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Myth of Pricing

March 9th, 2015 at 05:53 am » Comments (0)

every time I see the costing advice “2-3 x materials” it makes my teeth hurt.

If you do not respect your talent and expertise – no one else will either –

That means your first decision has to be to clearly define your goal.

Each of us has to make decisions about how we want to perceived. Why any artisan would choose to be comparable to Walmart is not something I will ever understand, but some do.

That means your first decision has to be to clearly define your goal.

The very idea of “what the market will bear” is so demeaning – If the market can’t bear the true value of your work, then you are in the wrong market.

Nothing can squeeze the joy out of creative work faster than turning it into the drudgery of making it a job where you are both under paid and under appreciated.

I know that not everyone has had the advantage of working in product development and so really understanding first the cost of manufacture BEFORE labor, the cost of labor, the overhead (all the business expenses shared over your entire business) and FINALLY the concept of PROFIT that must be added to the COGS (cost of goods sold)

I know it is just repeating what you have read “on the internet” and it seems like gospel. but 2-3 times the cost of materials is NOT what should be used for ANY hand crafted work.

Heck, that is not even the formula used by sweat shop manufacturing –

That might – very rarely – be PART of overall costing factor that is what is used AFTER all “development costs” have been recovered for mass produced items in less than nice places “for the workers”

If your goal is to be a “pin money” crafter, where all you really want is creative outlet and maybe be able to “replace” materials – that is your choice – neither good or bad.

If your goal is to seen as a professional, one who has invested time and money to learn their craft, then you need to rethink your pricing formula.

A large part of my life has been devoted to helping designers with tough love speech –

If you are in the pin money group, happy to recieve no compensation for time and talent and expertise then your costs, at the very least price for the COMPLETE replacement cost as if you had to make them the work again, and had to buy all the materials.

Or simply choose what many do, make for your own enjoyment and hopefully given as gifts to friends and family –

Obviously I have strong feelings about COSTING and how it effect PRICE – and someday I need to finish ‘the book” but if you are interested in considering more than slave labor pricing, – there are some blog articles starting at: http://wheatcarr.com/biz/pricing-pt-00-intangible-costs.php

If nothing else, please unload that gun you have pointed at your foot, respect the decisions of others instead of tearing them down for their business decisions and get past the bad business advice of applying mass production costing to hand crafting and above all – lose the false modesty, block the green eyed monster and decide what is right for you.

Pricing – Pt 6 – COGS Individual Components

November 24th, 2013 at 12:35 pm » Comments (0)

Although not the only element in COGS (Cost of Good Sold) relates to the cost of your components = the second most common mistake I have observed is not using Replacement Costs when planning your price.

Not unlike insurance, your costing needs to reflect NOT what you paid for each bit and piece, but what it will cost you to REPLACE that item in your inventory.

What does she mean?

Recently I read in a “business” group of someone basing their selling price on the “deal” they got for one of the major components in their work.

Well, what happens when they run out of that, OR someone says, I want 25 of that design but in different colors. Or, you are working a local craft, flea or farmer’s market and up walks the “been looking for weeks but not buying” and want to know why that piece cost $5 last week but this time its $6.

It is always easier to lower your price than it will ever be to raise it, suddenly with no explanation. Nor does it make “sense” to the consumer when something that looks the same has different pricing without obvious – to the consumer walking by your table – differences.

There is often, especially for those who choose to create in an over crowded marketplace stuffed with similar products produced in less than fair trade conditions – can you really afford the “customer satisfaction” issue?

If you must – for some reason of your choice – decide to lower your price, then at least clearly mark it as a “special price” if asked, it is okay to say “I got a really good deal on the threads, but when these are gone, I won’t be able to replace them for the same cost”

Still if you are in this for the long run, especially if you are in the building stage of your business, far better to take advantage of the deal, but price the finished work as if you had to replace it “at full price” next week.

Pricing – Pt 5 – More Intangible Costs

November 24th, 2013 at 12:06 pm » Comments (2)

There is a sentiment that pops up fairly often on FaceBook about “When buying from an artisan (one who works with hands and heart)

While it seems geared to those who are buying our work, there is much in it to think about as you decide whether selling your work is really what you want to do. Anytime I accept a commission or am asked to sell a completed piece, here is what I think about as the Artisan/Maker.

    As an Artisan (one who works with hands and heart)

  • You are Selling MORE than just an object.
  • You are selling hours of skill building and experimentation.
  • You are selling days, weeks and months of frustration
  • You are selling moments of pure joy when concept meet reality.
  • You Are NOT JUST Selling a Thing.

  • You are selling a piece of your heart,
  • a part of your creative soul,
  • and a precious moment in your creative life
  • .

