The First Rule of Pricing: Make No Assumptions

This contributor post was written by Tiffany Moore.

Let’s talk about money…yay!

Pricing is no fun. Trying to put a dollar amount on your creative product is never easy. But in terms of business, pricing is critical. (If you’re trying to sell things as a creative hobby, it might be a different story, but please, out of respect for those of us who are trying to do this as a business, know that how you price your “hobby” affects the people whose work is their livelihood.)

When I was working retail, I got a piece of advice from my manager that has been one of the biggest business lessons I’ve ever learned: “Don’t make assumptions about what other people can afford based on where you are in your own life.” It seems so simple, yet, I remind myself of this all the time.  I cannot put my own judgements on what other people can afford.

To take that to the next level: I cannot set my prices based on what I, my family, or my friends can afford.

As an artist, a designer, or crafter, it is not your job to determine what people can afford to pay. It is not your job to make sure that your best friend can afford one of your prints. It is not your job to make sure that you don’t make someone feel bad because they don’t have the money to purchase something you’re selling.

It is your job to make high-quality work. It is your job to get paid well for your time and your materials. It is your job to earn a living from your craft.

If you consistently hear, “Id love that, but I cant afford it right now,” that doesnt mean that your prices are too high. It means that youre marketing to the wrong people. But that’s material for another post?

Your turn: how have you learned to get out of your own way in terms of pricing? What boundaries have you had to push past to ask for what you’re really worth in your business?

*image via Fresh Words Market: My Worth Will Not Be Dictated by a Number

Tiffany Moore, co-founder of Teahouse Studio is an artist, life coach, change agent and magic maker. She helps creatives live their happiest, most sparkly lives (starting NOW) and thinks that everyone in the world is beautiful, including you.

61 comments | Click here to reply

Omg, this is such timely advice for me! I have a new handmade soap business, and just today I was pricing out organic and sustainable ingredients (palm oil that doesn’t involve rain forest deforestation, fair trade shea butter that supports a woman’s cooperative in Uganda, etc.). I’m a bleeding heart, and I want to make a DIFFERENCE with my products. But I know that if it weren’t for my business, I couldn’t afford the products that I make (at the moment, at least), which makes me feel badly.

Buying the better ingredients isn’t THAT much more expensive, yet it will still mean a slight price increase if I want to pay myself fairly.

I’m going to go for it. 🙂

Andi Luther-Philippe

Great business advice!! I am currently working on streamlining and improving my online shop. This includes using better quality materials, which will ultimately result in a price increase. It’s important to keep in mind that just because I am a “poor graduate student” doesn’t mean I have to price my items based on what *I* would like to pay for them – Thank you!!

Sasha

Great post! I’ve come to the realization that it’s o.k. to feel that sticker shock when pricing my own items. I’m worth it! My time. My energy. I recently raised all my prices after realizing that even when working my hardest and being the busiest I’ve ever been, that I barely broke even. I had to really evaluate what my time was worth. I’m happy with my decision and proud of my work. If people want what I have to offer, they may have to save a little more to get it, but it will last them a lifetime! And if they have the money to buy it right off, and they want it, they will.

Lucy Chapman

Excellent post, Tiffany!

I’d also add that it’s not our job to worry about someone else’s pricing. I see so many times a popular and successful shop will lower their pricing (which obviously they’ve determined from knowing the back end of their business that they can afford this!)…and a slew of competitors will follow suit.

Put your heart into your work and your people will find you…and they will not blink that your prices are a couple bucks higher than that other shop’s…and to that end, it’s very important to realize that the price is not always going to be the make it or break it factor. Not everyone is looking for the cheapest thing or the best deal.

Your post made me realize that I, too, have been making assumptions about what other people can afford based on what I can afford.

KJ

Wonderful post!

Although I am not trying to make a living from things I make, I passionately believe that we need a paradigm shift in the way we think about VALUE.

Learning to sew has made me realise how much time and effort goes into sewing things, for example. We need to value human beings: their talent, their creativity, their time, their labour…. even mass-produced goods are frequently underpriced in terms of the human effort that has gone into producing them… let alone all the advantages of handmade goods and art.

The idea of giving a discount to friends and family is a great one 🙂

Suki

great great great advice! thank you!

Megan

this is such a great post! it’s exactly what i needed i’m always worrying about whether people could afford what i feel my work is worth. thank you for this 🙂

lily sol

oh my god, this is gold! just like rebecca, i’m always thinking whether my pricing would still be affordable to my friends and family.. yet at the same time i want to be appreciated for all the love, hard work and effort that goes in crafting my products.. thanks so much for this..

Windy Dhanutirto

This is such an important topic! The unfortunate thing is that consumers are just really used to low price points, which are often achieved by unfair labor situations. A friend of mine just wrote an amazing article about this here: http://laurenelisenanson.wordpress.com/2012/01/17/the-truth-about-budget-fashion/

That point you made about not making assumptions about what your target market can spend based on your own situation is so key. I have to remind myself of this every day!

