our underselling problem

A guest post by Michelle of Wicked Whimsy.

Underselling. The term is probably not familiar to your average layperson, unless they’ve worked in retail a lot or studied business practices. But it’s a practice that, whether done intentionally or not, can seriously harm independent businesses and designers. Underselling is selling at a lower than fair price, not charging a fair, livable rate for time and materials.

I could talk about all the solid business reasons for not underselling (perceived value associated with price, making a profit, you shouldn’t be competing based on prices anyway, etc.) and I could talk about how many people have false beliefs about money, which makes them actually want to undersell. But here’s the simple fact of the matter:

Underselling harms you. It harms other crafters and small businesses, as well.

It’s one of my theories that when we don’t value our selves and our gifts, it directly harms other people. If we know and acknowledge our worth, and our gifts, and their worth, we are infinitely more likely to give ascribe the value that is due to others, and their gifts, and their worths. The underselling dynamic is one of the places where this shows up most clearly.

When you don’t charge enough for your services or goods, it has an automatic effect of making it harder for others to make a decent living from their services or goods. You’re directly affecting other people, just trying to make a living doing what they love. You’re hurting your own community.

It can also affect your customers, which isn’t something a lot of people think about. If you have to sell multiples of what you make just to break even, then you can’t spend the time that each piece deserves. Don’t you think it would be better to charge a fair price, fair enough that you can lavish care and detail on each piece? Your customers will thank you.

And of course, it harms you too! If you can’t make enough money to support yourself, you’re going to end up stressed out. You’ll have to work more to make a living wage, so that means less time with friends and family.

I understand; most people have deep-seated issues about money, because of the way our society acts about it. But selling yourself short isn’t the answer – it never is. You’re worth more – I really believe that, and you should, too.

(If you’re looking for pricing advice, here’s a short and sweet little article on pricing for Etsy and I’m sure you can find oodles of advice at Tara’s very own the Creative Empire.)

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Michelle Nickolaisen is a rainbow-haired writer, blogger, and all-around creative maven making her way in Austin, TX. She writes at Wicked Whimsy about saturating life with constructive creativity, among other topics.

{image credit: liquid paper}

16 thoughts on “our underselling problem

  1. It’s a race to the bottom. Here’s an example.

    A livable rate for building a complete website is something like $2000 to $3500, depending on what’s done.

    But anyone can get this done “for free” by hundreds of people who are willing to do it for the price of their affiliate marketing commission with the web hosting company.

    Then, there’s another large group of people who are Pro-Am, that is, hobbyists with professional skills, who do not need to support themselves. This might include teenagers, stay-at-homes, whatever. Pro-Ams always develop a subculture based on kudos (subculture status, rank) over money (tell me you haven’t seen this in handmade, I won’t believe you).

    Finally, you have pros with enough spare cycles to do such work as a loss-leader, poisoning the well. Why would anyone hire me when Famous Blogger will do it cheaper?

    My entry level rate for setting up blogs is now $2447. Doing it right is hard, tedious work, and requires a fair bit of time with customers. I like it, but I no longer like it well enough to do it at a cost which, well, costs me. If nobody buys at that rate, that’s cool too, because I have other work to do which does pay well. If it means I’ve priced myself out of the website market, that’s cool too. Competing in a market that can’t pay enough to pay the bills is a waste of time.

  2. totally love this post, michelle. it’s hard to think about value, though, when most of us live in a very underselling-driven world. i mean, every email i get from a major corporate entity (target, amazon, etc.) is filled with 50% off and discounts galore. this electronics store guarantees their prices 110%, this one 111%. the way the mass market works, he who has the lowest prices often does win (or at least that’s what the mass market works so hard to convince us).

    anyway, my favorite point you make is that when we price below fair market value, we make it harder for our competitors to charge a fair price. i think some folks see this as a business strategy, making it harder for the competitor, but really it just brings everyone’s bottom line down, eh?

