THS R SRS BZNZ
I had my Power Brunch with Mrs. Partridge yesterday. It was a lot of fun. She has such a businesslike approach that I began to take myself seriously at once.
We discussed sales and pricing, speaking in terms of the crafts I've been doing with polymer clay. I've made a hand mirror for my mother and various small human and animal sculptures for my father, and lately I've been doing a lot more with that. I'd like to try to sell my stuff at a science-fiction convention later this winter.
First Mrs. Partridge admired a small snake/dragon monster that I made a few days ago. Then we had some pancakes. Then we talked. Mrs. P. used to be a professional sales consultant, and she got some paper and drew me up a chart.
Here are her four main perspectives on pricing. They're all ranges rather than fixed numbers. You want your price to fall somewhere between the extremes of each range.
1. COSTS TO ARTIST.
This is a scale of possible prices for an item, the lowest end of which is your break-even point. That's known as your "bottom line", the smallest amount of money you could charge (so now I know where the term comes from). You are breaking even when you're making exactly as much money from sales as you spend on materials and other manufacture costs. So your finished-item sales price ought to be at least what you spent on the clay to make it, and the tools to shape the clay, and the gas to drive to and from the department store where you bought the clay. You're able to pay your bills, but you're not making a profit. Apparently many craftspeople, manufacturing companies, and all sorts of businesspeople in between never really look at their bottom line, with the result that they lower prices to encourage sales, and the prices are lowered past the bottom line. End result: they're paying people to take stuff out of their store. This perspective gives you a minimum price, but not a maximum; that's left open. The next categories will help define the maximum price of your product.
Your other big cost is the time spent making each item. See exactly how long you spend at work to finish a dragon. Then decide what your time is worth. I forget what minimum wage is right now, but probably somewhere around $8/hour. Sales clerks downtown make about $10/hour. My time is worth more than that; there's nobody out there who could do the job I'm doing just like I'm doing it, and also people in sales are doing a job that doesn't require total application. Sure, ringing people up is hard work sometimes, but then again you can stare off into space and think about whatever you want when you're not actively doing something. Whereas if I'm working on a mirror I'm thinking about the mirror the whole time. Anyhow, long story short, I've decided my time is worth $15/hour. Mrs. P. asked me, "Is your time worth $30 an hour? $20? $15?" and I said "No... no... yes." Now, I may have to revise that estimate downwards a little if it makes my work so expensive that nobody will buy it. But I have a low point beyond which I will not go: minimum wage. If I could only sell items by valuing my time at $5/hour, I'd say "The hell with this" and go back to only making the occasional gift for a friend.
You're going to start off with debts, because you had to buy your materials, rent your sales space, etc. When you start to make your money back on sales, you want to pay off your debts, but you don't want to use all the income to pay off the debts as fast as you can. You want to use about half to start repaying your debts, and use some or all of the rest to start a new bank account just for your business so you can plough it back into your next set of expenses. (This is particularly reassuring to me. I owe Mom upwards of $200 now. She would have just given it to me, but I don't want to just be given money anymore. I'm going to repay her as outlined above. The thought of having enough money to put in the bank makes me positively giddy, because for the last year or so I've had so many expenses that every time I make a little money it gets to stay about two days in the bank before I need to spend it again. I'm not a spendthrift, I just have lots of expenses that I didn't have when I was a kid and had less expensive hobbies.)
2. INDUSTRY--BIG PICTURE.
Say you want to sell small, cute clay dragons. Go and find other artists who are making small, cute clay dragons about as detailed as yours and similar in every possible respect. How much money do they charge? Which clay dragon artists are (in your opinion) charging too little? Which are charging too much? Your own work should be priced somewhere between those extremes.
3. SPECIFIC VENUES.
What stores would you like to carry your work? What are the prices like on all their merchandise? What about the merchandise that resembles yours most closely? Your prices should be able to compare with those in the store. If they don't, and you can't see your way to lowering your price, go find another store that sells higher-priced work but still handles stuff like yours.
4. PERSONAL STANDARDS ABOUT $
Mrs. P: If I said "I want to buy this little dragon from you, and I will pay you $15," before you'd made me an offer, what would you say?
Me: I'd say yes.
Mrs. P: What about if I said, "I can only pay you $9."
Me: I'd say it's worth more than that.
Mrs. P: What about if I said "I'll pay you $85 for this little dragon," what would you say?
Me: I'd be startled, but I wouldn't argue.
Mrs. P: What if I said, "I'll pay you $200?"
Me: I'd say, "It's not worth that much."
Mrs. P: Okay. What is the largest amount you'd feel comfortable letting someone buy this for?
Me: $85 is the largest amount I could sell that for in good conscience.
We also talked about a business statement. She said, "You should draw up a business philosophy, it'll help you make up your mind when you meet a new challenge," and she drew me up a template:
My business helps [whom--specific group] to [do what] by means of [how] because [why].
So far my first impulse, "My business helps me to make a little money by means of selling polymer clay accessories and desk art, because I iz flat broke", lacks charm for anyone who is not me. It'll probably wind up being something more like, "My business helps fans of mythical animals and SF&F lovers to enjoy having statues of characters from their favorite books to put on their desks, by means of my l33t craft skillz, because who doesn't like cute little dragons and hand mirrors with the heraldic device of Earendil on the back?"
