When it comes to pricing your goods and services, there never seems to be a magic number. We’ve covered the topic quite a lot over the years and today we are adding to the collection with a post from Laura C. George, a business consultant for artists who teaches the ins and outs of building an income around art. She previously wrote about Fast Food Marketing for Your Biz and today she covers the topic of pricing for the right audience. You can catch further pricing strategies in her free The Art of Pricing Art video. Here’s to finding the price that fits! — Stephanie
Read the full post after the jump…
The other day, I bought a nice-looking settee I found on Craigslist – for $200. It’s upholstered in a pretty, neutral linen and has simple curved lines. Not a stand-out piece. Certainly not an impeccably-made or incredibly oh-my-word-comfortable piece. But it’s nice and I didn’t want a big couch or even a loveseat in the space.
How I Found Out I “Paid Too Much”
A friend of mine came over and commented on the new piece of furniture. So I told her how I had scoured Craigslist and yada yada – my husband interrupts, “Well, I think she paid a little too much.”
When I announced that it was “only $200”, my friend’s eyes widened and she informed me that the going rate for a piece of that size and quality if more like $50, at least in our area.
At first, I was a little embarrassed. Perhaps I had paid too much. Why didn’t I think to haggle? Should I have waited for a different piece?
But the more I thought about it, the more I realized that I didn’t pay too much.
I Wanted To Pay $200
I passed up plenty of similar pieces on Craigslist that cost less. Primarily because I didn’t like them as much. Most of them had a fatal flaw – perhaps the color or fabric, or maybe the height or length. And this was the first one I saw that I really liked.
But the other, more important reason I didn’t pay too much is that I wanted to pay $200 for the piece.
It wasn’t that I had that particular number in my head before I went Craigslist shopping, but that I no longer buy cheap furniture if I can avoid it – a personal preference stemming from excessive particle board furniture when I graduated college. Now, I like being the type of person who buys decent furniture. It’s an identity issue.
How Identity Affects Your Prices
Your customers also have identities – both of who they actually are and of who they want to be. If you’re reading Biz Ladies, you’re more likely to have nicer products that attract people with more money. And people with more money have different perspectives of what is expensive, yes, but they also want to be the type of people who buy nice things. This is a large generalization, not something you can apply to each individual person, but the majority of people who are attracted to nicer products and services are also people who want to confirm their identity of being people with good taste.
I work with artists, so it’s easiest for me to explain how this works in the art world, though it can be applied to every industry. Your customers want to be the type of people who know what is “good” art. When this is a realistic identity, they’ll already know they want your art (because you make incredible art!). And if this is an imagined identity, they’re going to use vanity evidence to determine what “good” art is, so that they can still be the type of people who buy “good” art.
That means they’ll use things like your selling location (Etsy, eBay, and your own website are all going to feel different to them), the way you write or speak about your work (including innocent typos), and most often – how much you charge.
If you have inexpensive products and services, your customer is going to run away because they don’t want to buy cheap. They want to buy products and services that make them feel like that person they want to be – the one with impeccable taste and the one who only invests when it’s worth it. A higher price indicates a higher worth.
Of course, not all your customers will be like that. But the more you cater to the ones who are, the more high-priced sales you’re going to make. And that’s a win-win. Great products and services in the hands of people who love them and are incredibly happy to pay you for them; and money in your pocket for something you poured your soul into.
This is right around the time when I imagine you’re thinking, “I don’t want to manipulate my customers.” But people aren’t stupid. They don’t buy just because they think something’s good. They also have to like it, maybe even love it. Just how I mentioned that I didn’t like the less-expensive furniture as much as the settee I ended up buying, your customers will like what you do and make more than the other stuff out there or they won’t buy it no matter what you charge.
Here’s how you can prove to yourself that this works. Ask a friend who has bought something in your industry in the past if she thinks a certain piece of yours should be $50 or $200 (or pick numbers that make more sense for your products and services of course). A client of mine did this experiment the other day and was shocked to find the friend saying that if it’s priced low she’d assume it was poor quality and wouldn’t want to buy it.
Do the exercise yourself to confirm. And then go back through and reprice everything. If you like, you can use my favorite pricing strategy for artists and creatives that I outline in detail over here. Try to play into the identity your customers align with. Who do they want to be and how can you help them feel like that?