Welcome to Craft Venture – business and marketing tips for indie online business owners. Like me! I’m Brenda, owner of Phydeaux Designs on Etsy and 1000 Markets, and Phydelle Designs on Etsy. Last week, we talked about how much you’re worth, or are you worth paying a wage to? (Well, of course you are! You work very hard!) We’ve been talking about pricing – perhaps the most challenging part of owning your own business. Price too high, and your wonderful items don’t sell. Price too low, and you don’t make a profit or perhaps create the impression of lower value for your goods or services.
This summer, I completed the entire pricing exercise I’ve been talking with you about, resulting in a price overhaul. When all was said and done, I found I was right on point for several items, a little high on others, and seriously underpriced for many.
I worried about raising prices. There is often a perception that handmade should be low priced. From a business perspective, I neither want to be the most expensive nor the least. I’ve learned, however, that I’m not the best judge of “fair” pricing for hand knit items. When I look at other knit goods, my inner voice keeps saying, “I could knit that for so much less.”
I’m sure you’ve heard the phrase “what the market will bear” when it comes to pricing. You can go through the most sophisticated pricing models and calculations, but when all is said and done, your items will sell at a price range that your particular market is willing to pay. But is this true?
I don’t have a definitive answer for you! I’ve been reading about pricing for weeks and even the experts aren’t always clear (or in agreement). However, you can certainly figure this out for your own shop and goods, through a little trial and error.
If you’ve followed along with us, you’ve worked on your shop, improving your photos, reworking your descriptions, and you’ve perhaps even increased acceptance into online exhibits and marketplaces. Your advertising and promotional efforts are directed to your particular market. If you raise your prices and then see an immediate drop in sales, you just might be experiencing “what the market will bear.” If you drop your prices and see a significant increase in sales, you may be able to incrementally increase your prices until you see a levelling off. Now you have an idea of what your particular market will bear.
To successfully test your pricing, you want all other factors to remain constant. Just like a scientific experiment, you want to make sure the only variable factor is your pricing. Comparing pricing efforts if you’re having a huge promotion or sale, you’re sponsoring a giveaway or you were featured on a big site, isn’t going to be effective. You won’t really know if any changes in views or sales is due to pricing or other factors. Also, give it some time! A few days or even a week isn’t really enough time to gauge the effects of pricing changes.
You can also, of course, ask shoppers for feedback about your pricing. Ask people who you know will give you an honest answer and who are either buyers of your goods or the types of goods you make. If someone asked me what I’d pay for infant clothing, I couldn’t give a useful answer, since it’s not something I ever shop for.
What’s your experience with “what the market will bear?” Do you find yourself second guessing your pricing, worrying about what the market will bear? Have you found your ideal price range already?