Overpriced Handmade Items – Says Who?
Are people telling you your items are overpriced? You will probably brush off their comments if you have been selling for a while, but they may get to you if you have yet to make a sale. Before you go changing your prices, here are some things to think about.
It depends on what you sell – Some items are more likely to be considered overpriced than others. Are you making artwork or t-shirts? There will probably be more leeway with the pricing of the artwork. Sometimes the market will have a general idea of what certain types of items are worth.
Off the top of your head, what do t-shirts normally sell for? Maybe $20 to $25 depending on what they are and where you get them. It is safe to say that asking $100 is usually out of the question.
Coming up with a value for artwork on the other hand is much more difficult. Something could be worth $20 or it could be $1.5 million. It depends on who did it and many other variables.
Do normal pricing strategies always apply? – Prices are usually based off of time spent and expenses incurred. In some cases the market may cap what your specific item is worth. For some items there is only so much that someone will pay, regardless of how many hours were spent making it. This can be for a variety of reasons, but ultimately you will need to sell your pieces in this price range if you expect to get sales.
The general rules of figuring your time and expenses will still apply, but you will have to make the numbers work within a fixed selling price point. In order to keep your profit margin you will need to come up with more efficient, quicker ways to make the item and will have to get better deals on the materials.
From the art and t-shirt example: With the art, your hours spent creating it dictate the selling price and with the t-shirts, the selling price will dictate how much time you should be spending on each shirt.
What can your items be compared to? – Two items may not be comparable in person, but customers do have to go primarily by photos when purchasing online. You really have to have descriptions and photos that help to justify your prices. So many items look similar in pictures and it can be very difficult to make an informed decision on which is priced appropriately. Your customer has to base their decision on the information they have and can consider your pieces overpriced when they unfairly compare them to similar looking items without realizing the differences.
Quality – One of the most important selling points to anything handmade is the quality. As mentioned, in some cases you will need to get better deals on materials in order to have margins at certain price points. This does NOT mean using inferior materials. It means you have to get better deals on the high quality materials.
There can be significant discounts when you purchase in quantity. Ask where the price breaks are. Maybe you only have to buy 10 of something to get a much better deal. Sometimes it is only 2. You do not always have to buy in massive bulk to save money on materials. Call and talk to your supplier personally and see how you can get a better deal.
Another way to get better deals is to buy your materials from someone that is buying their materials in bulk. You can do this for materials needed to make your items as well as shipping materials. For example, a local business may be buying their packing peanuts 10 bags at a time. Because of that, they are paying $5 less per bag. If you get to know them you may be able to purchase a bag from them when you need one and you will benefit from their discount.
Sometimes the market changes – Sometimes the prices of items in the market go down over time. When you start out, you may be the only person making something and you may command and get higher prices. Over time, others may start making similar items at lower prices or you may have competition from makers of mass produced pieces. If these items are similar to yours you may not be able to sell yours for the same amount. You may have to change your pieces to differentiate yourself.
There is always room for premium products – But you will have to highlight the differences, and those differences will need to add value in the eyes of your customers. Using more expensive materials may not be necessary and may just drive up your cost. It may not make a difference to your customer what materials are used to make an item. Know what your market sees as being important.
First on the scene – Being first is similar to selling rare items. These items or products can go for premium prices even if the quality is not there. Price is more demand driven due to lack of other options. You can expect prices to go down over time as more sellers enter the market. As more competition comes on the scene only the more unique and higher quality items will command the higher prices.
Who’s complaining about prices? Complaints usually come from a couple types of people. The first is the person that does not understand the differences or see any added benefit between a higher end versus a lower end item. The second is the person that has the ability to make your item themselves.
Are their complaints justified? Possibly. There may already be a lower priced item out there that is a better value and maybe even of better quality than your high priced piece. On the other hand, some customers simply have no idea what some things cost or are worth.
People who know how to make things themselves look at prices differently. They may know what the materials cost and figure that their time is free, in which case, it would be cheaper for them to just make something themselves rather than buy a pre-made “overpriced” item.
On the other hand, they may be justified, since they do know what materials cost and how long things take to make. They may be selling similar items themselves and their items could be higher quality and they may be selling them at a lower price than you are.
You have probably seen others making inferior items that look similar to yours and you may be right saying that theirs are overpriced for what they are. It may simply take the other person too long to make their items and they are therefore asking too much for their pieces.
Complaining is not worth the effort though, and neither is worrying about what others are asking for their items.
Worrying about overpricing – Why do sellers fear more about pricing items too high? Would it be better to sell them for less than they are worth?
I think if you are going to price something incorrectly, you should price it on the high side. You can always lower the price later and more than likely you will still make sales because people will try to negotiate your higher prices if they like what you offer. If you feel you did set your prices a little too high but your items sell anyway, maybe you could have actually priced them higher.
An example is with selling cars. If you put your car for sale on Craigslist for example and you end up getting your asking price within the hour, you probably did not ask enough for it. Had you priced it higher you could have always negotiated down a bit and you would have made more money.
You are more likely to hear from customers that you charge too little rather than too much. Notice how I said customers. Customers, being people who have actually made a purchase from you. Usually the people who are complaining about items being overpriced have not actually purchased the item. When you provide your customers with a great item and give them a good experience, they are very supportive.
Have you ever heard from your customers that you should charge more?