How to price your work

 

This is always a very emotive conversation with artisan and crafters because you are not pricing work when you have this conversation you are pricing your own worth! The simplest way is to look for a similar item on Etsy or Amazon and take an average price of things you find.  There is a boring science behind pricing strategies but they don't take into account the emotive side that a hand crafter or artisan brings with them - you're selling a piece of you, a piece that you put love and time into.  This isn't as simple as saying it was £10 at the wholesalers so I'll sell it for £20. 

Burt here's the thing - are you making and selling to pay your bills or are you using it to top up a wage or pay for that family holiday as a treat? That's where the crunch comes in - are you totally sure about which you are?  There is no right or wrong to this question, but being clear on where you are may change your pricing methodology. 

The business text books will talk to you of price skimming, cost plus, promotional pricing and write huge papers on each of these topics BUT you instinctively know which suits you without needing to read these books! For the majority of artisan crafters the cost plus process won't work.  This is where you price how much it cost to make and add your profit margin to arrive at a selling price. The reason this won't work is you are worth more than just the time it took you to paint that picture - people are paying for your skill, the time it took over years to develop, the thinking time, the imagination to see that image before you painted it.  They are paying you because they can't do it themselves and more importantly because they like it.  This is where many small makers slip up.  They go but it only took me an hour to paint that so I can't charge £500 can I?? Yes you can, IF the market is there for you.  If you price too cheaply there will be doubt placed that the quality or worth isn't there, or worse that you didn't actually make it and found it in a car boot sale.  

Also, don't be embarrassed if someone tries to haggle with you - stay your ground! If it's something you wanted out of your stock then fine, but make it sound like you're doing them a massive favour! Think of it this way - would you walk into Marks & Spencer and take an item to the till and say to the staff 'I know this jumper is priced at £45 but I only want to pay £10'.  You wouldn't do it and you'd be squirming if the person in front of you was doing it - hand made is NOT worth less, if anything it's worth MORE.

There will always be people that want a bargain, or feel good for knocking someone's prices down but the thing is you have the choice to say yes or no to that request.  I remember years ago a lady who did amazing pieces was over the moon when she sold two paintings to a customer but on questioning her she'd done him a ridiculous deal and he'd tapped into her sense of guilt or unworth at pricing her own art.  She was delighted someone had gone wow, I was furious she'd accepted such a low price! 

So back to what's fair to charge.  There are other factors to consider - but most boil down to you almost taking the emotion out of this question.  That's incredibly hard for most to do, we make our work because we are passionate about what we do and want to be fair but we also need to be recompensed when we sell.  If you really struggle, ask a friend to advise what they think is fair.

Also, on the subject of pricing check when you do markets and fairs to see if you can identify which camp other makers sit in by their pricing.  If they seem more expensive than others then they are most likely to be a business model and need to pay their mortgage from profits.  Hobby makers are often cheaper as only tend to care about recouping materials and a little extra to be able to keep making.  Depending on which camp you fall may affect which markets you want to attend in future.  For example if you are a silver jewellery maker who wants to pay the mortgage you will have a hard time competing on price with the person next to you selling a lot cheaper because they just need to recover costs.  Again, both models are perfectly valid but depending on where you are may affect which markets you wish to attend in future due to the expectation of those attending as visitors.  Markets can also be a useful place to attend as a visitor to see what others are charging? Are customers buying? What questions are they asking of the seller / maker? 

And ultimately, you are the seller so you can change your prices as and when you want to but don't be in a rush to discount things too hastily unless you want to have a massive declutter of old stock (the old adage of stock is dead money is true!).  

Capacity - the hidden curse of the small trader (and how to resolve it!)

This is something that is increasingly cropping up in conversations from those looking to set up a shop or small business, and in the past, I have run this capacity question as a workshop for startups as it's a hidden issue that we don't always think about until it's too late.  I regularly have chats with folk bouncing away telling me their grand ideas but on digging a little deeper they have often not fully understood how much time they need and may not have the time to achieve their fabulous idea so we need to tweak it a little.  I primarly worked with hand crafters, artisans and makers so while the basic principles are always the same if you use wholesalers and resell items the capacity to make may not apply.

To give you an example of the capacity issue - let's make up Lucy the cake maker who wants to set up a cake shop.  She can bake amazingly well, absolutely no issue with her products; she has all her food hygiene certificates, her FaceBook fans adore her work and she's ready to turn her current hobby into a business .... BUT her capacity needs to be considered.

