De Raquel Manuela

B-Diary: Price Your Products Strategically

B-DairyRaquel BusaComment

I am a member of the Etsy Success Team, and one of the most common questions I see posted on the team's discussion board is "Am I pricing my products correctly?"

In the Etsy blog post, "A Simple Formula for Pricing Your Work," Danielle Lexo, offers great advise about what factors to consider when determining your price, such as the cost of materials, overhead, production, and profit. She also goes over how to calculate wholesale price and retail price. 

Today, I would like to add to Danielle's post. There are a few strategic questions a seller should always consider, whether they are selling their products on Etsy, on an independent website like this one, at a craft market or in a boutique. 

Here is the first question: Is your price part of your retail strategy? Your retail strategy is the strategy you use to set your business apart from your competition. For example, if you sell supplies, you may want to keep your prices low. Having the most affordable supplies will set your business apart from other business selling similar supplies. If you hand craft your products in limited quantities or create one of a kind pieces, you may decide to keep your prices high. A high price states to the customer, this item is different, you can't get another like it, it's worth the price. 

The second question has two parts: What is the maximum that your customer will pay? What is the minimum that your customer will pay? You should get to know your costumer. And also get to know your customers behavior in different settings. A customer my go to a flee market to look for a bargain, they want going to spend less than they usually do. That same customer may attend a pop-up shop the following week and expect to spend a little more. Don't be afraid to ask family, friends and your customer what are they willing to spend on a product. What price will make them not want to buy? At the same time, what price is so low that will make them wonder if the item is low quality?

The last question is what is your markdown policy? A markdown policy basically states two things: what are you going to mark down and when. Will is be spontaneous, like bring the price down for some one when they bargain with you at a market? Or will it be more regular? Maybe each time you launch a product an older product line will get marked down. Perhaps you will offer sale events through out the year. What ever you decide needs to make sense with your business. Your mark down policy says just as much about your business as your price. 

For further reading you can check out Who is your Target Market? and Retail Start Up. I would love to hear about how your price your items!