Wednesday, 4 November 2015

This Much I Know About - Pricing...


This week's 'This Much I Know' tackles the tricky, prickly issue of pricing. 

I say this every week, I am no expert...and I must confess, for me this has been one of the hardest areas of the business to get to grips with.  I know from conversations with friends who also run creative businesses that I am not alone in feeling that way.

Finding a good formula for pricing and valuing my work has really helped get things off the ground for me. I want to share a bit of what I've learnt about that so that it may help other's who find themselves in a similar situation.

This Much I Know About - Pricing... 

  1. Work out what YOU NEED and what TIME YOU HAVE to achieve it realistically so that you can calculate your ideal hourly rate. As your business grows and takes on greater overheads or if you find you have less time to work on things - your hourly rate may need to alter. There are plenty of hourly rate and pricing formulas that you can download to help you work it all out and ensure that you have your pricing level set where you need it. What you need will certainly differ from the next person.  The Etsy seller handbook is a great resource, as is Folksy's Seller Blog.  When it came to calculating my hourly rate I found Chapter 5 of Meg Mateo and Joy Cho's book Creative Inc has a fantastic formula which is extremely thorough and helps you work it all out without kidding yourself. I found it a great checklist to ensure you cover every cost at whatever stage you are in business.
  2. Value yourself, your time and factor in wholesale/gallery prices, whether you intend to sell wholesale/through galleries or not. That's the fair market value for your work and helps avoid excluding future opportunities just because your margins are far too narrow.  
  3. Pricing formulas are great, here are links to a couple of decent ones: Etsy Blog  Folksy Blog
  4. Be mindful of the sweet spot between market value (i.e. what the competition is charging/what the customer is prepared to pay) and your ideal price.  Try not to fall into the trap of comparing with mass market when you are limited edition or one of a kind.  Always look for fair comparisons to gauge your true market value.  An under priced limited edition/ one of a kind can put off potential buyers as it raises suspicions about quality - just as easily as an over priced item turns buyers off.
  5. If there's not enough profit in it once you've calculated your price, then it's not worth pursuing - either modify it to make the margins work or move on. Under pricing can cost you dearly in the long run as you'll be running to stand still with your business and you'll be contributing to the race to the bottom with other creative businesses - which is just not fair on anyone, let alone yourself!
I hope you found today's 5 things very useful.  The good stuff is in following the links to those pricing formulas and sitting down and working it all out - it will be time extremely well spent.
If you have any useful tips on pricing, your comments below would be very welcome.

You may also enjoy catching up on these posts from the past two weeks:

Staying Inspired and Being Creative:

Growing a Creative Business to Serve YOU!:

Next week I will be sharing a few tips on branding.  
Until then, have a lovely day!