Sidsel Dorph-Jensen is a Danish award-winning designer-silversmith, who studied at the Royal College of London. She designs & makes unique silver tableware, and was awarded Silversmith of the Year 2011.
Using her own experiences as a crafter and her love for marketing & running a business, she now works mostly to help other makers & crafters start and boost their business.
She wrote this personal guest blog for The Design Trust:
“Pricing a product is about more than just numbers.
Don’t get me wrong – there’s a lot of number juggling going on when you try to find the right price for your product, but it’s as much about value and emotion, as a pure mathematical exercise.
Pricing is one of the things that can take me way outside my comfort zone, because it’s a struggle between how I value my creations versus how I think a customer might value it.
How many times have you felt that you want to charge a higher price, but you’re unsure if your customer would pay that? You might be thinking something along these lines: ‘I wouldn’t pay that for my products, so why would my customers?’
But you and your customer don’t think or experience the same when it comes to what you would pay for your type of work.
In order to get the price right, there are 3 things I always do:
1. I identify my minimum price is, and I never sell below that
The minimum price is my cost price: all my expenses added up, what it cost me to produce one piece:
the material + the time spend making + my fixed expenses
The material cost are self-explanatory.
How much you want to pay yourself per hour or per day is entirely up to you, but I always distinguish between work that only I can do and work I could pay someone else to do, and price accordingly.
My fixed expenses are all the expenses that help me run my business, such as workshop rent, electricity, tools, admin, postcards, telephone, etc. A good thing to do is to add all the expenses up for a whole year, and then divide it out on the hours you spend making. I know this can be a very rough estimate, but it gives you an idea of the expenses you need to cover.
Add those 3 up and you have the all your expenses for that piece. This is the starting point when you price and the absolute minimum you need to get for your piece.
On top of the minimum you can add your profit and if you’re selling through a shop or gallery you need to add their commission.
2. I price according to the value for the customer – not for me
Now you need to find out what value the piece has for your customer. There’s a difference in what you would pay and what your ideal customer will pay. In order to get an idea of what your customer will pay you need to find out who he/she is.
You might see material, time, techniques and processes when you look at your piece, a customer sees something else. They see value that relates to what the piece can do for them, how it makes them feel. If it’s jewellery it might be to add beauty, style or confidence. Is it tableware then it might be a functional value, style or pleasure.
There are many different ways to find out what it is. If you already have customers you can ask them.
So for my customers, it’s about luxury, having a special piece of silver no one else has, and my price needs to reflect that.
3. I position myself where I want to be
The first thing you should do is to have a look at your competition – see what your colleagues are pricing the same kind of work at. You’ll probably discover that there’s quite a difference.
The next thing you do is to find out where you want to position your work in relation to your competition.
How do you want to be seen? So, where do you want to be positioned on the barometer from the high-end quality craftsman to the mass-produced accessible product?
You need to look at your work in terms of quality, technical skill, design and concept in comparison to what’s being offered, and position your pricing in the area that fits how you want to be seen.
If you’re making top quality one-off pieces, but price them too low – people get suspicious and don’t think they are actually worth more, and they won’t appreciate them for what they are really worth.
Pricing is a fine line and a combination of parameters and there are many ways to do it. It’s not something you can expect to get right the first time around, but you can refine it as you go. The more you get to know your ideal customer, the easier it will be to price right.”
If you found this guest post by Sidsel useful, then you also might like …
You might also like to read more about pricing and costing in these Design Trust blog posts How to create a design brief and quote, what price terminology to use with galleries and shops, and different ways to price your work.
Our Business Club members can also …
Watch this 30min Design Trust Dialogues video interview with Sidsel where she talks candidly about how she combines creativity and running a business.
Or you can watch the 1hour recording of Sidsel’s pricing webinar for The Design Trust explaining how to get the price right for your product.
If you have got any comments, tips or questions about pricing, do share them with us in the comments box below: