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The Perplexing Practice of Pricing


Pricing. For me, it's the biggest headache of selling my work. I hate it.

Other artists hate it too. I've had many conversations with people about pricing, and they suffer the same anxiety and confusion over it.

I am no expert, and I'm still learning, but I think perhaps some of you could benefit from what I've learned so far from my experiences.

This advice is for a) new artists starting out and b) people who create one of a kind handmade items. Established artists can ignore me, because really the rules change once you're at that point. This is for newbies.

There are many articles online that talk about pricing. This is the approach I've found works best for me (meaning I don't claim this is the best way for everyone. You'll have to make your own mind up what works for you).

I've broken the article below into main strategies:

Calculating a Base
Comparison Pricing
How Much Would You Spend
Don't Fall Prey to Emotional Pricing
Leave a Margin
Evaluate and Adjust
Your Time is Valuable

 




Calculating a Base

I use a basic formula to start from: cost + minimum wage per hour worked on the item. You wouldn't accept a job for less than minimum wage, would you? And (if you have any morals) you would never tell someone else they don't deserve minimum wage for their job. If you're selling your art, that means you've gone from hobby to (if you're still not comfortable with the title of artist) at the very least, hired help (and eventually you will be a skilled professional, and then of course your formula will change).

I don't base hourly wage on how long it takes me to make something the first or second time (nor do I include drying time). There's a lot of time consuming trial and error that takes place, and it isn't a true account of how long it takes you to make a particular item.

Once I've figured out how to make something, I keep a pen and paper beside me. Each time I start working, I write down the time. Whenever I stop, I write down the time. I also make note of what step I got accomplished during that period. It's good to know what steps take the longest. More on that later.

Tally up your cost + your time and voila, you have a base price.

Now it gets complicated.

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Comparison Pricing

Even though you have a base price, it might not be a good base price. Maybe it's too high. Or completely under-priced. You won't know until you do some research.

Go online and find other artists who:

  • preferably work in your genre (for me, that's Halloween/monsterlicious creations)
  • work in your medium (i.e. use the same materials as you)
  • make items of similar size
  • make the same type of item (for example, if you're pricing pendants, look for other pendants)

Find as many similar pieces as you can from different artists. Write down the different prices - and there will be different prices (a difference of anywhere between $5 to $200). It's the differences you need to look at.

Ask yourself:

  • how much detail is in their piece compared to yours
  • are they established (well known, or been selling a long time)
  • is there a material they use (glass eyes, for example, or maybe a fancier clasp on their jewelry) that would explain a higher price
  • is there a material they don't use that would explain a lower price

While these are only a few of the variables to consider, I personally think they are the most important. Also, if there's any indication of how many/how often they sell, make note of that.

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How Much Would You Spend

This is a tough but vital point. Start with the other artist's work. Ask yourself "Would I buy this at this price?" then figure out why or why not.

Now look at your own pieces. Ask yourself how much would you pay for it. Chances are, you make something that you also collect (or would if you had more money). Deep down, you know how much you would pay, and what price point would make you walk away. You're selling to people just like you. Most likely, you are the perfect example of your target audience. You have a general idea what people with similar interests will pay for a particular item.

If you can't be honest or objective with your answer, it won't work. In that case, focus on your answers when you were looking at the other artist's work.

Also examine why you would pay more for one and not the other. What makes the difference?

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Don't Fall Prey to Emotional Pricing

You've just finished your best piece ever. It's wonderful. It's so much better than anything you've made (even though you made it the same way, in the same time, with the same materials as the rest). You love it.

Don't price it.

Leave it on the shelf for a while.

Our emotional attachment to a piece clouds our judgment. If you love something that much, keep it for yourself.

I can't count the amount of times I've gone to an artist's site and saw a collection of the same item - same size, same material, same amount of detailing - priced differently. What was the only difference? The look of the higher priced items were slightly cooler. The colours matched better than the others. But it was the same product/design with a different palette.

They are simply charging more because they like it more, and they think you'll pay more because you'll like it more.

I don't buy from people like this. I'll pay extra for something that took more time, more effort, or demanded a higher level of difficulty. I won't pay extra because you "got it right".

You're also sending a message to clients saying "let's face it, the rest of my art sucks. But these three are good!". Because let me tell you, they're trying to figure out what's wrong with the other pieces. Something must be wrong with them if they are cheaper. I don't want to buy the defective ones. Shame, because I really liked them.

You get my point? Good.

