Saturday, August 28, 2010

The Business Chat - The price is firm

"How much is this bracelet?" asks the customer.
"Well, ummm.... it's.... um.... $95?" replies the maker. Her shoulders are hunched, she's squirming and her voice lifts at the end of her reply as if she's asking a question.
At this point our eagle-eyed customer has spotted an opportunity.
"I'll give you $50".
"Um... OK."

The maker now turns to her neighbour and bitterly complains that on one appreciates her work, it's so hard to sell and everyone is always trying to bargain.
Sound familiar?
I see this all the time, especially among those new to selling. With an attitude like this our maker will be out of the game very quickly. The problem is that she does not value her work.
As a maker, if you don't value your work and your pricing, why would a customer?
Back to our maker. The cost of raw materials for her bracelet is $20. Using the jewelry pricing formula she learnt in her Start Your Own Jewelry Business book her bracelet has a retail price of $95.
"But I can't charge that!" she sighs. "It only cost me $20 to make. People will know and feel ripped off."
First, people don't know what things cost. Second, a bracelet is more than the cost of the raw materials. It is time and energy. It is the sourcing of good quality wholesale materials, it is the design time and the labour to make it. Most of all it is magic. Just because you can wire-wrap and string well doesn't mean that a customer can. What seems simple to you is a complicated and foreign process to a customer. What you see is a pile of raw materials, what they see is a story, a piece of your soul, a piece of magic. Your magic is worth $95.
Pricing a piece of your work properly (and sticking to the price) guarantees that not only are you covering the cost of making a piece, you are paying the cost of labour, your overhead and making a small profit. This is called running a business. Constantly devaluing your work by thinking "I can't charge that much" is a defeatist attitude guaranteed to kill your business.
Get over it.
See the value in your work and stand tall.
When someone says "I'll give you half" try putting on your employee hat for a minute. You are standing in the booth as an employee of a company. Forget that it's your company and you are the only employee. The company policy is to remain firm on the price. Your boss would not be happy if you gave away the profits. What if it you were selling in someone else's booth? Would you drop the prices? No? Well why would you drop yours?
"I'll give you $50," says our bargain hunting customer to the maker.
She straightens her spine, squares her shoulders, looks the customer directly in the eye and with a pleasant smile states that the price is $95.
"But that's too expensive!"
This is the opportunity to explain a bit about the bracelet. What is it made of? Where did the inspiration come from? What's the story behind the piece? Show the customer the value of the work.
It is important to remember that you can't please everyone. No matter what there will always be people who think your work is too expensive. Sometimes it's tempting to snap a sarcastic remark about the location of the nearest Wal-Mart however it is best to rise above it and smile nicely. A line that's always worked nicely for me is "well, my work isn't for everyone".

Before you go to a show, or sell a piece online, know in advance what the price is. Know why it is that price. Tell yourself the story behind your work so that you can tell your customers. Most importantly, stand firm. You and your work are worth it.

1 comment:

Anonymous said...

Three cheers for that pep talk! Thank you, thank you, thank you.

Gawd, I needed that!