    1. Hey Julie – you’re right, most of our mass-consumer culture is built on price competition. I don’t feel like that serves indie artisans/crafters/biz-es well *at all*, though (obviously! or I wouldn’t have written this), and as a consumer, I’m less likely to try price-checking when it comes to indie items. I’m personally much more likely to look at things like originality, customer service, craftsmanship, and so on. IMHO, that’s what people outside of the mass-market should be focusing on, despite how tempting it is to compete on price alone.

  3. I agree we should not undersell ourselves. Pricing is part math and part alchemy to come up what people will pay while not cheating yourself. I have rejigged prices probably three times this year and am on the cusp of doing it again. It is a continual learning process for me.
    Unfortunately, I think the article you link to doesn’t address pricing structure in an adequate way. Perhaps to start out, but in the long run, someone using this pricing is going to be underselling themselves. There is no mention of overhead or profit to grow a business in the article. A better pricing article (in my opinion) is over at Craft MBA : http://www.craftmba.com/2010/04/21/pricing-your-products-for-growth/
    I am not willing to partipate in what Dave calls “the race to the bottom”. I am worth more than that! 😉

    1. Hey Leona! Thanks so much for adding that other link, I appreciate it. I agree that the link I added in the article is probably only suitable for beginners & that you definitely need to take in overhead, growth, etc. when pricing. I just thought it would be a good place to start. :) Kudos to you for not participating in the race to the bottom!

  4. I absolutely agree to what has been said, however let me throw this out there.

    Judging if an item is undersell or not can be tricky. What I mean by this, that let’s say the same item made in NYC or some place in California will be way more expensive than if made in Texas, for example. The cost of living and everything else varies enormously even within the US and let’s not even talk about other countries.

    Just my 2 cents.

    :)

  5. Historically, artisans spent years as an apprentice, then a journeyman before being able to demand the highest fee for their work. Today this system has mostly disappeared, especially in the US, and I think that is a big contributor to the underselling dillema. I know that two crafters may take the same materials, and the same amount of time, and produce two items that are very different in quality and detail, because one has spent 20 years perfecting their skills, and the other has only been learning for 6 months. These crafters should price differently.
    I find when I comparison shop my compeditors that it is often the beginners who underprice, but I see this as them paying themselves apprentice wages. But because the are not called apprentices, it appears that they are dragging the rest of us down. I really don’t think they are though.
    The artisans at the top of their form are charging high prices and getting them. My aim is to move on up to those hallowed ranks.

  6. I have a serious concern along this vein. I recently entered into an agreement to sell wholesale to a company. However, I later found out from another artisan that this company prices their items under the cost that the artisan sells their works so that they(the company) become the “go to” spot for customers to purchase the items, rather than the artisan. I assume that this is unethical, but very legal, no?
    I’d never heard of this kind of underselling before, and had only encountered that outlined in the article above. I look around at sellers who make items similar to mine and though some are underpriced, my category does a pretty decent job of pricing our work fairly. Underselling is one of many reasons I’ve come to appreciate shopping at properly juried shows. The artists are (generally) happy to be there and I don’t feel guilty about buying something for $30 that should be $80 but isn’t because the artist didn’t price it fairly for herself.

  7. I completely agree with your article & have argued the same point, myself. Nobody benefits in a race to the bottom. To put it into other terms: if you increase your customer base by decreasing your prices/profits you are not gaining anything & may actually be losing ground, when you manage to price yourself out of not only making a profit, but also out of being able to meet costs. You are harming yourself. If you have one customer & you make $0 it doesn’t help to have more customers at $0 (1X0=0, 10X0=0) When those customers also expect others to offer the same deals, you are harming others in the same business. Thanks for the great article.

  8. This all makes so much sense. Why would you want to under sell yourself? For years artisans and crafters have not had the respect they deserve. Time to stand up and be counted. It’s our time to shine. Don’t under sell yourselves EVER.

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