Your prices and the Seven Secrets

We’ve cov­ered a lot of ground on pric­ing from Cost of doing Busi­ness to behav­ioral eco­nom­ics. Each of these areas  should be part of your busi­ness mind­set on their own and they can really help you when  com­bined into your over­all mar­ket­ing mix as a strat­egy for build­ing your art busi­ness into a sus­tain­able source of income.

Remem­ber pric­ing is both art and sci­ence. As an art it requires you to be intu­itive, cre­ative and obser­vant while the sci­ence part pro­vides solid infor­ma­tion to help you design a strat­egy that works for you and your buyers.

So here are some key fac­tors to remember:

Do…

• Know the sen­si­tiv­ity of your buy­ers to price in every mar­ket venue you work. Review your sales records not­ing trends between venues pay­ing atten­tion to price point and product.
• Know your costs as in cost/unit. How will changes in pro­duc­tion costs effect your prices, some may go up, some may stay the same oth­ers may decrease. Always include your own labor cost.
• Know what effect price changes will have on your mar­ket and your sales, this is called price elas­tic­ity. In pric­ing an item some­times pric­ing it low will bring in more sales and more vis­i­bil­ity of your prod­uct. Pric­ing the same prod­uct high will result in decrease in pro­duc­tion time but it will decrease your expo­sure to poten­tial buyers.
• Know the dif­fer­ence in buy­ing habits for dif­fer­ent venues. This is more about behav­ior than price, know what venues buy based on price or value. Also pay atten­tion to their will­ing­ness to inter­act with you, what they are attracted to etc.
• Know  what your typ­i­cal buyer needs to walk away feel­ing happy they bought from you. Go back to your ideal buyer what does she need to feel good about her pur­chases. Pay atten­tion to your buy­ers, how much do they match your ideal? Where do they differ?
• Know that the prices you set will reflect in the buy­ers image of your busi­ness. Make sure the image you project for your busi­ness is the image you want to project. If you want to be known (your mar­ket posi­tion) for qual­ity then your prices should not be bar­gain basement.
• Know that your buy­ers are look­ing for fair pric­ing not nec­es­sar­ily low pric­ing because the two are not the same.
• Know that you need to be one hun­dred per­cent con­fi­dent of your prices because any doubt on your part will be sensed by your buy­ers caus­ing them to feel less con­fi­dent about buy­ing from you.
• Know that buy­ers who trust and  know you will have no prob­lem pay­ing your prices because price is not why they buy your stuff.
• Know your mar­ket and your posi­tion in it so your prices are con­sis­tent with who you are and what your busi­ness represents.
• Know the value of your work and express it so your buy­ers focus on value and not price
• Know that you can sus­tain­ably influ­ence your buy­ers per­cep­tion about the value and qual­ity of your work through your  pric­ing strat­egy and it’s place in your mar­ket­ing efforts.

Don’t…

• Price from your point of view…remem­ber your bag­gage influ­ences your price.
• Assume you know your buy­ers habits with­out the research. Pay atten­tion, keep records, and notice trends and behav­iors so you can see if buyer habits match your assumptions.
• Price in iso­la­tion, remem­ber your bag­gage, do what­ever it takes to get feedback…ask friends, buy­ers, strangers your dog.
• Set prices with­out know­ing the price point trig­gers of your buy­ers. Check your sales his­tory for indi­ca­tors and trends by price point and venue.
• Set your prices low in order to sell unless you want to be seen as a discounter
• Set your prices with­out know­ing your pric­ing and profit goals.
• Don’t posi­tion your­self in the wrong price cat­e­gory as in low, aver­age or high. Price in the cat­e­gory that best suits your buy­ers and your busi­ness’ mar­ket position.
• For­get that your buy­ers need to feel good about their pur­chases being authen­tic in your engage­ment with them.

Seven pric­ing strate­gies for artists:

Siz­zle

Describe your work in terms that bring out it’s rich­ness and value, then dis­play it to enhance that value and finally price it to match. You may also want to leave prices off your high end work so poten­tial buy­ers will have to engage you, giv­ing you a great chance to find out how your work can help them.

Num­bers

If you know your mar­ket venues and its habits, price your work so that it reflects those habits and stays within your busi­ness’ mar­ket posi­tion. This approach takes into account the actual num­bers used in a price and its effect on sales,like $19.95 vs $10.00.

Fries With It

This strat­egy is much like the one used by Mac & Don’s when they ask if you want fries with your order. Here though we aren’t offer­ing fries, instead we are “up sell­ing” by sug­gest­ing the pur­chase include some­thing else that would fur­ther enhance the buyer’s expe­ri­ence of their pur­chase. So if you are sell­ing cof­fee mugs, you might sug­gest a cream & suger set, or a mug rack. The idea is not to get them to buy some­thing they don’t need instead some­thing that you know would improve their expe­ri­ence of your work.

The Wrap

The pack­age or bun­dle approach is all about putting sets or col­lec­tions together. In this approach you add some­thing that com­pletes a set and in doing so add to per­ceived value, so a fiber artist who makes hand dyed work with unique designs might offer a liv­ing room pack­age that includes pillows,and table run­ners all designed to work together. The total price of the pack­age would be less than if each piece was bought indi­vid­u­ally. The ben­e­fit to your buyer is they get more of your work in a form that really lets them enjoy it more than if they bought one piece.

The Free Prize Inside

This approach gets your buy­ers inter­est by offer­ing some­thing extra that doesn’t effect your over­all profit much but is enough to push them to buy. It could be, free ship­ping, a free one hour con­sul­ta­tion to help them place your paint­ing in the best spot, or a free design guide for using your work.

U-Price It

This is kind of an extreme approach but it has been build­ing recently in a num­ber of venues. It is basi­cally the old “slid­ing scale” approach where a buyer deter­mines the price. While sev­eral restau­rants have been using it suc­cess­fully by allow­ing their cus­tomers to pay what they think the meal was worth, the most suc­cess­ful use of it is to set a low point and a high point or a range. This strat­egy has been work­ing for some small busi­nesses to the extent that their over­all profit and sales have increased because they have imme­di­ate feed­back and knowl­edge of how their mar­ket val­ues their work.

DIY

Per­ceived value always increases when buy­ers can cus­tomize their pur­chases or even assem­ble your prod­uct or make some­thing that might accom­pany or acces­sorize it. A DIY approach also helps buy­ers take own­er­ship of what they pur­chased and increases the like­li­hood that they will return and pur­chase more.