One of the hardest decisions any artisan has to make is deciding if it even makes sense to sell their work. Is what your are making unique and thus can compete. Or, it is a hobby you and other enthusiasts enjoy – but frankly there are just too many sources for the same product you are making.

Is what you are producing for sale able to command its fair market value. I should warn you I have little patience for “what the market will bear” because if the market cannot bear to pay you a fair premium then you should not be in the marketplace.

While of consuming interest to you, really just a passing fad that may or may not have a permanent place at any level in the crafts market place. For example, two years ago it was friendship bracelets, this past year Paracord knotted bracelets were hot, looks like the next few months we will be seeing lots of rubber band jewelry.

Thinking about Paracord, of the dozens making Knotted items, I can only think of maybe 4 who are really producing anything approaching unique enough to build a niche in the market place for themselves. Maybe another dozen who are producing products to be used either to make the bracelets (jigs, charms, etc) that may or may not earn them a place in supplying the needs of enthusiasts.

You also need to decide if you are comfortable setting your pricing in a way that undermines the good of the craft for short term gain. If you are just into selling for the pin money, admit that to yourself as you consider your path

These are questions only you can answer, but if your work “looks” like a Wal-Mart special then it is going to be a tough road to over come the financial challenges that can easily take the joy of creating from you.

If not, then maybe instead of trying to make it a business, you should focus on enjoying this, building your skills, knowledge of your chosen craft and expertise. You might have to find another way to fund your hobby, but it just might be well worth the effort so you can continue to

Enjoy The Making

Pricing – Pt 0 – Intangible Costs

August 17th, 2013 at 14:00 pm » Comments (2)

This one of the two parts where I where I allow myself to use more emotion than fact about the business viability of craft. Hereafter, it is about business and as such, as objective as possible

REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Although there are others, including the stress of deadlines, the uncertainly during off season (selling yarn from April to July can be pretty scary in terms of regular cash flow)

The largest consideration you will want to at least consider is taking something you love and making it a JOB.

Every says if you have a job doing something you love, then it is never work.

But that only works when you have someone else to do all the NOT FUN stuff mention in Pts 1,2, and 3.

When you have ALL the responsibility plus the laundry, the kids, the pets and every aspect of everyday life, the non-creative part of business and regrettably often the part that takes the most of your time for the least amount of joy – can suck the joy out of the creative aspects.

If you do not accept anything else I suggest and are determined to go for it anyway no matter how illogical cold analysis says otherwise,

Please don’t get yourself so far in financially that you cannot say “the heck with this other stuff” and go back to enjoying what you love. This means building inventory and supplies over time not getting into huge financial debt.

At the end of the day,
if you can’t
enjoy the making,
there is no point

Pricing – Pt 1 – What Is Your Goal

August 17th, 2013 at 13:59 pm » Comments (0)

Up to you, but this series is going to be a work in progress for a very long time. REMEMBER ONLY YOU can properly and completely perform the necessary due diligence to determine your costs – this article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.

Among the perennial questions in just about any group where people also sell their finished projects the question of pricing will not only come up but it will be brought up on a rather regular basis.

You may not be surprised to find I have some strong – some have said harsh opinions. My answer is usually if you can’t take the heat, get out of the kitchen. The reality of the business world and certainly the competition for “disposable income” in any economic time, much less one where folks are worried about paying their mortgage or buying food or medications or clothing their family do not make it less harsh.

Unless you have a patron – perhaps a spousal unit or even a day job – that covers your cost of living. If you want the life of an artist, best you start by understanding you may have to make some life style choices.

Because unless you are very very lucky, not only unique but manage to be discovered – the road to success is long and hard and increasingly paved with people who can afford goal number one so will be giving away what they do.

It was not until the first time the sale of my art made the difference between eating or not were beaded earrings outside a Dead concert. The reality of that experience along with realizing that my pricing meant I could not afford to buy the materials to make more, made the bus ticket home look like a very attractive alternative even if the job and the life waiting there were a lot less interesting. So the sooner you get smart about pricing, the better of you will be.

You can not price your work without answering as honestly as possible (and it took me a LONG time to be able to do this) WHAT IS YOUR GOAL?

Do you want/need the ego boost of calling yourself an “artist”?
Do you want/need to make “pin money” so you can buy more materials to continue your “art”?
Do you want/need to contribute to your support or that of your family?

Next up… Costing

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    Wheat Wrote WHAT !?!Assumes ONLY YOU can properly and completely perform the necessary due diligence to determine your course of action in life or business - ALL article, like all on this blog, are a starting point, not the last word by any means. While I hope it is worth more, its value is exactly the same as what you paid for it – no dollars.
    Wheat Wrote WHAT !?! began as a place to express opinions strongly held or silly without everyone getting their panties in a twist assuming those opinions to be a personal attack because they lack the ability to discern between discussing the point and flaming a person.
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