For any small business start-up you must know your numbers, here's a basic breakdown of the initial key things:

1. What do you need to bring in to SURVIVE 

You are a start up, survival is the aim of the game, we can get to growth and maturity later but right now we need to know the mortgage and electricity are paid! Add up all the essential regular household bills; go through your bank statement and note them down.  Remember to check any subscriptions you may have too that go out quartly or yearly.  Amazon Prime is an excellent example of a sneaky sudden bill you haven't factored in.  Now divide that by 52 - as a start up it's easier to work weekly.  Then add a contingency of 15% onto it - you will be amazed what has been left off that thorough list you made! You have to imagine you haven't made a single thing so what costs does your household incur? 

1.  TIME AVAILABLE TO WORK OR YOUR CAPACITY

How many hours can you realistically work at your business - you need to sleep, take small people to school, visit your Mum and see your friends from time to time. If it helps keep a little calendar check of your schedule for a week and then work out the hours you do have or could make available.

Don't assume you have 52 weeks either, if you have family you will to need to factor in school holidays, family holidays, add in time to look after a sick child and always factor in a few duvet days - you're working for yourself, not becoming a workhorse! And if you can work weekends great, but be realistic.  Allow that downtime to go see a film or drinks with your friends.

I get people to print off a year planner and with a marker pen rub out all the days you are not available like your partner's birthday because you always do something special, or Sundays because that's when you visit your parents.  Work out exactly how many full days you think are sensible given your personal circumstances (they will vary enormously person to person).

2.  TIME TO MAKE EACH ITEM

How long does it take you to make each item - if you batch make something then work out a time for 10 or 20 perhaps but as long as you know for example 50 cakes = 2 hours from start to completion.  So you now know that each hour you can work, you can make 25 cakes.

2.  GROSS PROFIT

Now you need to work out how much profit you have after selling your work - ignore the time for the minute, just deduct materials cost from selling price. These are classed as your variable costs as they vary depending on how many cakes you make. It's simple when you think about it; more cakes = more flour you have to buy.  Remember to include packaging! (this is considered your gross profit - net profit is when you take off rent too but we'll worry about that another day)

You now have your four basic figures to work out if you can survive, here's the basic maths:

1.  Use the time per item and see how many you can make in your available time, we know 1 hour makes 25 cakes and if you can work 6 hours you can make 150 cakes

2.  Now multiply that number by your profit per item - again, if your cakes have a profit of £1 per cake you have £150 profit per baking day

3.  Does that £150 per day multiplied by your capacity days available cover what you need to survive?

4.  If yes, fantastic; if no, then what can we change?  

I have often been accused of being too commercial in my approach in the past towards the small craft or artisan business but the reason is you do not start with the intention of making a loss! And without knowing your cost base (revenue and gross profit) and time (capacity) you may well accidentally end up there.  Many crafters have no intention of turning it into a business and it's used to top up a wage or pay for holidays which is fine, BUT if you want it as a real business paying your mortgage and bills you do need to keep an eye on the costs and your time. 

If you end up with a situation where you realise you cannot produce enough to cover your required income then look to diversify.  What costs can you cut, can you create passive income from recipes online that people can pay and download off your website? Can a friend help do the deliveries to free you up to bake? Can you supply local cafes or do office lunch provision to build a customer base rather than the massive outlay of a store until you know exactly what's working for you?

Capacity is the hidden curse of the small maker - we are required to be all things at the beginning phase and everything needs doing at the same time.  We have to be the maker, the accountant, the advertiser, the brand, attend events - the list is endless and can seem daunting so be sensible.  Which activities use your time and generate returns? Admittedly in the beginning there won't be masses coming back as you build your portfolio, your brand, your customers, etc etc but join networking groups as it can also be incredibly lonely especially when you have to present to the world as happy and bouncy while going eekkkk not sure I can pay the mortgage this month.

I appreciate this is a very basic and simplistic start to a much bigger and more complex situation.  However, it's a start and if you can arrive at some basic figures you will at least have a better idea of where you actually are.  I appreciate that your working day also includes paper work, promoting, attending events, collecting supplies and an ever ongoing list - BUT once you recognise that ongoing list you can become savvy with your time management.  Take the cake maker - once the oven is on she has time to do other things.  You have to make time and money your friends.  And I know that this is just the possible income, not the actual but we'll look at sales, promotion, how to price and so on later.  First you need to know where your survival point (or break even) is.  It will also help to know if you ever go to ask someone for a loan to be able to say exactly where you are, this gives people confidence that you are self aware of things.

