Pricing for Your Handmade Items for Retail: 5 Tips to Get You Started
“We’re going to be in stores!!!” The first time we were approached by a retailer, we were ecstatic. And puzzled. “What? we have to give away half our sales??”
The 50–50 split with the store owner felt like a lopsided deal until we took a good hard look at all the perks. We’d get exposure. Lots of it. Our shop was getting buried on Etsy. And craft fairs meant fighting for attention with super talented 150 vendors. At the stores, we’d get free advertising. And the chance to build our brand. Once we got past skepticism, we had to confront one of the most difficult questions artists have to answer (second only to “what is art?”).
How do we price this stuff ?
We researched, picked the brains of store owners, established artists, MBA’s (yes, them too) and came up with five strategies.. Some may work for you:
Work backwards
Most times the value of a product has less to do with the cost to produce it, and more about what the customer is willing to spend. The store owner can give a good idea of the disposable incomes in the neighborhood. Even narrow it down to your category. Once you divide that by two you’ll get your ballpark wholesale price. Then check if it still makes business sense. Will it cover the cost of production? Will you make a profit? If you take a loss, would it be worth the exposure and awareness? When we spoke to Oaklandish, a design boutique in downtown Oakland, we were told $50 is a good sweet spot for original art. So we introduced products that fell in that range.
Ask the store owner for an appraisal
The store owners know their customers. They know the trends. They know what sells in your category. Use their experience to get a free appraisal. Even if your stuff is something no one has seen before (which is sometimes the case with one-of-a-kind), they can use their instincts and gut feeling to good use. By asking store owners, we put the onus on them to come up with a price that’s fair and agreeable.
Raise prices way above your comfort zone
If you’ve been keeping prices on the lower side because of the fear of never making a sale (sound familiar?) this is a good time to bump up the price. You have the store’s branding to back you up and if people buy it you will get to have a second look at what you’ve been charging and readjust. Well, that’s only after you kick yourself for lowballing your prices all along.
Negotiate 60–40
Wholesale pricing makes sense if you get the advantage of buying your materials in bulk. However, more artists are making stuff from found materials. Sarah Bocket of The Bocket Store makes dotted bowls from bowls found in thrift stores. She doesn’t get the wholesale advantage. The cost of making an item is the same whether she makes one bowl or 20.
In this instance, it’s fair to negotiate more for yourself. Explain the reasoning to the store owner. They’ll get it.
Treat the store owner as a business partner
It’s natural to worry about all the profit you’re losing out at stores versus if you just sold stuff online. Instead think about it this way. If the store owner is taking away 50% of profits, treat it like a 50–50 partnership. It frees you up to play up each other’s strengths. You make the goods. They take care of the retail. As a partner, you can give them more room to adjust prices. Think of the best deals for sales, seasonal events, special offers, or whatever they see fit as long as they keep you in the loop. Also suggest experimenting with half wholesale/half consignment. I as a partner you can suggest offering newer untested products as consignment.
While the thought of pricing caused headaches and procrastination, the process helped us understand the dynamics of pricing for different neighborhoods, income levels and tastes and most importantly working with store owners as a team. If you have a technique that worked really well for you, feel free to share it on the comments.
Vinit is artist partner at The Whiteout. Their products have retailed at Oaklandish, Redux and Perch SF. Vinit is also co-founder of SKUE. An appraisal service for the maker community.
Originally published at www.handmadeology.com on October 17, 2013.
