C&T Q&A ~ Raising Prices?
Today’s question is from Ellie, and she writes:
Thanks for your Mailing List Guide. I’ve had it in my mind to purchase it for ages, so glad I finally did. Can’t wait to put some of those tips into action. It seems the best thing – not any extra work than what I’m currently doing, but just changing a few things…
I’m writing to ask if you have any advice about raising prices? I’ve looked on your blog, and found a couple of short posts about it. Do you announce it to the world that you’re raising your price, or not say anything? When I set our prices I did all the planning and research and I know the prices are good – but I think on the lower end of “good”. I think what I undervalued was our creative process and artistic aspect. I costed our time out, but only at a set nominal rate of what I thought I’d have to pay someone else to do the hard work of what we do. I guess it doesn’t take into account our designing aspect.
We’ve had an excellent Christmas, much busier than I expected. And already the year has started off busily – we barely got a break before our stockists were reordering. Of course it’s fabulous that people want to buy our beautiful work, but I feel like maybe if we raised our prices we might be less rush rush busy and still be making same dollars (and have more time for designing new products).
I’m just unsure of how to go about raising prices. Do I have to justify it all to existing customers and shop stockists – or simply say it’s what’s happening? Do I give notice for people to buy up before we raise our prices or just do it? Do I announce it on all our social media, or just on our website page and blog…???
Thanks so much for any thoughts or advice you can offer me. Or even perhaps directing me to some links or books to read.
I don’t think pricing is something we’re ever done with in our business – it’s always something to re-consider on a regular basis. Are your prices still reflective of your skill and experience? Is the market bearing them? Are you selling too much – and therefore do you need to raise them? These and many more questions will come up during the lifetime of your business.
Ellie is at the brilliant stage of being so successful that she’s struggling to keep up with orders and still keep the rest of her business going strong. It’s a pretty lovely reason to have to re-consider prices – but it’s also a stressful one.
Why? Because even though you know you need to raise those prices, you’re still scared that once you do, your sales will suddenly dry up and you will have shot yourself in the foot.
I know this intimately – I’ve been through this process myself a few times with Epheriell over the years.
As for how you go about it – the answer is… it depends.
I don’t really have stockists, so that’s something I’m flying a bit blind on. Since I sell the vast majority of my products direct to the customer, I have a slightly different relationship to consider.
However, I think we can use some general guidelines that will work for both situations.
I have raised prices a few times, as I said. Twice over the last few years I’ve raised my prices store-wide. The most recent price-rise I implemented was a more focussed one – I only raised the prices on my rings.
I approached each rise in a different way.
For one of my store-wide price rises, I actually made a pretty big deal of it… to my fans. I wrote a big post to my mailing list, telling them that I was raising my prices – and why. I explained that I was so extremely thankful for all their support, and that I was simply reaching the point where I realised I had been under-valuing my work, AND that I was, frankly, getting too busy to keep up. Hence the price rise.
I used this as a bit of an opportunity to encourage my customers to take advantage of the last few days of old prices – kinda like a pre-price-rise ‘sale’, if you will. I got a lot of orders through and lots of lovely words of support from customers and friends. It was heartening that I didn’t get any ‘how dare you put your prices up’ messages. I think I helped deflect that by being open and honest, and explaining my reasoning.
However, I didn’t really make a big deal of it to the wider public. I saw this as an opportunity to connect and basically reward my fans – not only by giving them a heads-up about the price rise so they could get in beforehand, but also by sharing my story with them.
For the wider public – those people who didn’t have a connection to my brand, and who were perhaps just finding my work for the first time? I didn’t feel any need to publicise my price rise to those folks. Because when they saw the new price, it wasn’t new to them. It was what it was. I only felt the need to tell those people who’d bought from me before, so they didn’t get a shock when they came back again and saw the jump in prices.
Sales did slow down a little for a while after the rise – but because I put my prices up, I wasn’t earning any less money (actually, more) with less work. Things were back in a place where I had time to work on other aspects of my business again.
In short – I like this approach as an option for you, Ellie. You can get in touch with your stockists, let them know you’re rising prices on such-and-such a date, and why, and encourage them to get in with an order before this date if they want to. Depending on the level of connection you have with direct retail customers, you might like to do the same with them. It’s really a personal decision – as you know your customers best, and therefore how they will respond. I think people appreciate being kept ‘in the loop’ so to speak – especially with small handmade businesses where they might feel a deeper investment than they would with somewhere like Target.
That said – for my most recent price rise, I took a totally different approach – one born out of sheer overwork more than anything else.
I had been slowly releasing more and more sterling silver wedding band designs throughout last year – and I honestly didn’t realise how popular they would prove to be.
I had planned a much neater and more organised price rise after Christmas – one where I was going to again talk about it with my community. However, as November rolled along, and the orders kept rolling in, I reached a tipping point… and in one mad stretch of a few hours, I put up all my wedding ring prices across all my venues. Thankfully I’d already pretty much worked out the rise I wanted to enact, so it was just a case of slogging through all the updating, with Nick’s help.
I didn’t publicise the rise – I just did it. And once I had, I felt relief – even if the orders kept coming in at the same rate, I knew I was finally going to be getting paid what I needed to be getting paid. The new prices aligned with the effort and time each ring was taking me to make, and so my cognitive dissonance was eliminated.
This rise was reasonably significant – but my fear of ‘will people still buy at the new prices’ was outweighed by the ‘I’m overwhelmed’! feeling.
(They still kept buying, by the way.)
This isn’t a method I would recommend, unless you’ve reached the end of your tether. Ideally, you want to be raising prices before you get to this point, so you can do it a bit more methodically – as I did the first time round.
However, sometimes things pile up on you, and you just have to take action to lighten the load.
So, in short – if you can, I reckon it’s a good idea to give regular customers and fans a heads-up… but you don’t HAVE to explain your reasoning. However, if you feel comfortable doing so, I think you can use it to actually weave another thread into the story-rug of your business, and make it a positive thing.
Thrivers, I open the floor to you – have you raised your prices? How did you do it – and what was the result of your approach?
Image source: davide ragusa