Pricing Your Items On EtsyJun 16, 2022
I could talk about this subject for weeks because I feel so strongly and passionate that so many handmade business owners are SEVERELY undercharging, and they don't know how to price their items/ products to make a profit.
I think that is because when we are talking about pricing, we strongly link it to our worth as a maker, business owner, entrepreneur and as a creative.
But, we need to unlink the worth from the pricing.
So many people out there will say 'charge less, you'll get more orders', but we've tested this extensively and it is not true.
In fact, this is the complete opposite of what actually happens.
So, lets get into how you should price your items on Etsy...
1. Comfort Zone Gremlins
We all have our comfort zones in terms of pricing. When we're looking on Etsy (or online), we're actually doing some research and just gauging where other business owners are pricing their items.
You may be saying: 'well Steph, I create lip gloss and that's like a £1 to make, is my business never going to be high end or profitable?'
And the answer is, you can charge whatever you need to! Your lip gloss business can be high end and you can (and should) absolutely make a profit from it.
But, we don't charge what we want/ need to because of our Comfort Zone Gremlins.
For example, if I told you to double or triple your prices and you go off and do it, and a day or two later I ask you how it went, you would probably say "oh I changed it back". I know that this happens from experience, and this is because of the Comfort Zone Gremlin bringing you back to safety.
The trick is to push the edges of your comfort zone slowly.
Increase your prices by £2 this month, then £4 next month and so on.
If you're rebranding and increasing your pricing is essential, then by all means go ahead and make those pricing changes immediately.
2. It's Easy
Just because it's easy for you to make, doesn't mean it's easy for others.
So many makers say - 'this thing takes me twenty minutes to make', and that's great, but you shouldn't undercharge just because it's easy for you.
Instead, you need to disassociate how easy it is to make your item, from what you charge.
You will naturally become more efficient (and quicker) the more you work on/ make your item. Don't undercharge because you've learned to make it quicker.
BOSS! Do you want to make more sales on Etsy? Then you need to increase your conversion rate! DON'T PANIC! I'm going to explain exactly how to do that in my FREE 90 minute masterclass - The 3 Step System To Skyrocket Your Etsy Conversion Rate 🙌🏻
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3. The Transformation
What transformation is your customer getting from your products?
You should base your pricing off of the transformation and the size of the pain point that your customer has.
A business owner who makes hair bows for children for weddings didn't know how to price them, and definitely wasn't making a profit. She was charging £5 each for a bow.
So, I asked her "why do people buy your hair bows?".
She replied "well I already told you, it's brides who have flower girls or little bridesmaids who need their hair tying up, and she wants them to look super cute for her wedding and her pictures".
Now, I do get that, but I want to go deeper.
So, again I ask "what is the REAL value/ the real transformation that the bride is getting from your hair bows?".
She sat there for a bit and said "I don't really know".
I said "what would it mean if the bride didn't have your hair bows in her wedding day?"
The business owner said "she'd have to pay someone to come and do the child's hair and that could be very expensive"
And this is exactly what I mean! Think about how much those hair bows are worth to a bride to have one less thing to worry about on their day, and saving her money in the process. So why is the business owner only charging £5 for that privilege?
I want you to look at your product and the problem you think you solve, and go one level deeper.
Include buffers into your pricing. Your customers don't know about these buffers as they're already built into the pricing, and I'm going to give you 4 examples of buffers that you should include:
1. An 'oops' charge
We're all human! If we're feeling under the weather and we make something a little wrong or you make a mistake and the customer reaches out to say that there's something wrong with the item and they'd like a replacement/refund, then it shouldn't stress you out about loosing your profits and remaking it again.
Instead, you need to build that 'oops' charge into every order you send out.
That way, if 1 item out of 100 is wrong, you have factored the price of another item over those 99 sales to cover the cost of another item. This is how successful businesses will still make a profit even if they have made a mistake.
2. Issues charge
This is when you've done everything right, so it's not your fault, but let's say that the customer just isn't happy with the item and they want a refund. Let's say you have 1 issue per 50 orders. This means that you have already made up for the costs for that 1 order in the 49 sales you've had.
Remember, you're building your costs into your pricing no matter where those costs come from.
I KNOW you guys have hidden costs you haven't accounted for when it comes to packaging your items. You need to factor EVERYTHING it costs you to make your item, to the penny. Make a list or a spreadsheet of everything you use to make your item so that you know exactly how much you are spending.
I know personally that the majority of my materials have increased in price over the last few months, and all I need to do to make sure that I'm making a profit is to put the new price of the material into my spreadsheet. It's so simple.
If you're running a 10% off sale, this should be included in your product pricing. Why should you lose your profit to run a sale?
It's not a sleazy thing to do. The big successful businesses don't lose out on profit just so they can clear their end of season items, so why should you?
Remember, we're here to make a legacy business, not an expensive hobby.
And that is what you should be including when you are pricing your items.
If you'd prefer to watch me teach this, then you can watch my YouTube video HERE.
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