New wholesalers don’t seem to charge enough for their products! Of course, this is not true for everyone, but I see it too often (and can tell you some horror stories of dealing with producers who low-balled their product, then complained because no sales rep would take them on!)
Pricing does not need to be difficult. If you are new to retailing or wholesaling, I suggest you check out my free e-course on the subject. Sign up here: “HOW TO PRICE YOUR PRODUCTS” 9-Lesson E-Course!
If you’ve wholesaled for awhile and are wondering if you need to increase your pricing, here are a few guidelines from Claire with Indie Retail to help you determine if you are underselling your products:
You’re hardly making a profit when you sell wholesale.
Your wholesale price is the smallest amount of money you’ll ever accept for your lovely thing.
But that doesn’t mean it’s a rock-bottom, bargain-basement, welcome-to-debtors-prison kind of price. It shouldn’t weigh your business down.
A healthy wholesale price is like a helium-filled balloon – it covers your direct costs, your overheads and your time and labour, but it also contains a significant shot of profit. That extra element is what gives your business lift….
You’re hardly making a profit when you sell retail.
Your retail price is tied to your wholesale price, so if the former’s out of whack there’s a good chance the latter is too….
You’re putting something wonderful out into the world and getting very little back. That’s not a business; it’s an expensive hobby….
You’re working all the time and still aren’t making much money.
…If you’re constantly working at maximum capacity – but still don’t have much to show for it – something has to change. The most valuable asset in your business is you. To function at your best you need rest, comfort and time to think…
Your prices are low compared to your competitors.
Closely pegging your prices to your competitors’ isn’t a great plan, but there should be some correlation….
In comparison to mass-market companies, your stuff will always look expensive – they can produce goods for much less than you ever could. But when you look at other designers, craftspeople or makers in your field, people at a comparable level who make and sell something similar, and discover they’re charging significantly more, well, maybe it’s time for you to catch up.
You’re pricing according to costs, not value.
At the end of a long day of making, when you turn to look at your work and feel a surge of pleasure and satisfaction, what’s the source of that feeling for you? Is it:
a) The deep joy of channeling your imagination, skill and experience into a unique object which shines with quality, personality and presence.
b) You saved your customer the trouble of putting it together themselves.
It’s the first one, right?
This is why your prices must reflect the value you create for your customers. You’re not simply assembling raw materials like a robot in a factory. In your hands, those materials become much more than the sum of their parts….
If your current prices are based simply on what it costs you to make your product, you’re not taking that extra value into account.
Now, before the big holiday buying push, is a good time to make sure your pricing is appropriate and you charge enough for your products!