Recently this happened...
I'll be honest, this was a hard one to take. It was a strange few seconds of elation and excitement at having one of my products on a nothonthehighstreet sponsored link which was then instantly obliterated as soon as curiosity got the better of me and I clicked on the comments. I do try to read comments as I think that if someone's kindly taken the time to write something nice, i'd like to give a little of my own time back by liking and/or thanking them and on the other side if someone writes something not-so-nice, maybe I can learn from it? Treat it as constructive criticism and either act on it or move on.
These comments however were particularly hard hitting as a) they were the only ones b) let face it, they aren't nice to read and c) there is nothing I can do to improve on that, in fact it's worse now as the £160 was a sale price. What with me still being relatively new to the world of business and the cold hard truth that it brings with it, I'm afraid I can't say that this was like water off a ducks back. Of course i've heard it all before, I'm hand making products that cost up to £430 which often prompts a "how much!?" but generally I am happy to take it in my stride and explain to people "yes well, I hand make everything and it takes me days and the materials are beautiful and high quality so thats why it costs this amount" but this seemed to be a whole other beast. It felt like that moment in school where you catch your mean-girl-friends bitching about you behind your back - it's so hurtful and you should never have to hear what they are saying because you know its not the truth.
But the point of this post isn't for me to have a whinge, it's to highlight the two difficult sides of pricing, for both creator and customer. There's the business side where you have to figure out how much to charge for an item to make sure that you are earning minimum wage and still make a small profit to keep going, then there's the customer, who see's that price and generally doesn't get to see any of the work involved. They have to make a personal judgement on worth and value. There's no denying it - it's tricky for both parties.
There are so many incredible small businesses out there, creating things that the rest of us can't imagine. Each one has a person behind it slaving away, being administrator, manager, designer, maker, marketer, and sales rep to try and earn a living making beautiful, funny, inspiring products for us. But the question that always seems to crop up is pricing...
When you can buy a footstool made in china for £40 how on earth do I compete with that?
The answer is, I don't. There is no way I possibly could - the materials alone cost well over £40 then there's my time and all the other costs that need to be taken into account (so to speak). So what I do is calculate my own prices. I use good old fashioned mathematics to make sure I'm covering my costs and I don't look at what everyone else is doing. I know that there is a market of (fabulously stylish ;) ) people who will appreciate the quality and work that has gone into each of my products. I also know that there are people who won't understand it, and would rather buy a £40 one that has been made in china, and thats OK too (not for the poor people in the sweatshop but thats for another post, another day).
So the main question is - How are creative businesses supposed to calculate their pricing?
There are so many articles and calculators to help work it out. Endless blogpost, opinions and advice but for what it's worth, I will share my thoughts and method with you. I asked as many people as I possibly could before settling on my prices, I drilled answers and figures out of anyone with a business and am so relived I did, as it set me in good stead. The trouble with small businesses and in particular creative business where one person is designing and making products, is that it is so easy to undervalue yourself and your time. It's far more humble and British to think 'well, I don't need to be paid much for my time so i'll just cover the costs and that'll be more reasonable' the trouble with this is that if you start out this way, and then realise that you're not earning enough to keep the business afloat and pay the bills and have a bit of money left over to live off, you have to increase your prices which takes a whole lot more time and causes problems of it's own.
The way I calculate my prices is with a ridiculously complicated looking spreadsheet that I created to do all the maths for me. I input my time and costs for each item and it works out the total cost, It then considers all the other stuff - postage, packaging, commission etc. Next step is adding a small profit; I say profit but its more like a 'general business costs fund'. This is the bit that will go towards my tiny marketing budget, the deposit for shows and fairs, the display for shows and fairs, camera equipment, courses, my time for taking photo's, writing blog posts, and yes, sitting on social media to 'talk' to other human beings for a short while every day. So the word profit seems a bit unfair to me; it sounds as though I get to add a bit on so I can roll around in all my money when actually it gets spend almost instantly to keep my little knitting business going. But thats how it's calculated. I will admit sometimes I am horrified as I keep popping in small costs "Toggle 50p" and the RRP rockets up; I so want to sell £5 items so that everyone can have the option of buying something if they want to, but I do stand buy my pricing strategy. It pays me fairly for my time and it generally covers the other costs of my business and at the same time the margins are no where near elaborate, meaning I can sleep easy, knowing that i'm not fobbing anyone off.
With that in mind - What should the customer consider?
I believe that there are two main things a customer should consider and of course I include myself as a customer in this. This isn't intended as a rant or a shaming exercise it's more general opinions and observations...
The first is how we, as customer value the products. I will admit, I have done it before "how much? for that? I could make it myself" Shameful I know! Clearly I wasn't considering everything else that comes with it. You aren't just buying a picture or a mug or a purse, you are supporting a business that has bills, staff and expenses as well as a person who has vision, skill and a mortgage. I believe in supporting independent businesses, but by that I don't mean buying things for the sake of it because, I have neither the inclination or the money to do so. What I really mean is, when I come across something I like that is handmade, instead of thinking "I could find it cheaper elsewhere" I think about the person who made it and what they are up against and most importantly what that sale will mean to them as opposed to what it would mean to John Lewis. I think about the quality, skill and love that went into one item and I value that over the machines that could process it for cheaper. - And on a side note yes, maybe I could make it myself but the question is - should I?! And the answer is a resounding no (...obviously) Why steal someone else's design, why go to the trouble of figuring it all out yourself when some kind person has done it for you and you could just pay them for that hard work that you appreciate and enjoy?
