One of the things I've been thinking a lot about over the last year or so is how to make more money from what I do. I'd love to get to the point where I'm paid a decent wage for all the hours I put into my business. So I thought I'd share some of my thoughts over a mini series of 3 posts.
My starting point is a small business selling handmade products that has got established and found products that people want to pay good money for. But it's just not making sufficient profit. How can you start to make more money by selling your handmade products?
Part One - Increase your prices
The most valuable lesson I learnt about pricing was this:
I used to worry about putting my prices up because it may mean that less people would buy my work. And this bothered me. I didn't want less sales, I was trying to make more sales. Then I read the above, - and I wish I had noted which amazingly insightful person shared this valuable lesson so I could thank them. It's possible to make less sales but more money.
Lets think about an example. Say I sold hats for £8 each and sold 20 a month, then doubled the price to £16 but only sold 10 hats a month as less customers wanted to buy my expensive hats.
So my profit is higher, my costs are less AND I've only had to spend time making 10 hats rather than 20!
Therefore, put your prices up and don't worry about losing a few customers. You don't have to double your prices, the general rules will work even with a smaller price increase. If you sell your handmade products at a higher price, even if you get a few less customers, you could easily still make more money overall. Obviously there will be a point at which no-one wants to pay out such a high price tag and you lose all your customers, so it may take a little experimenting.
Justify the price increase
To help sell your products at a higher price point you might need to justify the price increase. Here are three ideas:
1. Sell your expertise.
If you have been running your business for a while and you have made a lot of your products you are no longer an amateur just starting out, you are a skilled craftsman. Make sure your about page and product descriptions really sell this.
2. Smarten up your branding.
If you want to sell at professional prices you need to look professional. My sales really started taking off when I refreshed my branding a couple of years ago. I started to look like a proper shop.
3. Make sure your packaging reflects the quality of your product.
It might be ok to ship a cheap item in a recycled envelope, but if your customer has paid a lot of money they may be a little disappointed (unless recycled packaging is part of your brand). Think carefully about how you present your item to the customer. Does it need a packet, tag or belly wrap? Will you gift wrap it? What sort of packaging will it be shipped in? Make sure everything is consistent and well branded and your (now a little bit expensive) product will feel worth the money.
Parts two and three are now available:
Part two - make more money by using higher quality materials
Part three - remember that your time is money