In:Business matters

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I’ve been giving advice this week on pricing handmade items for selling. Not on purpose, just because it’s cropped up a couple of times. Working in a shop where people sell handmade items means it’s something which is bound to come up.

When I started selling handmade items, advice was thin on the ground. I tried reading some things online, but never really had someone to talk to in person. I also didn’t realise that my lack of knowledge was holding back my business, because people were bitching about me not being able to price properly behind my back, instead of just telling me what I was doing wrong, and I was missing opportunities.

This is why when I now see people underpricing their work, I tell them, and hopefully not in a patronising way, but because underpricing is undervaluing your own skill. To me, it’s not a big deal to say to someone their items are too cheap, and to help them work out the real price. It shouldn’t be a mystery, or a closely guarded secret! There are some things I’ve learned that I won’t share, due to the amount of time it took to research or learn, but pricing correctly isn’t one. Everyone pricing correctly helps EVERYONE, not just you – it helps the shops you sell in, other crafters and yourself. There can be bitchiness and backstabbing in the handmade community – undercutting your colleagues doesn’t go unnoticed, and people talk.

There are certain things which crop up every time I advise people on their prices – so to help you all out, here are the things I most often have to say to people.

1. I don’t think people will pay that

Number one on the list, and for good reason. You should never second guess your customer – you’re already making a leap guessing what they might want to buy in the first place, don’t try to guess their budget as well.

You should always work out how much you should charge, and then charge it. If no one buys it, try another outlet. Only after a few months, and/or a few different selling opportunities can you rightfully say, ‘this isn’t going to sell at this price, I need to put it on sale’.

2. I worked out how much I should charge and it was a ridiculous price, so I made it lower

Firstly, well done for working out the price! That’s one hurdle over.  However, charging a lower price means working out how much to charge was a waste of your time. I’m not trying to mean, I’m trying to make you value your time.

3.  I made it ages ago so I just want it out of the house

This came up yesterday – someone I know brought something into a shop near mine, and had marked it at far too low a price. I asked her why, and she said, ‘oh I made it ages ago’. My answer was, and always will be that that doesn’t matter.

If you’re taking something to a new stockist, their customer base don’t know you made it ages ago, or are sick of the sight of it. It might be the first thing they’ve ever seen of yours, they’ll fall in love with it… but then they have a fixed vision of what your prices are, and you’ve shot yourself in the foot. You can’t then explain to them that you made it ages ago, and your newer items are more expensive – to them, it was NEW and that’s how your items are priced.

I can sympathise with this in one instance – if you don’t have much storage space, you might be tempted to reduce your items to clearance prices too soon just because you’re running out of space. If this is happening to you, then try offering your items at lower than wholesale prices to your regular successful ‘sale or return’ stockists – they might jump at the chance to have your items in their shop at a higher mark-up.

4. My friend says this is the price they would pay

Asking friends how much they’d pay is a good idea – as long as you also work it out properly. Also, if you ask ten friends how much they’d pay, don’t just go for the lowest price. It’s a good idea to go somewhere in the middle as long as this is still the price you should be charging (or thereabouts). For example,  if you work out you should be charging £10, and your friends suggest prices ranging from £5 to £15, then the middle price of £10 is perfect – however, if your friends suggest £5-£10, then go for £10, don’t go down to £7.50.

5. I feel like I’m ripping people off if I charge more

A contentious issue, but think about it – if you get a tradesman fixing something in your house, you pay him, because that’s what he charges, and that’s what he’s worth. He doesn’t think, ‘hmm am I worth that though? She might be expecting to pay less.’ He gives you the quote, and you say yes or no.

This is exactly what you are doing by putting a price on your item.

You are saying ‘this is how much this costs’, and then the customer can say yes or no. You don’t have to justify it in any way – he isn’t telling you how much it costs him to keep his tools serviced and his certificates in order, so why do you start telling people why your item is cost as it is? Sure, tell people it’s a one-off, there’s only 5 ever made, or whatever makes that item SPECIAL, but you don’t have to tell them how much it costs you to hire a table at the craft fair you’re selling at to justify the price (I’ve actually overheard this happening).