The second consideration is how we value the feelings of the human being behind the product. Everybody who creates something is putting a little bit of their heart and soul into it; this may sound a bit extreme if you aren't a crafter or maker but it genuinely is how every artisan feels. They have taken the time to consider, design, practice and perfect an item, it is made up comepletely by aspects of their imaginations and talent, then shown to the world (Whether that be via a table at a fair or a post on Facebook.) It is gifted to the world for their approval and opinions and the maker sits quietly and waits for a verdict, praying it'll meet the approval of their peers and followers. In this business you need thick skin, you can never please everyone. I just can't happen; we all have different taste and that's a wonderful thing. Of course we are entitled to our opinions but as customers, but lets try to be kind and remember that despite the thick skin, it can still be hurtful because it's so easy to take it personally as each product is practically an extension of it maker.
As a customer lets place value on the products that are hand made and created with adoration and lets respect those items that aren't to our taste and remember that they too have been made with skill and love and other people will appreciate them. If we don't understand the pricing because it seems high, why not ask questions about the products and what goes into making one. Prices generally aren't plucked out of thin air, there will normally be a reason something is particularly deer ....or cheap!
But it's a two way street , so on the other hand - what should the creative business consider?
In business as in life It is so easy to sit there feeling sorry for yourself when you get negative comments. They may be about price or design and as a business, you probably feel misunderstood and undervalued . Where is the line of professionalism drawn? Is it OK to comment back and explain or is that rude and unprofessional? Is it best to just accept it and move on? It's so hard to know and of course each case will be different. In general, I believe the best thing to do is to try and explain from the beginning, Without saying 'this product is expensive because X, Y & Z' but to demonstrate in a less obvious way, all the wonderful benefits of this particular item whether that be a unique quality, the fact each one takes days to make due to its intricate hand stitched finish. We as businesses need to share with our audience why something is special, why its worth a slightly higher price tag, and why it is important to shop independent. If a customer has no experience of running a small business why should they be expected to understand?
I also think its important to be honest. On a very regular basis I get asked where I buy my wool from; this is a question that never fails to surprise me as after all, you wouldn't ask The White Company where they get there scrumptious bedding made, so you can go to their supplier and buy it yourself. It's funny how large corporations seem to gain more respect for their pricing than small independent businesses. When I get asked this question I reply with the honest answer - I see no point in making a fluffy excuse, instead I aim to give a respectful answer that calls for equal respect in return.
My answer goes something like this " Dear So-and-so, I buy my wool in vast quantities from a British mill. I knit it up on gigantic needles that I have specially made, then I hand process each piece, which takes a very long time but is vital as it makes it more durable. Simply knitting and leaving it would result in a poor and messy finish. I'm afraid I don't share any other details about my suppliers or process, as I get asked on such a regular basis I would be putting myself out of business and after all, I am trying to earn a living doing this. I hope you understand, best wishes, Lauren" I try to demonstrate that a lot more has gone into it than simply buying the wool and knitting it.
I imagine that there will always be people who want to know, which I completely understand. After all, I'm a knitter and if i'd seen someone else doing this I probably would have been desperate to give it a go myself. I honestly believe people don't mean any harm its just their curiosity taking over. They probably don't realise that it may be a bit hurtful or even insulting and as ever it goes back to the price - if you can knit why would you spend £200 for someone else to knit it when you could make it for less? Rachael Rowe from Grace and Favour Home put it perfectly to me the other day when she said " The thing is, anyone can make anything for the cost of the materials, but that isn't the point". It took me time to develop a method that works and source my materials and work out my patterns and all of that is reflected in the price.
I will admit, this is something that occasionally gets me down and I think 'why don't people understand?' but as the business, I should try to make it easier for people to see why it's important. If we never explain the pro's then why should we expect the customer to see them? Of course there are customers who automatically appreciate the difference and will shop independent 9 times out of 10 but instead of feeling sorry for ourselves when people question "how much?!" lets say "This much, BECAUSE ..." I hope that my candid answer to peoples questions draws attention to the fact that my products are special and shows that I respect myself and my business enough to not just hand out advice on 'how you can make it yourself' hopefully without it coming across being snooty or selfish or small minded. I need to see it as my responsibility to demonstrate the points that I think are important rather than just expecting others to know.
So What's in a price?
For me, getting pricing right isn't just a matter of picking the right number - It's about the value of each piece. It's about sharing that value with the right audience and showing them why its worth it. I have been so lucky to have wonderful customers who automatically appreciate the value of my work and I am so grateful. I would also like to think that by sharing some of what goes into each piece I could help others who question it to understand. I know I will never escape the 'HOW MUCH?" questions and that really is fine, not everyone will want to pay the prices I set. £200 for a footstool is undoubtably not in everyone's budget but when someone tells me that they like my work and they show that they value it even if they can't afford it... well, it just makes my day. That is what's important to me.
As ever thanks for reading! For updates on new blog posts pop your email address in the box below.