Why reducing prices may not be the best idea

I met an artist at a design fair this summer who made beautiful miniature figurines encased in glass boxes. Each piece was a scene in a play and staged with obsessive detail. Well worth the $500 price. Maybe not a price that appeals to everyone which is probably why a customer who was browsing her art started backing away slowly after seeing the price tag. The artist stopped her and asked how much she would pay and even suggested a few prices…

"$100, $50…$25??"

$25?!? I thought she was kidding (and so did the customer). But no. She was serious.

As a pricing geek, I asked why she was offering such ridiculous discounts. Her answer was: "I'm just starting out and I just want to put as much of my art in people's homes."

That's a reasonable explanation. I make art and sometimes I've talked to the artist I partner with about ways to get our art into people's homes. We've toyed with the idea of reducing all our prices. The more we've talked the more it's sounded like desperation and insecurity. We stopped and asked ourselves, is price really the problem? What if it's something else?

Are we selling at the right venue?

Are we selling to the right audience?

And most importantly, if some pieces aren't getting any interest, is it because they're duds? (Oh yeah, we make a lot of duds.)

It's important to analyze that kind of stuff before reducing prices because once you do roll back, you send a few signals to your audience:

The most glaring of all is, previous customers who paid full price will feel cheated. Not even Apple fanboys can get over that hurt. Apple initially introduced the first iphone at $500 dollars, then dropped the price by $100 after a few weeks. For the first time, the fanboys blogged in anger. Apple hardly ever apologizes but in this instance, they did. They also returned $100 to everyone who bought at full price.

Another problem is, you're telling customers that they might be bringing a cheap product into their homes. This is a real turn off. To a customer dropping the price may not translate to "We're doing this because we want to get our art into your home." Rather "This isn't as valuable as we imagined."

Another side effect is, customers may start waiting for the price to drop even more. The car companies must have trunk loads of case studies to back this bit. Even video game enthusiasts waited for the Playstation3 price to drop (as always) and it never did, hurting sales.

If price is the problem—and in this tough economy sometimes it is—it may help to TEMPORARILY reduce prices to get stuff into people's homes. But how do you do that without hurting your brand?

All the best marketers I know use one tactic: Give people a GREAT REASON for lowering the price. The best reason is, you are doing for fun versus just to get them buy stuff. And by fun I mean customers have to feel like they've earned the discount.

A manager at new Ikea store in Sweden uploaded pictures of his store and asked his customers to tag their favorite pieces of furniture. The first person to tag an object got to take it home. Customers had fun and the promotion cost him nothing. Except the price of the furniture which he wanted to give away anyway.

Zappos keeps prices high but offers free shipping on sales and returns. We took a page out of the Zappos playbook. We just gave free shipping to a customer in Brazil. It cost us $40 to ship. But we got it into his home. We also said we'll give him another 50% off on his next purchase if he sent us a picture of the objects at his house with 5 friends. He wrote back saying he's throwing a party to gather some friends.

An artist we know offered a customer 50% off a San Francisco themed print if he could answer three questions about the city. The customer got all the answers right. He earned the reduced price only because he aced the quiz. Fun!

Sometimes lowering prices is a good idea but do it in a way that protects your brand. If you're a new artist, that may be a way to get your stuff into people's homes. I'd love to hear what you've tried. Go ahead and share it in the comments.

This is a monthly post of the touchiest of all subjects, pricing! See you again in November. For the October feature, "What's the price of garbage?", I've updated the post with the answer here. Thanks for all your comments!

Posted by Vinit (TheWhiteout)

Tips for a Tuesday - Keepin' in Touch

So you've set up your Etsy site, to which you regularly add new treasures and relist older favorites. You've created a blog, where you post every now and again to remind those 60+ subscribers that you're still hard at work. Perhaps you even have a more robust website with a news section where you list events coming up. But all of these methods rely on your customers coming to you to hear the latest and greatest.

