This is a piece that I’ve been wanting to write for a while now. To give you some context of my pricing philosophy, I want to preface it by saying this:
- Offering quality, unique, handmade designs at affordable prices was the reason I began Derby & Power.
- Keeping prices as affordable as possible is at the forefront of my mind, day in day out, and this infiltrates into every facet of the business.
THE PRICE POINT JOURNEY
Let’s start at the very beginning ;) I first launched Derby & Power as an Etsy store, with a range of faux leather designs which I put together without any formal training (I made it up as I went along!). I capped all of the prices at $50, and it was all just a bit of fun. The pricing wasn’t necessarily ‘business smart’ – the price tag probably didn’t cover the time required for me to make each piece. But the materials didn’t cost very much, and at this stage the point of the store was to provide me with a creative outlet outside of my full-time job, and it was achieving that.
Fast-forward to the present day, and I consider myself incredibly lucky to be able to say that what was my hobby is now my full-time job. Quite a bit has changed along the way – I’ve invested in lots of courses to develop my skills, I incur a lot more costs associated with running the business, and I have much more varied and complex designs available. As a result of all of these factors combined, it was inevitable that new price points be introduced. This wasn’t something I found easy, but at the same time, the alternative would have meant I’d essentially be giving my work away for free. I made my peace with the situation by resolving to keep the core of my range around the $100 - $200 mark. Allowing myself to introduce a select few pieces at higher price points means I am able to experiment with more detailed and technical designs, which is great for both my own creativity, and for the business.
CRUNCHING THE NUMBERS
So how exactly do I determine my prices? It’s pretty simple. I need to allow myself an average hourly rate, I need to pay for the materials required, and I need to cover business costs. Here’s the black and white of it:
Retail Price = (hourly rate x hours to make piece) + materials + additional percentage to cover business costs
KEEPING COSTS DOWN
I’ve reached a point now where I’m comfortable with charging an appropriate amount for my time. It took a little getting used to, but I now understand that if I don’t value my own time and skills, I certainly can’t expect anyone else to! Having said that, maintaining attainable prices for my customer base is still my total focus, so there are a number of steps I put into place to make sure my clients are getting 100% value for their money.
In order to use my time as effectively as possible, I work on more than one piece at once, so that I can ‘batch’ different stages of the design process to save time.
To keep my materials as affordable as possible, I purchase supplies that I can use in a few different ways, rather than for one-off pieces. I review my suppliers regularly and consistently to ensure that I’m getting the best quality materials at the most affordable prices. I buy in bulk wherever possible to receive discounted pricing and to consolidate shipping costs.
To keep the business costs down, I run my own website and social media accounts, set up my own marketing strategy, manage my own accounts, and pack each and every order myself ;)
At the end of the day, you can’t please everybody. I know that those of you reading this are ‘my people’ :) and I don’t need to convince you that my pricing is justified. That’s definitely not what I’m trying to do here. I suppose I just want to genuinely assure you that when you buy a Derby & Power piece, you are getting something that has been handmade, by a real person, who wants you to have the best consumer experience possible. I hope you all feel that way!