Monday, December 20, 2010
Day 5 - The Pain of Pricing your Items
Pricing can be a very tricky area to address when listing your items. On Day 5 of this challenge, we will go over a few methods that other sellers use to come up with a price for their products.
If I had to summarize everything we will discuss about pricing on this post, I would just advice you to 'go with the price that makes you feel the most comfortable about your whole creating/selling process'.
By 'comfortable' I mean:
- You think of the price for a specific product and you know you have included the costs of all your supplies, including silly ones such as 'tape', 'labels' etc. in it as well as Etsy, Paypal fees.
- You feel the price is fair for the amount of hours you spent creating your product AND the quality of it. ($30 for a mug that you spent 2 hrs working on but ended up with a broken handle is not fair, IMO)
- You know that the final price of your item leaves some room to cover unexpected expenses.
(Perhaps you miscalculated the shipping rates or your packaging supplies)
- You have considered the possibility of selling your items at wholesale price and you are ok with making this same item in large quantities for at least 50% off your MSRP. (This one is optional of course, some sellers might not care about wholesale orders at all)
- You are able to have 'sales, special promotions, discount codes' and still make profit on your items.
- You have researched the competition and your price is well within range.
What can you do if your 'comfortable' price is not competitive?
The easiest answer to this is: Focus on your supplies! Lower your production cost/time.
It is a very do-able task and if this is where you are failing, then you need to spend some time researching all the possibilities out there.
Supplies can get very expensive if you buy them directly from a craft store at their regular prices. I often find myself having to turn to them because I can choose my materials in person or just because they are conveniently located in my neighborhood. However, I do have a rule and that is to never buy anything at their regular price. If things are not on sale, then I don't get them.
Why? Because I already know I'm wasting a lot of money by buying from them in the first place.
Buying materials in bulk quantities and from wholesale suppliers would keep your expenses really low and allow you to make money while keeping the final price highly competitive.
Get creative and be selective.
If you are currently buying supplies from a US retailer but the materials themselves are made in China, then don't kid yourself and just get in touch with the Chinese company and buy from them directly. (Yes, it could take up to a week to get the items, but trust me, you'll be saving a lot of money there).
There are so many suppliers all around the world, that finding one you can establish a solid business relationship with will not be extremely difficult.
Think Global and remember that your materials may come from anywhere in the world.
"All my materials are handmade"
If this is the case, then I believe you are part of a very special group of sellers who will most likely end up pricing items somewhat high. And that's absolutely fine!.
In this particular scenario, your efforts should probably be directed towards marketing your item better and making buyers aware that your price can not be compared to an item that was made using mass-produced supplies.
If you educate your buyer and emphasize the virtues of your product, I don't see why you would need to worry about sellers with low priced items.
Could you perhaps reuse things you already have around the house?
If your product allows, you should also consider recycling, upcycling, freecycling.
Have you looked under the "free stuff" section on Craigslist lately? I know I've used it to give away things that were brand new and completely usable.
If you are unsure about picking up items from other people, get in touch with a freecycling person in your area. I know a couple of ladies in my town who do this everyday and you can literally email them and ask them "Hey, do you have free wood available?" and they will be more than glad to let you know and even bring it to you if you'll be trading it for other things you might have around the house that they might be looking for.
Here is a link to the freecycle network website in case you want to look into this some more.
Supplies cost is low but production time is very high
In my opinion, this is one of the easiest problems to address. If you are spending way too much time creating a product and it is affecting your ability to compete with other sellers, then you need to investigate and identify what they are doing differently.
Is it perhaps that you have not yet mastered your skills?
If that's the case, the go to YouTube, look up tutorials and learn from others. Each artist has a specific way of doing things and yours might not be the most effective.
Sign up for classes if you have to, read books, ask for help in the Etsy forums, etc.
Here are some of the tools you can use online that would help you calculate your Etsy prices.
Etsy Fee Calculator : http://www.rolbe.com/etsy.htm
Reverse Etsy Fee Calculator: http://www.gregledet.net/efcm.html
Here is a good one that was posted on the Etsy forums by another seller (BabyBundleBoutique)
Lastly, here are some good Storque Articles from the "Art of Pricing" series.
The Art of Pricing: Three Helpful Exercises:
The Art of Pricing: Understanding your Costs:
Today, I would like you to grab a piece of paper, calculate your costs, leave room for unexpected expenses, get a feel of your final price by researching the competition and deciding on a pricing range that you believe might be accurate and appropriate for you.
Once you are done with this, list at least three different items that you could test your pricing numbers with. Whenever they sell, think about the time they were listed for, the amount of views, hearts they got and based on all this, choose the final price that makes you happy.
Posted by Earthy Habitat at 7:36 AM