Ready for more strategies on pricing your hard work?
Welcome back and let’s continue from where we left off in Good Pricing Strategies—Part One. We began discussing prices and many of the things you need to consider to create your own workable pricing strategy. The most important thing is to make a profit, yes? Profits are good. Profits ensure that you will be in business for another month, another year, another decade. Profits make it possible for you to follow your passion and make a living at it. Profits = Happiness.
Consider this: If your prices are way out of range, check your math, deduct your emotions, and recalculate. —Alan Revere
In Part Two, I will explore six more factors that are important for you to consider as you assemble your pricing strategy and sell your work:
You Might Not Be Able to Afford your Own Work.
In my former design business, I sold almost exclusively to the wholesale market. One time, however, I did a retail craft show in North Carolina. At the opening, a woman asked the price of our most expensive piece. I almost choked as I said the price out loud because it sounded dreadfully high. Why? First, because I was unaccustomed to the retail price, and second, because I could not have afforded the piece myself. The shopper? She didn’t even blink. As soon as I said the price, she said, “Ok,” and she paid for it. I wanted to grab ahold of her and explain that I could buy a good used car for that price, or pay a chunk of my daughter’s college tuition. Obviously she was in a very different financial situation than I was. That day, I discovered—much to my surprise—that our jewelry was not aimed at me as its target customer. And I am not alone; many designers cannot afford their own jewelry.
The Two-Sentence Rule
This is a pricing sales tip. Whenever you quote a price to a potential customer, keep talking for at least two more sentences. I really don’t care what you say, as long as you are singing the praises of the piece, its craftsmanship, the fabulous materials you are using, the remarkable design, your influences, when it was made, and so on. Just keep talking.
This way the last thing the client hears is not the price but the qualities of the piece. For example: “The price is $2,000 and if you look at the luster and depth of color in the Tahitian pearl you will see it is truly a beautiful pearl and the 18k white gold sets off and complements the color perfectly don’t you think?” The customer is not left with just dollar signs, but beauty and color and quality.
When I owned a gallery, one of the jewelry artists I carried made hammered 14-karat gold square, round, and triangle pendants that were retailing for approximately $150. She also had the very same pendants with a small .02 ct. diamond flush-set in them retailing for approximately $350. The diamond pendants sold out and I didn’t sell one of the plain gold ones. It was the Christmas season, and young men came in to buy “diamond” pendants for their girlfriends. There’s an significant distinction between saying, “I bought Sally a diamond necklace” and “I bought Sally a gold necklace.”
“Setting your price is like setting a screw. A little resistance is a good sign,” wrote Harry Beckwith in his book, Selling the Invisible. A fellow jeweler once told me that if you don’t get some price resistance, then you are priced too low. This is where it is important to know what your competition’s prices are and why your higher priced pieces are worth the extra money. And, vice versa, if they are substantially lower, then you need a reason for that, as well. If you are confident about your prices and the way you arrived at them, then be prepared to explain the value of your product without going into the pricing structure.
Avoid getting sucked into a conversation about pricing your work only as it relates to the price of gold/silver. This usually only happens at jewelry trade shows. It is totally irrelevant for handmade jewelry and objects. Even though metal prices play a huge role in pricing, it is not the main determining factor.
You Can Always Adjust the Price
If you feel you are encountering a good amount of resistance to a price, then lower it, if you have the room. And, if you are getting no resistance, then you might consider raising the price in small increments to arrive at a price which is comfortable for both you and your customers. This is called “what the market will bear.” You need to find that perfect spot where the customer is still willing to pay the price you’ve set and you make a profit.
Sometimes makers will discontinue a design when they realize, after making it, that they can’t get a fair price for it. Maybe the manufacturing is too expensive or the piece too complicated to produce at a reasonable price. In that case, it is better to eliminate the piece or re-design it so that it can be sold profitably.
Take an Accounting Class
Learn the basics of bookkeeping. Having that knowledge will enable you to make wise and informed business decisions. Additionally, if you hire an accountant or bookkeeper, the knowledge you’ll have will pay huge dividends in just helping you understand what they are doing. If you don’t understand the language of accounting, you won’t get the advantage of meaningful exchanges with the number-cruncher you hire.
Consider all these factors as you price the pieces you design and create, and revisit them regularly to keep both your strategy and your pricing fair and profitable.
Now go out there and price your work with confidence! Good luck!