Saturday, July 14, 2012

The Business Chat - Charge what you are worth

One day you’re walking down a street and you see 2 hair salons, side by side. You need a haircut so you wander over.

The salons look identical, the only difference between them that you can see are the signs in the window. The first salon has a nicely framed sign in beautiful calligraphy saying “Haircuts $45”.  The second has a piece of construction paper with wonky handwriting saying “Haircuts $5”.  

Which salon do you think will get more business?  

Absolutely no question, the $45 haircut will attract more customers. A $5 haircut just seems too cheap to be any good. If I saw these signs, my first instinct is “what’s wrong with it?” followed by a sense of mistrust. The $45 haircut is consistent with what I know to be fair market pricing of other salons so I equate the salon with the better salons that I know of.

Your work is like this. If you price yourself too low then customers will automatically wonder what is wrong with it. Or maybe they will think that you didn’t really make it, that you are importing from a third world country. If you have a hand knitted sweater that you are selling for $45 a customer is going to realize that you are working for $2/hour. Nobody respects someone who is willing to work for so little.

You have a skill. You have talent.

You have spent time and money acquiring these skills. You deserve to be paid for your skills.
The reason people are buying your work is because of your talents. You can do something that they cannot. Think of the hairdressers in our mythical salons. She has spent a lot of time learning how to cut hair beautifully, of course she is going to charge for her skills. And people will pay it because they cannot cut hair themselves. You don’t begrudge her for making a decent amount for her skills.

So why do so many artists belittle their own value by underpricing their work?

I’ve heard all sorts of reasons for justifying ridiculously low prices.

“Oh, but I’m self-taught, I can’t charge more”. Yeah? Van Gogh was self-taught.

“Everyone around me is charging the same”. Don’t be a lemming, even worse, don’t be a broke lemming. If everyone around you is underpricing their work then everyone else will be disappearing from the marketplace very soon. Rise above it.

“But I really need the money”.  Charging too little and paying yourself $2 an hour is not going to get you out of any financial hole. If you’re truly desperate pick up a job making lattes and then do your artistic work on the side. Remember, we are selling a bit of our fantastic artsy lives when we sell our work. Desperation is not a story a customer wants to buy.

“Well I bought my supplies years ago when they were really cheap.” Does your customer know when you bought them? And what happens if your design is really popular, you sell out and have to buy more supplies at current prices that are 4 times higher? Your prices will either rise and customers won’t understand, or you will have to swallow the difference and lose money. Base your prices on current rates and consider yourself smart for stockpiling cheap supplies. After all, if you hadn’t bought those cheap supplies you would have had money in the bank earning interest for all those years.

“I’m just starting out, I’ll charge more when I’m established”. Uh no. If you aren’t paying yourself properly then you won’t be around long enough to get established. And if you do manage it then your brand will already be tainted with the scent of being bargain basement.

Let me say this again. What you do requires skill and talent. You have those. You have invested time and energy in developing these. Customers are buying your work because they believe in you. Believe in yourself and charge what you’re worth.

It’s an important step to success.

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