June 14, 2012

raising my prices killed my business (but it was still a great decision)

This is a guest post from Chantelle Brightbill.

"Turn In the Road" by Terra Holcomb - click for info

A few years back some of my friends told me my quilts were really good, and I should sell them. I was a stay at home mum with one child, so I dived right in, set up an account on Etsy, consigned at a local baby boutique, signed up for a show, the whole craft scene. I didn’t write a business plan because I didn’t actually have one. I was just making stuff and throwing it out there and seeing what happened. Some stuff flopped. Other items sold really well and I hated every second I worked on them. Some items sold well but paid $1/hr.

I was floundering around and hoping something would work. Miraculously, something did. A few of my designs became popular; I started selling them as fast as I could make them. I had an eight week lead time. I felt successful, if constantly stressed. But then I discovered when I added up all my costs (because, of course, I hadn’t been keeping track) that I had made a loss for the year. I was concerned, but I had been told that no one makes a profit the first year, right? But the next year wasn’t much better. I had more success at shows and selling online, but I still only broke even.

I thought I was charging enough, but I was not.

I was constantly busy, but I felt like I was chasing my tail, spinning in circles.

I had plenty of excuses for my lack of profitability. The economy is slow, I am still learning the ropes of running my own business, I had two more babies. But while those things have certainly affected my earnings, the real problem was this:

My prices were too low.

I did possibly the most terrifying thing since l signed up for my first craft show: I doubled my prices. I would love to wrap this up by saying that sales took off and I am now quite profitable. However, my sales have been very slow since. But I can think again. I am no longer spinning.

You see, I have been reading along here, and on other sites focused on the small craft business for years. I am naturally quite an introspective person, so I have taken much good advice to heart and reviewed my business periodically and thought about how to make it best serve me. I have made lists of goals and five-year plans. Inevitably they get lost under a leaning tower of sketches and invoices in the studio I am too busy to keep tidy.

Having this hiatus means that I can actually stay on track and begin working toward these goals.

I did not have a great eureka moment. I already knew everything I needed to know, but the status quo kept pulling me back.

The raise in my prices has accomplished what I could not do alone, forcing me to take time to take the steps I have needed to take for a long time. I am working on following a better path, with more thoughtfulness and linear direction and less circles and dead ends.

What about you? Have you been so busy making money that you forgot to make a profit?

- – -
Chantelle Brightbill is a modern quilt designer with a strong commitment to sustainable materials. She wants the art you put on your bed to be as beautiful as the art you hang on your walls.

Filed Under: Buy You, For You, guest posts Tagged With: , , , , , , 17 Comments
December 28, 2010

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.)

——

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}

Filed Under: guest posts, mindful spending Tagged With: , 16 Comments