Pricing Your Products

Etsy held a workshop on the Art of Pricing with speakers Tara Gentile, writer, business coach

and Megan Auman,  a designer, maker, educator, and entrepreneur

Here are some of the key concepts from that workshop:

Tara Gentile http://www.taragentile.com/blog/)

• Many women have problems with money or talking about money – practice with a friend
• Learn how you can earn more by using sales
• Important to set goals for gross sales, any number from $5K to $500K, write it down – this number is up to you (there is no right number)
• Drop the starving artist routine and adopt the thriving artist routine
• Create your best work and understand the true value of your work.
• Match the right people with your work.
• Make more money as an artist than you could be doing anything else because of passion, talent, and strength
• People will find the money to buy what’s important to them – artist’s job is to find what’s important to those people.
• Make your customers richer – not only by money:
• Emotional wealth       
• Intellectual wealth
• Relational wealth
• Environmental wealth
• How did you feel when you bought something you were in love with? You felt richer on the other side of that transaction in some way
• Make selling your greatest experiment = can’t be perfect – everything is an experiment
• Use a prototype design or new technique incorporated into a piece to make it better and sell it.
• Use what you have and what you’re working on to sell more, create more of what customers really want.
• Be ambitious – create something fresh and innovative that furthers your greater vision.

Megan Auman http://designinganmba.com/

To calculate pricing:

• Start with profit - money that has a purpose beyond the day-to-day business and your life
• Profit is the money to grow the business
• Profit is the money to put in savings
• Profit is the money to spend and money to give
• Need to price so you’re profitable at the wholesale price point
• Profit allows you to make your purpose a reality
• Example: A pair of earrings
• Material cost = earrings $5
• Wholesale $60
• Retail $120 - $140

• People don’t buy based on formulas - Having a necklace that makes you feel like a rock star is a value
• People buy on perceived value, not formulas, but the right formulas can help us
• Profit + product cost = perceived value
• Profit + product cost = wholesale
• Profit and labor are NOT the same thing
• Product cost = materials + labor + overhead

• Retail price is for anyone buying your items on Etsy or at craft shows
• You are not a sweatshop – you need to charge at least $20-25 an hour
• Labor cost – hourly wage x how long

• Not every piece will have the same profit margin
• Don’t worry if you can NOT afford your jewelry
• Not every buyer is motivated by price

• The more value you can articulate through purpose, story, emotion, branding, the more people will pay
• Use price as a tool for perceived value – the sweet spot of your price
• Number of sales is NOT important – it’s the profit!
• Profit gives you the space to do your best work
• Make women feel more confident – grateful and not guilty about purchases.

• Think about “What’s my purpose?”
• Where do you want to go in 5 years for your business? Invest time and energy in figuring that out.
• Visit Artofpricingforprofit.com

In the Q&A, there was an interesting response to the question about offering discounts and coupons:

• Your pricing teaches people how to treat you – market positioning
• Discount offers and policy teach people that your stuff isn’t worth the price
• There’s nothing wrong with a coupon here or there – as long as it’s special, not the norm

Our teammate, Leah of magicbyleah created an inventory/pricing worksheet taking all of these items into consideration. You can request a copy and it'll be emailed to you. 

I’ve never thought of pricing in terms of profit, so I’ve raised my prices slightly. I'll have to get back to you on how it's working. 

What has your pricing experience been? 

Linda Blatchford

Jewelry Designer

www.lindab142.etsy.com