trying to price compare. In order to see search results and options, you have to see prices too. So when a few people skew the market so ridiculously low, it throws everything off. It confuses the buyer and makes it harder for ALL of the sellers to sell.
2. High volume onslaught fatigue.
Oh, you didn’t consider that maybe someone would feature your piece somewhere and lots of folks would come and buy it all at once? (Even though that’s like every seller’s dream.) And now you’re freaking out because you have as many open orders as you could possibly have and suddenly you feel very uneasy and irritated because you will spend the next three weeks working for $4 an hour? YIKES! Imagine selling out and still making a $2 profit. YIKES.
3. You might actually be paying for sales.
When you undercharge, you are basically paying to make sales.
Little example here:
Item priced at $20
Takes you 2 hours to make
Material cost is $5
Between listing fee, Etsy commission and PayPal fee, you made $13.22 profit.
This doesn’t include shipping or postage costs.
$13.22 divided by 2 hours of work to create the piece equals $6.61 per hour. That’s less than minimum wage in most places!
Also, this doesn’t account for the time you spent taking photos, writing descriptions, listing, editing, or shipping. It also doesn’t account for any material procurement costs – such as getting the in car to drive somewhere or even driving to the nearest post office. I don’t know about you, but it usually takes me at least 15 minutes to go to the post office by the time I get to my car, drive there, drive home… So let’s just say it takes you an hour to do all these other things … $13.22 divided by 3 hours is $4.40 and hour. For the sake of driving this home even further, let’s say you’ve renewed this piece twice on Etsy, that’s another 40 cents off your bottom line. Let’s also imagine that you put it in one of those fancy bubble mailers – which you aren’t yet buying in bulk – and that was another $1, plus the trip to the store, etc etc… Excuse me I need to go pop my eye balls out of my face. DO YOU SEE?!! I would rather just skip Starbucks, I’d be at about the same level financially with 3+ hours of my life back. Basically, you could just take a nap and make more money than if you undersold a piece.
4. Just because you enjoy your work doesn’t mean you don’t deserve to get paid for it.
Sure, I love to sit around and embroider. But it’s not “for fun” – it’s work. I enjoy the process, but I still have to do it even when I’m just not into it. Just because you “like” to do something doesn’t mean it should cost less. Don’t be like this: “Ohhh, but it was fun.” *knock off a few dollars*
5. In case you want to wholesale or send work on consignment.
If your prices are too low, YOU will be the only one losing in this situation. You’re the one who will get a check for basically nothing when your piece that was way underpriced to begin with sells in a shop that takes a 40-50% commission. They might’ve done alright on the deal, but you definitely didn’t. And it’s gunna get real awkward up in here when you try to finagle a higher price *after* someone has shown interest in wholesale or consignment. *facepalm*
6. If you want to actually be in business.
If you aren’t making money – and actually, in fact, LOSING it – you are not in business. You have an expensive and stressful hobby.
After a while, you’ll get tired of spending the time you could’ve been spending with your family or friends working for pennies and get burnt out. And then you’ll realize. So why not just save yourself all that headache and take it from me? Please value yourself and your work – price it correctly, present it nicely, carry on and be well.
Do you need to raise your prices? Take this quiz to find out!