Pricing strategies for fine crafts differs from low-end craft items. This report will show you how to use pricing in specific circumstances to increase your market share. The situations where prices can change include where you sell your work, the time of year, amount of competition, and the newness of your product.
In many cases, you can use pricing to boost your sales. But the only way to really know what works is to test your prices and see what happens.
You can charge more for your work in areas where the economy is good or growing. On the other hand, if people are out of work, craft items will be an unlikely attraction. You have to go where the money is.
If your local area is financially depressed, this may mean traveling to shows in other states where jobs and disposable income are plentiful. Another solution is to place your work in shops, galleries, and craft malls in other areas around the country. You should also stay informed of trends in tourism so you can follow the money trail to states where craft sales are booming.
One way of getting a good picture of economies in states or areas you are considering selling to is by contacting your local SBA – Small Business Administration office or SBDC – Small Business Development Center.
Many offices will have on hand a copy of Small Business Profiles, an annual compilation of the latest economic and small business information for all states in the country. Click here to locate an SBDC near you, or call or write the lead center for your state.
Position your crafts in markets where customers arrive with a set of perceived values and price expectations already in their minds. For instance, display your goods at one of the better, juried fine crafts show.
Customers at these shows are willing and even expect to pay more than they would for mass produced items.
Another example is getting your work featured in galleries along side high priced items. Mail order catalogs that features quality crafts like those mentioned above are another place where customers have expectations of a higher price range.
As you may have already found, different kinds of craft shows attract different groups of shoppers with whole different sets of preconceived notions about what they are looking for and how much they will spend.
Price your craft items at different amounts according to the market you are selling through. For instance, you would establish separate price schedules for craft show customers, stores or galleries, and catalog companies.
Within each market, however, you should keep your prices consistent. That is, charge one store the same prices as all stores. Don’t make frequent changes as it confuses customers.
Some types of crafts have seasonal sales swings. Clothing and accessories are examples. Christmas ornaments are another. If your work is susceptible to seasonal sales, look for additional items to sell at those seasons when your other sales fall off rather than marking down prices to move inventory.
Also look at markets like craft fairs or craft malls in geographical locations that might be more profitable for your seasonal work at other times of the year. For instance, during the winter, many people travel to Arizona and Florida for the season. Place your winter items in shops in these states during the cold months. During the summer months, these same winter pieces may sell in stores in the northern states.
New products pricing
When a product is new to the marketplace and you have been the fortunate one to introduce it, you can help recover your initial investment quickly by setting the price artificially high.
Demand for the item will be driven by its benefits, features, and newness. Price is not near as important in the buying decision of new products as it is with familiar ones.
When you come out with a new item and there is little competition, pricing can be based on maximum profit. You are selling to customers who are willing to own this product because of its unique features. This makes the new product a premium.
When more crafters are making similar pieces, the customer has many choices. When this happens, competition for customers will hinge on price or service value. If the product is familiar, not new, and requires little or no education, the price of the item will be more important to your customer than the service value.
If a craft item is new and requires consumer education, than customer service will be more important than price.
If you find items like yours in abundance at other crafters’ booths, the best thing to do is to attempt to improve your work, make it stand out, or give service so that customers can clearly and effortlessly see the benefits of your product over the other crafters’ products. Another strategy would be to improve your reputation or image with brochures, tags, and other promotional packaging.
Loss leader pricing for crafts
You may attract additional customers by pricing some of your pieces at cost or lower. Though you may actually lose money on a few pieces, this tactic can be used to bring in buyers for more profitable items.
Say you advertise a packet of dried herbs and flowers for $2 a pound. These packets are displayed with your new line of handmade collector vases priced at $49, which is what you really want your customer to buy.
Loss-leader pricing is especially effective in mail order sales when you are introducing a new product to your existing customers. In general though, mail order sales are often unprofitable unless the item you are selling is priced at least $25.
Is the price too low?
You might think an item isn’t selling because it’s overpriced. There is a tendency among new artisans to mark down their products in an attempt to help the situation. However, this usually fails to produce the desired result.
Unless you have tried and failed to move a piece for several months at a given price, you make a mistake in lowering the price thinking it will sell better. Most new entrepreneurs believe this is true because we all grew up under the influence of mass marketing.
The pricing concepts behind mass marketing, though, is inappropriate for the people who buy handmade crafts. If your craft products are perceived as valuable to the shopper, you will probably find they are just as willing to pay $25 for a handmade item as they would pay $20.
I have often found that a piece sold faster by raising the price, than by lowering it. This is because of the element of perceived value. Sometimes the customer sees ‘cheap’ on a lower price tag and rejects the work as inferior. Read more about pricing strategies in How to Price Crafts and Things You Make to Sell.