One of the hardest parts of being a business owner is understanding your worth. That’s right. The hardest part isn’t making your product. It’s understanding what it’s worth and being confident in that. Deciding and setting prices in a creative business is one of the most important conversations you can have with yourself. Keep reading to learn more about how you can reframe your mindset when you are determining how much to charge product-to-product.
When setting prices in a creative business, you are charging for more than the product itself.
If you have decided to go into business as a maker or creative business, there’s a good chance you’re good at what you do. You believe you’re the best of the best (or at least you should!). When setting prices in a creative business, keep in mind that you are not only charging for the product itself and your time to make it. You must also factor in the value of your experience and your knowledge.
This is the most basic principle in the concept of “value pricing.” You are not only charging for the product itself, but also for the value it brings.
Consider value pricing when setting prices in a creative business.
Let’s say you run a macrame business. The cost of materials to make macrame pieces is relatively low; however, it is tedious work and could take hours to complete just one product. A lot of people in creative businesses will factor in the cost of materials, and then pay themselves however much they feel they deserve “per hour.” If the materials per macrame project cost $5, you pay yourself $15/hour, and it takes you three hours to complete the project, you would charge $50.
The problem is, you end up punishing yourself if at one point it only takes you one hour to complete the project. If you stuck to your original pricing agreement, you would only make $20 from the project. Setting prices in a creative business can be more than this.
Set prices with the ideal customer in mind.
The prices you set and the types of pieces you produce will inevitably attract a certain type of buyer. In your business, you can choose if you want to create products that lean more towards being a commodity or a luxury item. You can hang out somewhere in the middle, too.
Commodity items are usually able to be produced in bulk and are more day-to-day items someone would have multiples of. Luxury items are usually one of a kind and, depending on the buyer, would be purchased for a special occasion, or as a treat for themselves.
You should expect a certain amount of pushback about your prices. Don’t fret over these people and conversations. Those who are willing to pay what a product and you are worth are the types of customers you want to have. If this means spending a few extra hours on a project so that it can be that much more special and priced that much higher, you should do it. You have a gift to create beautiful things! Your pricing should reflect that.
If you would like to learn more about setting prices in a creative business, please don’t hesitate to reach out for a consultation! We would be happy to coach you through this process.