HOW TO PRICE UP your products
FOLLOW OUR GUIDE TO TURNING YOUR PASSION INTO PROFIT
POPPY LEARNT ABOUT PRICING
EARLY ON when setting up her home accessory business. ‘I applied for a loan from the Prince’s Trust and a business guru helped me define the whole financial structure from the beginning,’ says Poppy. ‘Being creative doesn’t mean that you can’t think fiscally, and she helped me narrow things down.’
HOW TO PRICE UP YOUR BUSINESS Be mathematical and practical about pricing up. It removes the emotional strings and really simplifies how to work out what you could earn. List and sum up what you can live on or what you want to live on. Add up what it costs to run the business, including rates, rent, staff and materials. Work out honestly how much time is spent creating products per week and decide how much you want to have as profit and how much you want to invest back into the business. ‘I added all this up and divided down into earnings versus time spent and I could see the business was viable, which was really important,’ says Poppy. ‘Remember the minimum wage exists for all, not just employees, and if you end up working all BE REALISTIC ABOUT PRODUCT PRICING It’s really important to be aware of how many hours are spent making versus the cost to purchase an item. Beautifully created pieces have to be commercially viable, too. Best practice in business is to be honest with regards to worth and effort. If a project takes too much time and the price point spirals, then it might not being worth pursuing from a business point of view.
TREAT WHOLESALE CLIENTS THE SAME AS RETAIL Matching wholesale price mark-ups for trade clients with those that Poppy sells in her own shop keeps things clear between all sales methods. ‘It wouldn’t be good to undercut and it’s all about supporting each other and having relationships between buyers,’ says Poppy. ‘I look at wholesalers like Notonthehighstreet.com, who host many other crafters, as a good gauge with regards to pricing so that I know I am being fair.’
Offering items for lesser amounts is a good way of clearing old stock or slow-selling items but should be a short-term and succinct activity. It might conjure up interest and produce sales, but long-term promotions devalue the brand and products. Think about having a loyalty system for regular customers. Poppy rewards her customers with stamps on a card. Incentives could be vouchers, a discount, or a free selected item worth a certain amount.
MANAGING STAFF PAYMENTS Banding is a good way to price employee’s roles, especially if a member takes on lots of jobs. Work out how much time staff should be spending on certain tasks they manage. Pay any makers a piecework rate with the expected quality standards of handcrafted products clearly stated. Setting a goal for the numbers of products expected means makers can’t over deliver if a business can only afford so much. For more help on running a business, try the creative business network.com and princestrust.org.uk for information.
❝THE SMALLEST THINGS ARE IMPORTANT, SUCH AS PUTTING ALL YOUR CONTACT DETAILS ON EVERYTHING YOU SEND AND GIVE OUT. NO DETAILS MEANS NO DEAL❞