The following article was posted by Morna McEver on her blog. Morna is the founder and CEO of the International Association of Creative Arts Professionals. I follow her blog and occasionally dial in to some of her free conference calls on running a craft business. I think she’s highly insightful and I would love someday to attend her Creative Arts Business Summit.
The article is included in its entirety below. It focuses on how creative types value their work and maybe underestimate their customers. Take a minute to read the article and I’ll chime in at the end of it.
Whose Wallet Is It?
In the past couple of weeks I have had several different conversations that seemed to have a recurring theme — pricing and value.
One conversation was with someone creating a new online teaching program, and she was struggling with what to charge people. I thought her price was really low, and I asked why. She told me that she just knew not all her customers could afford to take the class and she really wanted everyone to have that opportunity. I asked how she knew that they could not afford the class, and she wasn’t able to answer that question. It was just her gut instinct. When we went further with the question, it was really that she would not have paid that amount. I asked her what she was doing living in someone else’s wallet and deciding how someone else spent her money. We talked about what her value was, and she went on to charge a higher price. And yes, her classes have filled with people who absolutely love what she has to offer.
There is something to be said, too, about people expecting value at a certain price. Would you expect the same value in an online class that cost $50 vs. an online class that cost $350? Would you put the same effort into the class?
If you are the instructor, what value do you place on yourself at each price point? And, it is not really all about delivering value on your end, it is about valuing what you do deliver.
Another conversation I had was with a neighbor who is struggling with when to leave her high-paying corporate job to fully commit to her creative arts business. She is a wonderful pet photographer. She keeps telling me that it is impossible for her to make what she is making in her day job. Maybe she won’t make her nice six-figure salary, at least right away, but I say it is an excuse that just holds her back. She is afraid to make that leap, and she is afraid that people won’t pay her. Yes, she is living in their wallets, too, feeling sorry for them, deciding how they will spend. And, she is stopping herself from the joy of making her own decisions about her business and her life.
And, then there’s Jan, who makes incredible mixed-media art quilts. Last month a couple was interested in one of her pieces, only they told Jan that they couldn’t afford to purchase it and asked her if she would negotiate on the price. Jan started questioning whether her work was overpriced and whether she should lower her price. Jan really wanted to make this sale. Again, Jan was living in someone else’s wallet not her own. While it’s fine to be empathetic to someone’s plight, I think Jan was being sympathetic and living in her potential customer’s wallet. Jan had a couple of options: saying no because she knew her value and waiting for the right buyer, or offering to work out a payment plan with the couple.
I believe that your ideal client is out there, the person who will pay you what you think your classes or your art is worth. Yes, you do have to be clear on who they are and where they hang out. And, you have to be super clear on your value. So find your value and stop living in someone else’s wallet.
—I’ve read this article over many times because everything in it strikes a chord with me. My own immediate feeling when determining the price of one of my handmade products is that no one will pay over a certain amount for something handmade. I can see that I de-value my own work based on an assumption I’m making rather than reality. I’ve made a blanket statement about my customers and now I think I’ve been looking at this wrong. Why have I been making this assumption? Is it because I think that customers don’t have the money to spend or is it because I’m in a hurry to sell the item and I don’t want to wait around for the right customer who does? I’m not really sure. Or maybe I assume people don’t have any idea how expensive fabric is or how long it took me to make the item. It always takes longer to make these items than anyone would think it does. By charging less money than what the item is worth, am I effectively saying that the product isn’t worth the bigger (more accurately valued) price tag? Or that my time isn’t worth more than minimum wage? So often the prices on handmade items do not reflect the labor costs.
I have a friend who sells beautifully decorated and delicious cookies. She smartly charges what she believes the cookies are worth. She does a great business and she knows who her customers are and she knows that if they want a beautiful and delicious cookie, they will pay the asking price. Long ago when I was selling handmade purses, I kept the price low figuring I would gain sales. She asked me why I didn’t charge more for the bags even if I didn’t have as many sales. The higher price would make up for the lower sales volume. As time went on I got bored and burnt out making bags at the lower price. I think her perspective was right. If I priced them higher and took a better look at who my customers were and where they might hang out, I might still be in the bag business!
How do you figure out the value of your products? Do you think there is market for everything? Do you undervalue your items because they are handmade? I do truly believe that most people have no idea about the cost of raw materials in the craft industry. Fabric is expensive. Thread is also expensive never mind zippers, batting and purse handles and the like. Another cost the general public might not realize is the cost to do business such as the cost of web hosting services and shopping cart fees. It all adds up rather quickly.
I think the take away here is that we need to know our costs, find our true customers and stop assuming that our items are worth less than they are. As Morna says, “Whose Wallet Is It?”
*****Morna McEver is the founder and CEO of the International Association of Creative Arts Professionals where creative arts entrepreneurs craft business success. Her weekly e-zine offers tips, techniques and inspiration to help you craft business success from your creative arts passion. You can sign up for a FREE subscription at http://www.creativeartsprofessional.com.