7 good reasons to not discount your wares.
So much of how our society works is based on money. It’s a useful tool for sure, providing a common medium of exchange between various people and/or businesses. And because it’s at the core of business (otherwise it wouldn’t be “business”, right?), the temptation for small businesses is to try and compete on price, because it’s easy.

But your biz is not just about money, is it. Is it? You can’t make a life out of giving stuff away; you have to sell it. You must be fairly compensated for your labour, your skills, and your vision.

 

7 good reasons to not discount your wares in small bizImage from © Lime Lane Photography

 

Don’t get me wrong – discounting can be a useful strategy sometimes. But use it wisely. Leverage it! I had a sale in my shop recently, and I sold enough to buy myself a new computer. Two points: 1.Yes, the discount was substantial. It encouraged some sales for sure, and managed to move some of my older stock (bonus! Don’t hang onto onto old stock; but I’ll write more about that in another post.) 2. It worked well because I RARELY have sales. It’s the rarity of the event that creates genuine interest.

Carrying on from my recent post here, it is my long-held belief that art/craft/design is generally quite undervalued and, depending on your medium, it can be either somewhat undervalued, or like, GREATLY undervalued.

 

Don’t undervalue yourself.

 

Our world is driven by the internet these days, and we are bombarded with choice. Of course it’s tempting to compete on price; everybody loves a bargain, and it’s a five minute job to change a price on an item, or offer up a discount code. But in the end, it’s not a sustainable or healthy way to go (for everyone – even your customers, who think they want the ‘bargains’. More on this later).

 

1. Continually offering discounts via ‘Sales’ doesn’t equate to building up sustainable interest in your biz.

If you continually have ‘Sales’, you build up an expectation that there will be another ‘sale’ shortly, so customers don’t bother buying ‘now’. Spotlight does this all the time, supermarkets do this too. Truth is, I don’t rush out to Spotlight or Woolies every time I hear there’s a sale on (and remember, they’ve already built the ‘discount’ into the price of other things in the store). If I’m there in the shop, I’ll buy the discounted item if it’s something that I want, but generally I won’t make a special trip just to get that item. I know there will always be another time, and I go to those shops for reasons other than ‘sales’. So when you continually discount (have YOU built the discount into the prices of other things in your store?), you wear out your impact, and you shortchange yourself.

 

2. When you continually undercharge, and/or continually discount, you are sending messages about your value to your potential customers.

How much are you really worth? You are not a discount store, you are a highly skilled producer of creative product.  You are not just a reseller of materials and labour; you also need to consider how long it has taken to build up your particular set of skills – years of practice? What about the time spent researching and sourcing your materials? The time taken to attend a seminar or read a book on business skills? Work THAT into how much you charge for your time. If you charged by the hour at the same rates of other skilled jobs , e.g. plumber or mechanic, the disparity becomes patently obvious.

 

3. By continually offering your goods and services at low rates, you are devaluing your whole field of endeavour

You devalue everything by building in and confirming customer’s expectations about how much these skilfully made things are worth. Yes, it means your other wonderfully creative friends suffer in the long run too.

 

4. To compete on price, eventually you are going to have to cut corners somewhere.

Efficiency and time management can only take you so far, so the next thing to suffer is the quality of your finished product.  This is where your customer loses out too. When your quality drops, your customer misses the joy of receiving a beautifully made object. Perhaps they even greet your object with gentle disappointment, perhaps they are more non-committal; perhaps they will not keep it as carefully, nor will they appreciate it for a long time afterward. For ALL of us, poorly made objects lose their resonance quickly – they just don’t mean much and soon simply become more ‘stuff’.

 

5. You are a professional.

Just because sites like Etsy are loaded with people who have no financial imperative to make a living/profit does not mean you have to try and match their prices. For them it’s a hobby, and often they just want to cover their material costs. But YOU, if you are any kind of professional, will out-compete these hobbyists on presentation and customer service every time. Being prompt, efficient and helpful in all aspects of your business takes time and effort; and I as a customer would much prefer to have that seamless experience than to be left waiting on answers to questions and/or goods to turn up. That professionalism is worth paying for.

 

6. Wholesalers take around 50% of the retail price.

If there’s ever even a vague possibility that one day you might like to wholesale your goods, remember that wholesalers take a hefty slice of the retail price. That means you still have to be making a reasonable rate for yourself when you are selling to them at half price. Don’t ever be tempted to retail cheaper than them – to undercut them is poor manners (you’re stealing their business!), and they will most likely not deal with you again.

 

7. You are not a third world worker.

It is impossible to compete on price with other products in your marketplace that are manufactured overseas with poor ethical and environmental standards. Think carefully about how much that person in the third world sweatshop was paid to manufacture that item – not to mention that they were most likely working in unsafe and cramped factory conditions. Don’t try and compete on price.

 

So, how do you figure out how much to charge?

 

I’ve come across some excellent articles on how to do it properly. Ink & Spindle, (who produce wonderful hand-screenprinted fabrics, and who I interviewed a while ago here) wrote a great article on how to price your wares properly. They shared a basic formula, and backed it up with great reasons why it (or something like it) should be used. The formula is

Time + Materials = Cost Price.
Cost Price x 2 = Wholesale.
Wholesale x 2 = RETAIL.

You can read about the formula AND the reasoning behind it here.

Another great article was written by my friend Jess from Create & Thrive. She suggested firstly to (a) Price with the head – have a formula and be logical about it. And then AFTER you have got a grip on a logical price, (b) Price with the heart. Think about how branding can change the perception of your product. This does NOT mean lowering your prices back down again! She offers the great example of Apple, who have managed to build a raving fan-base that gobble up ALL the products at PREMIUM prices. Check out the full article here.

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Pricing in any business can be tricky, and in any kind creative business it can be trickier still. We are fighting entrenched ways of thinking – in ourselves as well as in others.  Stay strong! Reconsider your pricing and hold off on the discounting.

Charge the right prices. You are a professional. You are highly skilled and have years of practice under your belt.

 

You are totally worth it.

 

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