And finally, please please enjoy what you do - you started this journey because you're passionate about what you do so even if things feel a little bleak somedays just remember why you started out.

You're keeping this why???

I apologise wholeheartedly to friends and family! This tidying lark gets under your skin and once you get your head around it you don’t seem to stop!

As a friend summarised:

1. Go big or go home
2. Reflect
3. Sweep through again
4. Get rid of the nigglers
5. Feel smug 
6. Repeat

And it really is that constant appraisal, that constantly asking yourself do I really need this? That self-critique of how did I acquire 7 ice scrapers, 4 tubes of decorators caulk and yet somehow feel the need to purchase more (you know who you are!!!). I have noticed a massive head shift in how I live in my space, how I feel about my space and also how I value it.  It’ll never be a show home, cats owning a home will never allow for that, but it does feel like a happy little home again.  One where there aren’t piles of odd project ‘that will come in useful’ stuff.

Key deadly phrases to watch out for, if you hear yourself saying them then you may be in danger of being a closet hoarder and may need the skip of salvation to rescue you.

That MAY come in useful - ok the key word here is MAY, and just how long have you hung onto said item just in case???  If it's more than a month I can almost categorically tell you that it won't come in useful, you would have used it by now if that were the case so in the skip with it!

It’s on my reading list –  really?? You had the time to make a list of things you’ll read but rather than read the book you made a list?? Skip of delusion again my friend.

It matches something I can’t remember where it is – this is my personal favorite reasoning of mine, chances are the one it matches is hiding somewhere, damaged or I’ve already thrown it out! Plus if I can’t remember where it is I clearly don’t use it. Unless it is antique, or so hard to replace it belongs in the skip of salvation.

I’ll make something out of that – again, one of my personal frailties! Like what exactly are you going to make with it??? And just how much else random rubbish will you accumulate before getting round to it?? And just how long have you been planning said project?? If the answer to any of these causes a giggle then off to the skip of salvation.

I love how inventive our self reasoning is for keeping things! Was helping a friend do her garage and it was an utter hoot finding at least 5 half opened tubes of decorating materials (I did have them too, my smugness came from having already done my tip run).

The other thing is organise stuff! Till earlier I called my kitchen cupboards the cupboards of doom, there were several duplicates, several packets of half-used things and many more things that I had clearly purchased on a whim yet gone nahh and shoved to the back of the cupboard.  I have cats yes, but they do not need 5 bowls each! By going through things I was able to discover exactly what I did have, what I needed to replace and what I clearly had a zombie apocalypse survival quantity of.

It is hard that first deep breath of right, I need to tackle this.  Even recognising that it needs tackling is a bit daunting.  The amount you clear out questions how you fitted in the house and did my friends think me an utter slob yet didn’t want to say anything?? We have found a badge maker and suspect there will be many silly badges made such as ‘I used to be a hoarder’ and we do like the Skip of Salvation for recovering hoarders.Yes I’m making light of it, but honestly, you feel so much better for living without the chaos around you, it starts to clear your head and you feel calmer in your own skin and space.  However, telling me I own too many cats and need to declutter won’t be happening soon – and anyway you have 6 bikes so nyahh!!!

Pixie x

The Ladder of Success

 

With grateful thanks to Elaine Collier for giving me some of her valuable time I was able to actually see my business from an outsiders perspective; what was good, what needed tweaking and more importantly how to grow it and genuinely be successful in what I love doing.  I've always been a creative little soul but sometimes creativity and business brains don't always make happy bedfellows as profit is often seen as a dirty word in the UK.  However there's sod all as a small trader you can do without profit, without profit you are a sweet little hobby maker and might as well gift your wares to friends and family for birthday gifts.  If you don't keep an eye on the figures you have no idea what's going on, and certainly can't review or grow your enterprise.  I fully accept for me the glass would be considered a lifestyle business or a Mom and Pop in the States, I have no desire to run a factory with many employees and for me personally the intimacy of knowing my customers is something I value enormously.  But that's me, and every story is different - the key is knowing your own story and being brutally honest with yourself.  Rose coloured dreams are wonderful but don't put food on the table or money in the gas meter.

