A reader e-mailed me last week with a question about pricing. After a few back-and-forths, she said something that made me laugh out loud.
Let me backtrack to pricing. And let me refer you to the experts on it.
There are several formulas for pricing out there. The simplest and least effective is to multiply your cost of materials used by some number, ranging from 2 to 5. These are simple and easy to use, but their downfall is their very simplicity.
The more complicated formulas take into account such factors as your design time, your labor, your overhead, your materials cost, your packaging and your marketing costs.
It's important to include labor because someday your business may grow so much, you need to pay someone ELSE to do part of what you do now. If you haven't factored in labor costs, you will be in deep doo-doo.
Same with overhead. This is the cost of running your studio. Most professional craftspeople include this in their pricing.
Marketing may seem like a silly component to work with when you are just starting out.
But marketing includes the cost of photography (for jury slides, advertising, press kits.) It includes your promotional materials (such as hangtags, brochures, business cards, postcards, etc.)
And it can also include the cut you would pay to a sales rep, a person who goes from store to store selling your work FOR you. You must include the cost of paying this person for their services in your pricing.
If you do shows, you must factor in the actual cost of doing a show--your travel expenses, the time away from your studio (and away from production time), the cost of your booth, etc.
Yes, marketing is an important component to consider in pricing.
One of the best articles on pricing I've ever read can be found here: http://www.jiverson.com/features_folder/facqs.html This is an inactive site, developed several years ago by John Iverson. John is a former craftsperson who sold his business and began a small consulting business on professional development skills for artists.
He may have retired from that, too--I haven't heard of him for awhile now. But he left his site up as a valuable resource for artists. As you can see, he has several FAQs for pricing. All of them are thoughtful and elegant.
Thomas Mann, the original designer of "techno-romantic" collage jewelry, has a good pricing formula, too. You can order his workshop materials at http://www.thomasmann.com/explore.cfm?mc=1002&s=1010 or get information about his workshop. Or you can read his pricing formula in Wendy Rosen's book CRAFTING AS A BUSINESS. You can see Wendy's book here: http://www.amazon.com/gp/product/0806985534
So what was the original advice I gave on pricing?
The reader had raised prices on her product earlier this year and felt it was a mistake. What should she do?
I've done the same thing. A few years ago, I realized I was underpricing my work. I raised my prices substantially--just before 9/11 and the dot.com crash. I was stuck with higher prices in a dead market.
I asked myself the same question: Now what??
One thing you should NEVER do is lower your prices. The people who bought from you before will feel cheated. They already invested in you and your work, and now you're telling them their investment is not worth what they paid for it. The people who would buy from you now will think you have no idea what your work is worth.
There are a few strategies you can try if you find yourself stranded above the high-tide mark in pricing.
You can develop NEW products to sell for less. Now you have a good range of products in different price ranges. And you still have a product that sells for your original price of $X.
And you can justify the higher prices with added value.
There are many ways to add value to your work. One way to make the work bigger. Sometimes a larger piece only costs a little bit more in materials and time, but the size justifies the price.
Or you could make the work better. Use nicer materials. Add better techniques.
Another way to add value is to build your reputation, through achievement or publicity. Or get into better shows, so your stature as an artist increases. Your name is better known, and your work will command increasingly higher prices.
You can add value by making your work more distinctive. You use signature touches and aesthetics so unique that people look at it and can declare, "I see you have a Luann Udell." I remember the first time a repeat customer shared such an anecdote with me. It was wonderful!
And last, you can add value by making your work more powerful. As your work gets stronger and better, of course it will get more expensive.
So what where the sentences that made me laugh out loud? It was this passage:
"It seems either I make more trouble for myself all the time by making things that are just too different or it simply wasn't meant to be. I'm not sure yet. A different product needs a different path which may be more difficult."
Why?
Because I realized, in a nutshell, that these two sentences are the foundation of my entire blog.
Almost everything I write is trying to determine which of the two phrases in the first sentence is true--Am I making art that is worthwhile and worth fighting for? Or am I totally out in right field with artwork that nobody wants?
And everything I share with you I've learned on the way comes from the last sentence.
Yes, when you make something different, it's hard to figure out where to go with it.
But, as I always say, if it were easy, everyone would be doing it.
And it IS difficult. But not impossible.
So there it is, the heart and soul of my blog. I don't have this artistic life completely figured out yet. And it's really hard.
But in the end, it's as simple as this:
I'd rather fight for the art I believe in, than be on Easy Street with something that's mediocre.
