We all know in our hearts that in general, you get what you pay for and so the cheapest isn’t always the best yet we find ourselves falling into the price trap with our products and services, we undersell ourselves.
As the owner of a small business it’s easy to think that you have to be the cheapest at whatever it is you do in order to get sales. In these days where the media are constantly telling us that even though we’re out of latest economic crisis we still need to hold onto our spare cash, it makes us as small businesses owners feel so obliged to every single customer that we then feel the need to add an extra discount or to offer additional products for the same price. Whilst exceptional customer service is a great way forward, losing margin and therefore profit, is not a viable way to run any business.
I see so many people who are competing on price when looking to gain new business and it’s simply not a sustainable way to generate value in your business. If you don’t hold your business in high enough esteem to charge a proper price for your products or services, how can you expect other people to?
I’ve heard it say for those in the service industry that if one in ten people don’t tell you you’re too expensive then you’re too cheap. I actually think it should be more like 1 in 5 but the point is that in order for you be able to create value for someone else they have to see what you do as valuable.
Those of us who make products to sell have no way of manufacturing in this country, let alone hand making items, at a price point that can compete with the pound shops and value emporiums, and that’s not a bad thing. A recent predictions report from Positive Luxury claims that the central pillars of luxury brands are consistent in that consumers expect a high level of quality, the craftsmanship has to be exquisite and the provenance, the story behind the brand and the products must be authentic. It’s this story though that I see as the pivotal change when it comes to UK handmade creations and the place where we can add value and in so doing, charge what we are worth.
Increasing numbers of consumers want the story behind the products to be an ethical one, they want their purchases to support the UK marketplace more than ever and are prepared to pay a little bit more to have those products. If your work is too cheap there is a danger that consumers won’t believe that it is actually your work, you’ll have priced yourself out of the market in a completely different way!
There are various formulas that are banded about regarding how to calculate your prices, your worth so to speak and yes, there are costs that need to be covered to ensure you can stay in business but it’s not a simple formula to accurately value your products at a price that consumers will pay and that you are happy to receive. There is time and effort involved along with measuring, assessing and analysing what pricing structures work for you and your business and don’t forget it is an evolving process, one which you need to be on top of. It’s not a quick win and there is no perfect solution for all, what I will say though is, it’s always easier to reduce a price or run an offer than it is to increase a price….
Lucy Pimblott, Owner and Chief Glitter Sprinkler at Lubylu Ltd