6. It didn’t take me that long to make

Good for you – that’s probably because you’ve practised a lot, and been doing it a long time. Did you get paid for all that practice? No? Well now is when you DO. If I was to make a dress it would take me at least a couple of days, because I’m not very good at sewing – I’m happy to pay someone I know £20 an hour to do it for me, cause I know it won’t take her much longer than two hours, and they know what they’re doing.

(NB I know most dresses take longer than two hours to make and dressmakers should be paid more – I am not intending to undervalue dressmakers! This is a very particular situation I am in with a friend.)

7. I just enjoy making it, I don’t care how much I get for it

That’s excellent, you have a hobby which people want to buy from you. However, if there are people who make a living doing what you do as a hobby, please charge the same as they do. I know that sounds mean, I really know it does, and I can’t think of a good metaphor.

Let’s say, for argument’s sake, that you have a friend who is a hairdresser, and you’ve decided to take up as a hobby cutting hair. You keep your regular job, but on the side you cut hair, and you charge less than your hairdresser friend. It doesn’t matter because it’s your hobby, you enjoy it, and anything you get is good enough – but your friend who does it for a living is being put out of work by your hobby because she has to charge less as the value of hairdressing becomes diluted by people doing it at home. She has paid for training to do what she does, and years of practice to be as good as she is, but people will still question why she charges what she does when you are charging less. She also hasn’t got another income to supplement her hairdressing, this is her whole career.

This may sound extreme, and as I say, I couldn’t think of a decent metaphor. However, I will use scrabble tile necklaces as an example, as I don’t make them any more, and this never happened. I use to charge £10, as I’d worked out this was the price they needed to be – if someone then came along, who made them as a hobby, and sold them for £6, it would impact on my sales. The price would still cover their costs (I would be wholesaling them at £5 after all, so I have to know my costs are covered at that price) so they think they’re being fair, but as mine are £10, people wonder why I seem to be ripping them off.

Which brings us to…

8. *person A* sells it for £x

You shouldn’t use someone else’s price as comparison, unless you’re selling like for like at the same price. You should never think ‘I’m not as good as person A so I need to sell it for less’. If it is the same thing, you must sell it at the same price.I learnt this the hard way – I made an item at the start of my selling life, and sold them for £2, because I thought this was the right price. I found out someone else was selling the same thing for £5, and instead of thinking I should put the price up, I thought, ‘but I’m not as good as them, I should keep the price where it is’. The person who made this same item found out, and thought I was undercutting them on purpose, when I was actually thinking they were better than me. I was undervaluing myself, but hurting someone who I respected in the process.

I shouldn’t have to say this, but I feel I should – You should never sell it at £2 on purpose because person A sells it at £5 and you want to steal their customers.

9. It’s OK for you, people will pay more for one of your items

I find it hard to believe that anyone thinks I can charge more simply because I made it, but I have had someone say this to me. All I can say is this – a name can carry weight when pricing something, otherwise designer clothes wouldn’t exist, but there aren’t many crafters who can charge more just because they’ve made it. BELIEVE ME.

10. The materials were just hanging around

Therefore the material cost is nothing, and making your price far too low? WRONG! The material cost is not how much the material cost you this time – it’s how much it will cost you to replace it.

So if you make, for example, a cushion from a piece of fabric someone gave you, it doesn’t mean you don’t add in the cost of the fabric – it means you add in the cost of replacing that fabric. This is hard to get your head round, but I have learnt this from pricing making stock out of donated and recycled items. For example, I might get given a lot of books by someone for nothing to make vases out of, but I always factor in the cost of having to buy a book – usually it’s just as if I bought a cheap one from a charity shop for a quid – but you can see the parallel I hope. Just because that fabric was hanging around, you can’t charge £5 less for a cushion, or next time your customer will wonder why this cushion is £5 more expensive than the last one.

So what do you all think? I know how difficult it is to value yourself, and how much easier it is to see someone else’s stock and see that they’re undervaluing themselves, so maybe if we all watch out for each other, and make each other feel good we can create an even nicer handmade/crafting family.

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