If a piece is broken or actually flawed, that's different. Or if for some reason a piece isn't selling, and you just want to move it, reduce the price but mark it as a sale item. People don't question a sale. They are just happy it's happening.

Simply put, give your buyer a reason for the difference in price. Don't make the difference in price a mystery.

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Leave a Margin

There has to be some padding between your base price and your actual price. Let me tell you a story.

At my first event I had a woman who was interested in buying a bunch of my mini pumpkins, and she asked me what my wholesale price was.

Wholesale price? Oh right...like a discount for buying lots. Um. Hee hee.

I ended up admitting to the woman I had absolutely no idea and that this was my first show. I took her contact information and said I would be more than happy to discuss it with her the following week.

Successes sneak up on you. And they happen fast, seemingly out of nowhere. You have to be prepared.

People will expect you'll be able to give them a discount if they buy in large quantities. Instead of taking a loss on your time and cost, make sure there's a bit of extra wiggle room in your price so you can give people a deal (if you want to).

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Evaluate and Adjust

Now you have to look at the item and your total (cost + min. wage + margin) and consider if your price is realistic based on all the information above.

If you've completely under-priced your work, it's an easy fix.

But what if your items are way too high? If you make a really nice magnet at a low cost of materials, but it took you 10 hours to make it, you're in trouble. No one is going to buy a magnet that costs over $100. One solution is to figure out how you can make the process quicker (less hours to bill for) without compromising the quality of your work or your self worth.

If you end up with a base rate that is completely unreasonable, and you just can't figure out how to bring the time or cost down, then you need to ask yourself if you should be making something else.

Remember earlier when I talked about making notes while you're building something, especially the time consuming steps? This is where you should start looking for alternatives.

For example, when building a base for a piece I often try to save money by using pieces of styrofoam I've collected from packaging. The benefit of this is it's free (zero cost). The drawback is it takes me longer to sort through the pieces to find the right size, connect the pieces, shape the pieces, and then bind them together. For simplicity's sake, let's say this takes me half an hour ($5.00). Total value cost + time = $5.00.

It makes more sense for me to buy a block of foam (cost $1.00) and shape it for 15 minutes ($2.50). Total value cost + time = $3.50.

In that one small change I've lowered my overall price and time and made the process easier on myself. Considering you've just shaved off $1.50 from the first step of your project, imagine how much money (time is money my friends) you can save if you're efficient in every part of the project.

If a more expensive material saves you a significant amount of time, it's usually better to pay for the more expensive material. The lesson being lower cost for materials might be costlier in the long run.

That doesn't mean you shouldn't be looking for sales or opportunities to buy directly from the dealer or buying in bulk. There are many ways to save money.

Of course, if you just don't have the money to spend on materials (which is often the case when you haven't sold items yet/recently), and you have loads of free time - time you wouldn't be spending MAKING MONEY some other way - then you can make the executive decision to sacrifice what your time is worth. Just don't get into the habit of it. Which brings me to my last section.

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Your Time is Valuable

That's why we pay other people to do jobs that we could easily do ourselves: fast food/restaurants, mowing lawns, gardening, painting walls, even answering phones. We can all answer phones, but sometimes our time is better spent/more valuable elsewhere, so we hire receptionists. You with me? You get it now? Good.

When you know - honestly know - how much it costs you to make something, you don't ever have to feel guilty for what you're charging. You can look someone straight in the eye if they question the price and say "Yup. That's how much it costs me to make it." Because be warned, there will be some random dude looking for an unreasonable deal, mercilessly trying to haggle you down - like you're peddling mass produced factory knockoffs. These are usually people who have never made anything with their hands in their life. To be fair, they actually DON'T have any idea how long it takes or how much it costs to make something.

But as long as you know, you're good.

For every person that thought I overpriced an item at a show, I've had another person - a stranger - gasp and say to me "Wow. That's really cheaply priced."

Honestly, you won't know if you've priced it right until you start selling. And reaction to your pieces and prices will change from venue to venue, show to show, and season to season.

You also need to factor in other costs: if you're listing online, how much is PayPal taking from you per sale (or Etsy or Ebay or wherever else you're listed)?

How much did you pay to rent a table at a show? How much do the other artists at the show charge for their pieces? Is anyone selling items similar to yours?

Perhaps I'll dive into those topics in another article. For now, I hope I've given you a starting point to contemplate.

Even with all this knowledge, I still hate and struggle with the pricing process. But I'm getting better at it, and I'm also finding more self confidence in it because I can justify every single price point if I wanted to. In reality, the only person you need to justify your prices to is yourself. And if you're like me, you are your toughest customer.