HOMEWORK BEFORE SETTING PRICE - Part II
© Barbara Massie
5. PACKAGING - At the point of sale, you hand the customer a purchased item in a bag. Any protective packaging: a piece of shrink-wrap film or a plastic bag, with a label or an attached descriptive tag, costs money.
5A. Learn more about PACKAGING. Read Andrea Mandel's Favorite Packaging Places.
6. SHIPPING - When materials are delivered to you, a shipping fee is charged. Divide that fee by the number of items received. Each item should have that amount added to its per-item price to cover mailing costs.
7. MARKETING EXPENSES - Any form of marketing done to help sales is a cost to the product. This can be the cost of mailing, printing of brochures, doing a marketing survey, etc. Incorporate these costs into the price.
7A. Learn more about your business by going to the Coastal Enterprises, Inc. site ANALYZING YOUR EXPENSES.
8. COST OF TIME - You travel to craft shows to set up a booth or to craft malls to replenish a booth. How much time was spent on the road? An hour of time not considered at your hourly rate of pay is an hour of profit not realized. Consider all time involved in doing business as an expense!
8A. Determine what your TIME IS WORTH. Use the calculation on the Business Know-How site. It's done on a larger scale than that of most home-based craft business owners, but it gives an idea of what is involved in pricing time. Look at: Put a Price on Your Time.
9. WHAT THE COMPETITION CHARGES - Your price should be in line with your competitors, but don't let the competition set your price. With a quality item, you can be the leader in pricing, you don't have to be a follower.
10. WHAT THE CUSTOMER WILL PAY - Price a little high originally. It is much easier to lower the price then to raise suspicion of customers by having a higher price the next time they want to purchase an item.
10A. Read a description of percentages to use when DISCOUNTING ITEMS.
11. Are your customers "VALUE" CONSCIOUS? - Value conscious customers will pay a higher price because to them "if something costs more," it must mean that it is better!
12. Or are your customers "QUALITY" CONSCIOUS? - People who look for quality will pay a higher price when an item is well-made and attractive.
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