When things are going right in your handmade business, it’s sunshine and strawberry Twizzlers every day. Blog posts write themselves, the supplies you need from the store are always on sale, and inspiration is flowing like a waterfall. But we all have those days (weeks, MONTHS?!!) when things just aren’t in step like they used to be. Something just feels… off. There are indicators in our businesses when things need to change, and revisiting your pricing strategy could be one of them.
Learning the hard way
When I started TL Yarn Crafts in 2013, I felt like a baby bird jumping out of a nest with every intention of flying. I had confidence in spades and just knew everything would go right. When it inevitably didn’t, I made some adjustments and things started to look up. About a year in, I was at a good clip, bringing in sales on a consistent basis and staying busy. But I was dreadfully unhappy. Some days, I didn’t even want to open the Etsy app. I knew something was wrong.
I talked with a trusted crafty friend who helped me get to the root of my problem: I felt like what I was putting more into my business that I was getting out of it. Some part of me felt like my current business just wasn’t worth the time and energy I was giving. At that moment, I knew something had to change. I started with my pricing, which made a huge difference. And it led me to a better understanding of how pricing impacts every part of our businesses.
Six Signs It’s Time to Raise Your Prices
1. Your costs go up. Which is just a matter of time. Eventually, the costs of doing business will increase. Consider all of the supplies and services you use and how that factors into your prices. Some obvious costs will be supplies you purchase on a regular basis or contract services you procure for an event. But don’t forget the underlying costs like web hosting fees, credit card processing fees, and packaging costs.
2. You’re investing in yourself and/or your business. Have you ever taken a class to grow your skill set or attended a convention to learn more about your business? That continued education is worth more than you think. As you grow to become an expert in your field or become better at what you do, your product becomes more valuable. Let’s say you recently adjusted your marketing to re-brand your business in the eyes of your customers. A price adjustment shouldn’t be too far behind. Your pricing should always keep pace with the image you portray of your business.
3. People you trust tell you to. This one is very personal for me. I experienced this myself and it changed how I ran my business from that very day. I had finally landed my first consignment contract with an amazing gift shop here in Columbus. I did my research, asked the relevant questions, and boxed up my product to drop it off. The shop owner is a woman I idolize for all she’s done for makers in my community. When I got to the shop, we started going through my wares and she had nothing but nice things to say. After a quick chat, I was headed out the door when she said, “Oh, and you should definitely raise your prices.”
She said it so nonchalantly but it hit me like a ton of bricks. I hadn’t even been thinking about raising my prices! But, hearing those words from someone who runs an actual store, who only wants to help (and is Columbus’ crafty fairy godmother!), lit a fire under me. If even one person in your life that you trust says you should raise your prices, chances are you totally should.
4. You can’t keep pace with orders. What a nice problem to have ☺ But it’s still a problem. If you’re reading this, I’m 95% sure you’re a one-woman show, side-hustling your business with every free minute you have. If you have so many orders that you get instantly overwhelmed every time your phone cha-chings, it’s time to make some changes. Raising your prices will price out customers in the lower half of your market. Then you can focus on customers who don’t mind paying more for what is obviously a high quality product. You’ll be selling less widgets but making the same, if not more, money. Sounds like a win-win to me!
5. You can’t afford to run promotions. It’s no secret – people like deals and sales. We’ll see commercials for holiday sales weeks in advance (President’s Day Sale, anyone??) and our snail mail is exclusively Amazon deliveries and ValPak coupons. Even if you don’t want to incorporate arbitrary sales into your business, running a promotion every now and then isn’t a bad thing. But, if you’re prices are so low that you can’t even afford to run a sale, you’ve got a big problem. That means you are likely breaking even or already losing money with every sale. The amount of money you make above and beyond covering your costs is called your “profit margin”. This is the area you can play with if you want to run a sale. Make sure your is big enough to offer specials to your customer, even if you decide not to. Find our more about profit margins and base prices in my Pricing Basics post.
6. You’re just not excited about getting the sale anymore. To this day, my heart does a little happy dance when I make a sale. It’s a confirmation that all of my hard work is meaningful and I’m not the only one who cares about what I do. But I’ve been in that place, where getting the sale just doesn’t mean much. If anything, it meant that I had work to do. And I never want the business I love to feel like work. If you’re not completely in love with the handmade business you’ve created, something is very wrong.
Make the change
While pricing may not be the final answer to problems in your business, it’s a great place to start if you know something is wrong. Pricing is at the core of your business and impacts every decision you make. If you decide that raising your prices may be a solution, don’t wait! Do it now. Experiment with incremental increases or bite the bullet and push all of the numbers up. Whatever you decide, make sure it’s a decision you can be proud of and gets you back into a business you love.