So, back to the ideas and advice I was given.  Her strategy is 100 days to 100k - and yep I'll be honest I gulped and not sure my eyes could have gotten any bigger as she said it.  Her giggle told me this is a fairly standard reaction! However, I got out my notebook and pen and started scribbling and all of a sudden the lightbulbs were going pop pop pop absolutely all over the place, it's so bloody simple once you get your head around it! I also accept Elaine will explain it far better than me, but this is just me processing my thoughts into words about what I took from the meeting.

The idea is that you need a range of products.  Imagine a ladder propped against the wall with ten rungs and on each rung there is a product or service and they significantly jump up in value as you climb the rungs.  The numbers represent currency for whatever country you're in, I'm UK so they are £.

Like most I bet you're thinking yep got something up to the £197 rungs but blimey how on earth do you get further up the ladder?? And this is where the lightbulbs went off (for me anyway).  As she explained what you are doing is testing your market, is there a need, will folk get behind your products or services and more importantly do they get behind you?? As sole traders being accessible is vital, people buy from people.  We all know there are some stores or online places we avoid because customer service is so poor or it's impossible to actually talk to a human being when issues arise - same principle for a sole trader as YOU are the business.  Your website, etsy, whatever is just the vehicle promoting YOU.  Also, you're not expected to do all of it at once.  

The plan is you spend ten days on each rung, ok maybe not literally but ten days and boom move on.  You may well be working on projects for a few rungs at a time but once you've cleared a rung bank it and say yep that works, leave it chugging along on your website and think of the next challenge.  Small brain played far too many platform games as a kid and to me each run is like the boss level! Create and develop something for the rung, pitch it, sell it and beat the boss then boom onto the next level.  You are testing what the market will bear, what your customers will accept from you.  Sure, you may have feedback that says I loved it but can you do this instead?? Tweaking, listening, responding and accepting critique are all part of growth and learning.  And if you change mid way it's not a backtrack it's responding to your customers.  Lack of customers, and boom lack of profit and boom you're not a business you're back to being a hobby maker.  So, if you want to be a business you must listen and react accordingly.  There are some things obviously due to legal reasons and licences that will not be possible but as a general rule of thumb customer feedback must be listened to.  I've learnt so much from my customer base and wouldn't have improved without their comments.

So the light bulb moments!  Firstly there are three C's that will kill any business (especially small start ups) lack of capacity, lack of customers and lack of cashflow.  For me capacity is going to become my nemesis due to the physical capacity of the kiln with the glass so I need to do value added, sell my time, upsell, and most importantly have passive income that never sleeps.  Things uploaded to a website that folk can download anywhere in the world with an internet and paypal account - that's what I call a passive income.  Something you spend time creating once but is then always working for you in the background.  As you would expect the small brain has not stopped whirring and many many plans are afoot for the higher rungs! And also back to people buy from people, don't be afraid to sell your time - you're good at what you do, so shout about it, share your skills and knowledge.  Offer workshops, classes, talks whatever.  Foolishly you'll be able to get the small brain blogs on youtube and tiktok soon so mute now good folk!

But the trick is self awareness, critically assess where you are; where you want to be in five years and start seeing it.  Start believing you are at the top of the ladder already, start seeing your life after you've climbed it.  That way you will focus on the things that help you get there - sure I've made some lovely pretty things but they don't really make profit, or are too time consuming to be effective so I left them behind.  And we have to keep trying, we have to believe we can climb that ladder and instill a sense of personal belief because if we don't believe we can get there why should anyone else?? Talk with passion and conviction about what you do, why you do it, give customers a reason to invest in you personally not just buying products or services off you.  If you've not come across The Secret it's well worth a read.  It's about seeing that the success has already happened, you are already doing these ten rungs, you are already achieving your goals and teaches you that with self belief comes reality and that the law of attraction will naturally align you with things, people, investors that are appropriate to climbing all ten rungs.

For me, I'm going back to first principles of why the glass existed and began - I was very poorly with body dysmorphia and I want everyone to feel good about their body regardless of size, age, background, disability etc etc.  It's why I paint the body, it's why I paint nudes and I have zero problem with doing that especially when it makes folk happy about their own shape and image.

To all the small biz out there, good luck! It's a slog, it's tough but it's ours and we've worked too hard to go nah don't want to play today!  And have fun with it, I'm off to plot!

Pixie x