Yesterday we talked about the balancing act between the prices we charge for our handmade products and the value that our customers perceive in our products.
Perceived value is tricky — it’s different for different customers. For example, the value I perceive in a handmade quilt is different from the value my brother perceives in a handmade quilt. One of us could justify spending $300; one of us would rather go to Target.
So, savvy business people that we are, we want to do the whole Marketing thing to find those special people who value our craft as much as we do.
We take time to define our niche. And then we make it smaller.
We brainstorm our benefits and feature, and define our competitive edge.
We analyze our costs, we pay ourselves a living wage, and we formulate a price.
And then (and why is it only then?) we look for a target market who is willing and able to pay the price for our passionately-made products.
Isn’t that backwards?
Why is pricing the last step? Why do we create a new thingie, saying “Oh hey, that would be cute!”, without pausing to consider if consumers have a need for our new thingie? Or big enough wallets to pay for our new thingie?
So, what if we work in the opposite direction? What if we used price as a starting point for product development?
Start with the price that your ideal customer is able to pay, and then engineer a product to be profitable at this price.
Do any of you do this already?
I have a potter friend who does. She makes beautiful ceramic pieces: platters, mugs, bowls, pitchers — you name it. And she is particularly well-known for her elaborate, and highly involved, glazing techniques. Needless to say, the prices of her larger pieces reflect her level of involvement and expertise.
But when she attends craft shows, she takes a different approach to her work. Throughout her years of experience, she has found that casual craft show shoppers are looking to make $25 purchases. In other words, they are looking for mugs.
So she finds ways to make mugs more efficiently. She throws simpler shapes. She works in larger batches to cut down on production time. She uses fewer glazes, and less complicated application techniques. And you know what, sometimes she even skips attaching handles. (Handles take a lot of time, you know!)
As a result — she can produce mugs in a shorter amount of time. She can sell them at a lower price that, while still fair to her, is agreeable to her customers.
Now, her goal is not to be the cheapest. She’s not trying to cut corners and cheat her customers. She just wants to make something beautiful that casual shoppers can afford to buy.
Are her mugs still high quality? Absolutely. Are they still beautiful? You better believe it. Are they still a good value? Incredibly.
A Creative Challenge
Would you ever consider using price as a starting point when developing new products? It’s sure to be a creative challenge!
You probably wouldn’t use this production strategy all the time. But you might use it if you were looking to appeal to a different customer base, or perhaps land a wholesale account.
Can you produce a quality product that your customers can afford to pay for? Can you create a marketable product while not compromising your artistic merit? Can you hold the quality standard high, while making your products affordable?
(images courtesy of Susan DeMay)
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Such a great perspective on this. I’m working on designing a new jewelry line, and I’m involving price in the design decisions from the start.
My first full year at craft fairs and markets taught me quickly that there are definite price points at all craft fairs / markets. It is very interesting to me, and any given week the point may not be the same. I try to fill my table with varying price points, and then a few higher end goodies for those folks looking for something unique and are willing to pay for it. So, I would say to some degree, I consider price when making up an item and can usually tell if it is destined for my table or for one of the consignment shops (where people seem willing to pay more).
For the first time in my life I am designing a product based on price. That is, I have a limit for how much it can sell for retail, then I’m working backwards from that. And I’m streamlining my business to sell only this product, which is a radical departure for me. I’m in the process of developing it now, and it’s been very interesting to work this way.
that said, if you don’t have an idea and the vision to design, the price means nothing. So here’s hoping I’ve got the mojo.
My biggest issue is that I can’t get the manufacturing cost down far enough to sell wholesale and still make a profit.
I’m enjoying your site a lot. thanks.
I’m about to start looking at changing my prices, and this has definatley given me something new to consider. Designing to a pricepoint is what Ikea is all about, and it seems to work for them quite well…
It makes sense to start off with a price in mind before designing and making the whole piece – after all if you can’t sell it for a profit, what is the point of listing it in a web shop? Obviously there are a fair few pieces I make simply for the love of it, and sometimes I bite the financial bullet on those ones (although I certainly don’t make a loss), but the more I begin my design process this way around, the better I feel I am doing balancing my budget.
The same thing here. I sell alot of lanyards to girls at work, but they all have a certain price that they have became accustomed to. So when making my designs i have to think about the cost and keep it down to a minimum so that i can offer low cost prettys for them to wear. The only thing i can’t get a grip on is that the low cost lanyards take just as much time as the higher end lanyards. I have not figured out that part yet. Any suggestions would be appreciated.
Thank you.
Robin (aka GrannyGrant)
One more question. Who is the artist of the pottery shown on this blog? I love it!
Hi Robin,
The artist is Susan DeMay, my wonderful ceramics professor.
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