Enter the email newsletter. "Oh, but I don't want to spam my customers!" you think to yourself. Or perhaps you haven't been keeping track of people's emails, which in all honesty, you shouldn't be doing without their owner's permission anyway. Enter Mail Chimp (or another contact/email system), a trusty spiral bound journal of sorts, and a healthy sense of propriety.

The skinny on Mail Chimp.
I like them because they're free, super easy to use, they have a monkey as their logo, and it says funny things to you. I'm on their Forever Free plan: send 12,000 emails per month to 2,000 subscribers. Holy cow, like I'm ever going to send 12,000 emails per month to anyone (this is where that sense of propriety comes in). But how nice to have the option. I'm sure there are plenty of other wonderful similar services out there, but I'm going to champion these guys for a little bit. With Mail Chimp, you can organize emails into different lists, create those fancy emails with the pretty pictures in them via a number of lovely templates, and then view data on the number of people that actually opened those emails, see which hyperlinks they joyfully clicked on, etc. They also offer a number of free training sessions if you want to become the resident expert.


Gathering emails. 
This can be done a number of legitimate ways. If you're a craft show person, bring a journal or a clipboard with pre-printed sheets where people can Join Your Mailing List. Make sure there's a pen with it, and that it's off to the side somewhat so people don't feel like they're in the way while filling in their info. I've found it's also helpful to fill in the first line to show what kind of info you're interested in. Do you just want their email address? Or perhaps their name so you can customize your mailings a bit more? Also, don't be shy about asking people if they'd like to sign up.

Mail Chimp also lets you create short and fancy online forms where people can enter their info and it gets automatically added to your list. See the little sign up box in the column of this blog? That's one example of the short form. I've added a fancier version to my own website, and have included a link to it in the message that gets automatically sent to my customers when they make a purchase through Etsy. In the fancy version, I've added a line where people can post comments of sorts. I've also added the short form to my own blog. 

Are you a facebook or twitter user? It makes sense to occasionally (and I'm thinking about once a month) to let people know you have a mailing list by posting a link to it there.

Ok, so you've gathered and organized your email lists. Now to determine what to share, and when to share it.

Enter that sense of propriety I mentioned earlier.

No one likes a spammer. Also, if you have too many people unsubscribing from your list on Mail Chimp, your account will get flagged. Personally, I'm fine with getting an email from a company once or twice a month. Any more than that and I get grumpy. I like to try and consolidate my announcements down to once a month. I'll list upcoming shows and announce new items that will be hitting my shop soon. It's also a nice place to let people know about discounts I'm offering for that month, which is another way to see how much traffic you're getting as a result of the newsletter.

Alrighty, I'm sure that's enough to get you started.

Good luck, and a happy Tuesday to you!
Maggie

What is it really worth?

Should you charge $27 or $39?

Hard to say. Well, unless you’re Ryan McGinness. Then it doesn't matter. You can eschew all formulas and charge whatever you like.

For the rest of us, here's my monthly attempt at making sense of pricing handmade.

Once a month, I will be covering pricing tips and strategies, unusual pricing tactics, interviews with artists (with a focus on pricing), social pricing experiments and pricing advice from around the web. Let me caveat this by saying I'm no economist (lucky me) or expert on pricing (seriously, who is?) but I am obsessed with the psychology of valuation, especially for something that’s hard to quantify, like creativity.

Thought I’d kick off this first post with a unique pricing strategy employed by New York artist Justin Gignac of wantsforsale.

Justin and his wife Christine think about what they want, paint it and charge the exact amount the item is worth.

A painting of a pizza slice $3, Nintendo Wii $239

'Buffalo wings' costs $12.99

'To see showgirls in Vegas' costs $250

Same canvas. Same whimsy illustration style. Wildly different prices. Blows my mind.

While Justin doesn't think he can use this strategy to make a living in New York City, his intent is to kick off conversations. Pricing for story telling. He has painted a check for a million dollars which he hopes to sell some day. Now that would make a great story.

Next month I'll share more thoughts on pricing and we can deconstruct, discuss, and debate. Fun times!

Vinit

The Whiteout (Junk Rescue)

Kaamchor (Art from stolen office supplies)