Natalie Teodori

Wow, such great advice Tiffany and so simply put. It’s hard not to consider your own life/financial situation when considering pricing but this is definitely something I will keep in mind for the future and advice I will share.

I think a key element to pricing is keeping customers educated about your product and helping them to understand the true value of your products. The good thing about the handmade community getting bigger and more mainstream is that the average person becomes more educated about handmade. The time that goes into each piece, the detailed craftsmanship behind items, all the work that an independent entrepreneur puts into their business, etc. As people become more aware about these issues, they understand the value of a handmade item, and therefore are willing to pay more.

For example, I used to think letterpress was so expensive, which it is. But after learning more about the letterpress process and seeing all the time and energy that goes into each print, I’m more than willing to support artists and pay the higher prices. I can pay a little more to get something that has so much love put into it. 🙂

Lauren Elise

This is a fundamental lesson for creatives that run a business. A year after launching my photography biz, I met a woman who had been at it for five years longer than me. She gracefully pointed out that my prices were severely low. It was definitely a challenge to up my prices. I’ve had to say “no” to several potential clients who have outright asked for a pretty steep discount. One helpful approach I’ve implemented is a friends and family 10% discount. It saves me from giving away my work but also allows those close to me a small break.

Sandra Fazzino Photography

Hanna, that is a great question and a really good point to bring up! I think that one thing you need to ask yourself is what is sustainable for you in terms of running a business? New business owners often start out with low prices and then realize that it’s difficult to raise prices once a low bar has been set.

The other thing to consider is what your target market really can afford. It really hurts when you think someone can only afford a specific price only to see them spend much more money on other products.

If you are concerned about specific folks being able to afford things, one thing you can do is offer a specific friends and family discount (15% is what I offer ~ it feels comfortable and not like I’m giving it away) or have sales periodically throughout the year. I do a BOGO sale a couple of times a year and people can stock up if they’ve been wanting something for a while.

Finally, to the question about your target market, I think that if your target market can’t afford the prices that you need to sustain yourself, it’s time to rethink a few things about your business. Maybe you need to change up your products or start marketing to other people. Maybe you need to offer a range of products at different price-points to appeal to different audiences…just a few thoughts…

All of this discussion is great, and I appreciate your honesty around your thoughts. So many people hate talking about money, and I think it’s time that we open some dialogue around it!

Tiffany Moore

Great advice, although rather hard to follow sometimes. I often get conflicted when wanting to price my work and take the means of my potential costumers into consideration. What if my target costumer is someone, who can’t afford the “real” price? Or am I underestimating my market or should I reconsider my target audience? I would love to put a fair price on my creations, but it does frighten me sometimes whether I’ll be able to sell it at that price.

Hanna

Hi all, I’m SO GLAD to hear that this is resonating with so many of you! I’m definitely getting some ideas for some future posts too…

One thing that is good to keep in mind, especially if you’re a newish seller, is that you are going to have to step out of your comfort zone at the beginning. Good pricing decisions will almost always make you uncomfortable at first. As Jan mentioned, it starts getting easier and easier over time…trust the process!

Tiffany Moore

Great article! As for me, I read up on different pricing formulas and figured out a system that worked for me, early on. I was fortunate to have a mentor when I first started selling onetsy, and she sent me links to these high end jewelry sites that were very bold about their pricing and suggested I up my prices even further. Her suggestion to me was to price my work and then add on another $5 or $10 past my comfort level. At first, I felt bad about my prices, but Marlo (my mentor) was right. With the fluctuating silver market and now taking into account wholesaling at 50% my retail price, I can be assured that I am still going to make a profit. My price point also allows me to offer grat customer service; free shipping specials, upgrades for my best repeat customers, and discounts, too. Pricing is still challenging, but focusing on offering a customizable, high quality product and awesome customer service helps keep my confidence. Thanks for the post! 😉

Jan Avellana

hey mgb. there is a facebook share button, but no “like” button. maybe i’ll add one in the future. but for now, i did post it on facebook, you can “like” it there if you’re interested. http://www.facebook.com/papernstitch
either way, thanks for stopping by!
-brittni

papernstitch

this is great advice – thank you! honestly, pricing my jewelery is one of the hardest things for me…and a big part of the reason that I don’t list more on etsy. I usually make jewelry, rather than buying it…so I am afraid that people will look at my work and think, I could make that! I assume that every consumer is just like me…which is not true! this gives me lots to think about!!

erinkathleen

I wish there was a facebook “like” button for this post!

mjb

glad to hear that you’ll be keeping tiffany’s tips in mind. it is not always easy to make that mind shift, but once you do its quite freeing! good luck.
-Brittni

papernstitch

Such great advice! I always subconciously cost things around what I or my friends can afford or other similar products made en mass…definitley keeping this in mind for the future x

rebecca
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