We discussed sales and pricing, speaking in terms of the crafts I've been doing with polymer clay. I've made a hand mirror for my mother and various small human and animal sculptures for my father, and lately I've been doing a lot more with that. I'd like to try to sell my stuff at a science-fiction convention later this winter.
First Mrs. Partridge admired a small snake/dragon monster that I made a few days ago. Then we had some pancakes. Then we talked. Mrs. P. used to be a professional sales consultant, and she got some paper and drew me up a chart.
Here are her four main perspectives on pricing. They're all ranges rather than fixed numbers. You want your price to fall somewhere between the extremes of each range.
1. COSTS TO ARTIST.
This is a scale of possible prices for an item, the lowest end of which is your break-even point. That's known as your "bottom line", the smallest amount of money you could charge (so now I know where the term comes from). You are breaking even when you're making exactly as much money from sales as you spend on materials and other manufacture costs. So your finished-item sales price ought to be at least what you spent on the clay to make it, and the tools to shape the clay, and the gas to drive to and from the department store where you bought the clay. You're able to pay your bills, but you're not making a profit. Apparently many craftspeople, manufacturing companies, and all sorts of businesspeople in between never really look at their bottom line, with the result that they lower prices to encourage sales, and the prices are lowered past the bottom line. End result: they're paying people to take stuff out of their store. This perspective gives you a minimum price, but not a maximum; that's left open. The next categories will help define the maximum price of your product.
Your other big cost is the time spent making each item. See exactly how long you spend at work to finish a dragon. Then decide what your time is worth. I forget what minimum wage is right now, but probably somewhere around $8/hour. Sales clerks downtown make about $10/hour. My time is worth more than that; there's nobody out there who could do the job I'm doing just like I'm doing it, and also people in sales are doing a job that doesn't require total application. Sure, ringing people up is hard work sometimes, but then again you can stare off into space and think about whatever you want when you're not actively doing something. Whereas if I'm working on a mirror I'm thinking about the mirror the whole time. Anyhow, long story short, I've decided my time is worth $15/hour. Mrs. P. asked me, "Is your time worth $30 an hour? $20? $15?" and I said "No... no... yes." Now, I may have to revise that estimate downwards a little if it makes my work so expensive that nobody will buy it. But I have a low point beyond which I will not go: minimum wage. If I could only sell items by valuing my time at $5/hour, I'd say "The hell with this" and go back to only making the occasional gift for a friend.
You're going to start off with debts, because you had to buy your materials, rent your sales space, etc. When you start to make your money back on sales, you want to pay off your debts, but you don't want to use all the income to pay off the debts as fast as you can. You want to use about half to start repaying your debts, and use some or all of the rest to start a new bank account just for your business so you can plough it back into your next set of expenses. (This is particularly reassuring to me. I owe Mom upwards of $200 now. She would have just given it to me, but I don't want to just be given money anymore. I'm going to repay her as outlined above. The thought of having enough money to put in the bank makes me positively giddy, because for the last year or so I've had so many expenses that every time I make a little money it gets to stay about two days in the bank before I need to spend it again. I'm not a spendthrift, I just have lots of expenses that I didn't have when I was a kid and had less expensive hobbies.)
2. INDUSTRY--BIG PICTURE.
Say you want to sell small, cute clay dragons. Go and find other artists who are making small, cute clay dragons about as detailed as yours and similar in every possible respect. How much money do they charge? Which clay dragon artists are (in your opinion) charging too little? Which are charging too much? Your own work should be priced somewhere between those extremes.
3. SPECIFIC VENUES.
What stores would you like to carry your work? What are the prices like on all their merchandise? What about the merchandise that resembles yours most closely? Your prices should be able to compare with those in the store. If they don't, and you can't see your way to lowering your price, go find another store that sells higher-priced work but still handles stuff like yours.
4. PERSONAL STANDARDS ABOUT $
Mrs. P: If I said "I want to buy this little dragon from you, and I will pay you $15," before you'd made me an offer, what would you say?
Me: I'd say yes.
Mrs. P: What about if I said, "I can only pay you $9."
Me: I'd say it's worth more than that.
Mrs. P: What about if I said "I'll pay you $85 for this little dragon," what would you say?
Me: I'd be startled, but I wouldn't argue.
Mrs. P: What if I said, "I'll pay you $200?"
Me: I'd say, "It's not worth that much."
Mrs. P: Okay. What is the largest amount you'd feel comfortable letting someone buy this for?
Me: $85 is the largest amount I could sell that for in good conscience.
We also talked about a business statement. She said, "You should draw up a business philosophy, it'll help you make up your mind when you meet a new challenge," and she drew me up a template:
My business helps [whom--specific group] to [do what] by means of [how] because [why].
So far my first impulse, "My business helps me to make a little money by means of selling polymer clay accessories and desk art, because I iz flat broke", lacks charm for anyone who is not me. It'll probably wind up being something more like, "My business helps fans of mythical animals and SF&F lovers to enjoy having statues of characters from their favorite books to put on their desks, by means of my l33t craft skillz, because who doesn't like cute little dragons and hand mirrors with the heraldic device of Earendil on the back?"