You Want How Much For That?

The Art of Pricing: It's Capitalism Baby!

One of the biggest controversies in the handmade community is, Pricing. There are many reasons this issue is a sticking point for people. We want to make sales, so we want the price to be affordable to our target audience, but we also don't want to under price ourselves for fear of looking cheap. Then there's the most annoying factor, other sellers opinions!

Look, you have every right to price your goods any way you want. This is capitalism, supply and demand, a free market system that allows the consumer to regulate the pricing of goods. I know that as handmade artisans, we feel a sense of community, but that does not mean we need to resort to price fixing just to suit other sellers pricing needs. I know that this is contrary to many other peoples opinions on the subject so feel free to ignore my opinion if you so choose.

When I first started selling tatted jewelry it was woefully under priced. I had no base for comparison as I was the only tatter on Etsy at the time. Eventually I came up with price points that I could live with. I certainly can't wholesale at my prices, but I don't intend to wholesale, so that's a moot point. I used to worry about new folks selling tatted pieces at really low prices, but I realize that the average consumer is not a idiot. They can see the difference in quality, even online and the cheap goods are not really competition for me. The consumer who prefers a $3 tatted doily is never going to buy a $75 tatted scarf and the person who buys my scarf probably thinks that the $3 doily is poor of quality not a great deal.

Here's an example. Widget makers, company A and company B make a comparable product in both function and quality. If A lower their price, B must either lower their price or increase the quality of their product to compete. However, company Z who makes a similar product much cheaper in quality and price is not competition to A or B, because they do not actually share a consumer base. Company Z's customer will never spend the extra money to get a better product, only price determines their purchases. A and B don't pay attention to what Z does because they can't compete with that and continue to make a high quality product, nor should they. They must market themselves to a different demographic and continue making a product high enough in quality to warrant the price they charge.

So if you make high quality baby bibs for $16 a pop, you are not going to get a Dollar store customer to buy them. You do not share a customer base with the Dollar store, so don't complain about their product pricing. Perhaps you should worry more about marketing to your consumer base and less time trying to undermine other peoples business strategies or lack thereof. Etsy is not a co op and although we love to help each other out, we are individuals in a free market system. Not too long ago, I read someones post suggesting that we put a basement price on goods. I was actually shocked, I mean how would we feel if all industries adopted these kinds of strategies. Milk can't cost less than $3, a car can't cost less that $10,000, a pair of earrings can't cost less than $7. Ridiculous. If you can't sell your bibs at $16, the problem does not lie with the Dollar store, it lies with you. Either the price is higher than the market can support or you are simply not advertising to right demographic.

Here's a pricing strategy for you, take your costs, fees, materials, etc., add to that minimum hourly wage or give yourself a bit of a raise, then add $1 and that's your price. If you never plan to wholesale that's all you need to charge. Everything else is optional. My material costs are extremely minimal so my costs are basically labor, so it comes does to how much I feel my time is worth. I would never charge less than it cost to make something and neither should anyone else, but if you make just $1 on your item, you don't have to answer to anyone else. You are not hurting everyone else with your prices. Conversely if you want to make $20 on that same item, you can't complain about the $1 person, you need to make your product worth the extra $20 and market to the audience that pays for quality.

I know that this issue is not going away any time soon, but I think that people need to get some perspective. This is capitalism whether you like it or not!