HOW TO SET YOUR PRICE

Setting prices for your goods and services seems to be a stumper for Indiepreneurs — new and seasoned. 

Too high and items sit forever and customers are  afraid to come back to your site or booth.  Too low and you cut your own profit margin.

It’d be wonderful to have a secret formula that magically produced a good sales price for you.  While a such a secret formula doesn’t exist — here are a few things to keep in mind when considering your prices.

Cover Your Overhead

Overhead means things like shipping items TO YOU or your store, price tags and pens, accounting software or accountant services, credit card and bank fees, business cards, insurance, website fees, gas and car wear and tear, electricity — all those things you need to do business, buy your product or supplies, or make your product. 

Some overhead costs are universal, for instance tax and business licenses. Some costs will be unique to your business. Do you need expensive software like Photoshop? A snazzy camera to take brilliant photos of your creations? Professional lighting for your jewelry displays?

Brainstorm and make a list of every supply and service you use — right down to the last postage stamp.

Cover Theft and Breakage

Theft happens, even to us little guys and gals. If someone can slip your goods into a pocket, you’ll experience it. You’ll get mad, get sad, but eventually you’ll come to expect it as part of doing business.

People will break things and walk away. I’ve experienced both in my space at the antique mall.  You have to set your prices so that a broken platter or stolen bracelet won’t hurt your margin too badly.

It’s unfortunate that we all have to pay for theft, but we do. Even big box stores set their prices to cover themselves.

Value Your Time

Whether you’re getting up at 5AM to hit garage sales, flying off to buyers’ markets, or staying up until midnight creating your product, count your time in the above mentioned overhead.  Don’t be shy about it either. You’re worth more than $2 an hour, too. 

Including your “wages” into the price of your goods and services from the beginning is important. You must, must, must determine whether your business can support a living wage for yourself — or what’s the point.

Consider Volume

Do you want to sell one exquisite oil painting per month? Or do you want to sell 1,000 widgets a day? Obviously, your margin on the painting must be much, much higher than on the widgets.

Be Flexible

Indiepreneurs make mistakes. It’s a shocker, I know, but it’s true. ;)  Prices aren’t set in stone. Don’t be afraid to rectify your errors.

I find that sellers can lower prices on a whim and a panic, but are reluctant to raise prices on highly desirable products. Don’t be shy about raising the price — even slightly — on an item that is flying off the display case.  Raising prices on hit products will help you cover losses on miss products (those that don’t sell at all). 

After you total up all these “costs of doing business”, you’ll see that setting your price includes more than what you paid for an item or the supplies that go into handmade items.  You will also — over time — get quite good at recognizing products that have a sufficient profit margin and learn to pass on those that aren’t worth your time.