Marketing Monday: 6 must know things for pricing

 

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Know what your costs are

This is very simple and yet a lot of folks disregard it because they think it entails a lot of left brain machinations. I’m here to tell ya if that was the case I’d never ever address it…because while I grew up as the tail end of the slide rule generation I’m lucky to add 2+2 and get four if I have to do it in my head. Thankfully, I don’t have to any more due to the advent of those funky things we called Goesintas ( as two goes into four or calculators).

While it may seem obvious that your prices must at the very least cover your costs and if you intend to support yourself with your work the price must also include something extra to help you move out of your van. This process is called knowing your “Cost of Doing Business”. In its smallest form it amounts to adding up all the things you need to spend money on that

  • Cover the costs of the stuff you need to have to make your stuff… in other words supplies, expenses like costs associated with firing a kiln load of pots.
  • Let you move out of your van, like PROFIT.

    To do it the short way, just add up your studio related expenses to get a base number that will show you the least amount you need to make to keep your credit card bill down and your studio working. That’s your Cost of Doing Business.

    If you then subtract that from the income you receive you will have the minimum you need to at least break even.

    However, I would suggest an easier way that would give a good idea as to what you need to make to cover all your costs while factoring in a desired profit (for moving out of the van). There are a couple of tools available that I have used in my photography business.

    • NPPA (National Press Photographers Association) Cost of doing business calculator which is an online tool.
    • ASMP (American Society of Media Photographers) Cost of doing business calculator which does the same thing as the NPPA one only in more detail and as an Excel file. It is also designed to let you determine your annual income
      You can download it here: cdb_calc_06
    • Art Worth Calculator

    Know what you need to keep you in your studio

    Ok…now you know how much it costs to make your stuff and to at least keep you from either living in your studio or out of your van. It is probably safe to say that you’d really like to have living arrangements that at least gave you a kitchen and your own bathroom, so now you have to figure out what you need to make to get those tow important things. It is called profit and amounts to income that isn’t eaten up by other costs.

    This part is more art than science and subject more to your own preferences than anything else. I generally, list out the things I need… like paying myself, upgrading computer etc. And then prioritize them by their order of importance and NOT by their cost because cost can lead me down a rabbit hole. Once I’ve done that, I add what I call contingency which can be anywhere from 50 percent to 100 percent to get the profit I need to make. The details of pricing individual products will be covered later.

    retro_buyersKnow your market and its buying habits

    Before you attempt to set pricing strategies you gotta know they have a chance of working with your market. So spend some time now reviewing your perfect buyer profile and both your market demographic and psychographic descriptions. What causes them to buy? What type of stuff do they buy? How do you really fit into their buying habits?

    Know what you are really selling

    Instead of describing what we make in a way that would put even the most ADD among us to sleep in seconds, we are going to look at how to REALLY describe what we make and when to use that description. For now just starting thinking of your stuff the way a chef might describe a sensuously luxurious meal.

    Know which three types of buyers you attract

    There are generally three types of buyers and it is important to know where yours fall. Knowing where your buyers fall will be key to your ability to price and sell without discounting. The three types are:

    • Those who willingly pay full price for your stuff because they know and trust and they know the value of your work.
    • Those who shop for cheap stuff because they really can’t afford much let alone your premium prices but they do recognize your value.
    • Those who are hunters, always pursuing the lost price possible as a trophy without regard to quality. These folks proudly brag about how they “saved” five cents on a whatzit despite using up $10.00 of gas hunting and bagging the prey.

      Knowing this information can help you with your pricing strategies by helping you understand what triggers their desire for your stuff.

      Know your market position

      Go back again and check your business model as well as your USP and make sure you are clear on how you are positioned in the market. Does pricing play a major role in your market position. So if you are positioning yourself as a true artiste aiming at the luxury market low pricing may hurt you. Your pricing must be consistent with your position.

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