We have the final part of The Pricing Decision Series by Ellen O’Hara, Head of Business Development at Cockpit Arts.
There’s no doubt that getting your pricing right is a crucial part of your marketing and business strategy as a designer-maker.
As part of the Pricing Decision series I am looking at three key areas: Cost, Market and Value, as well as how different pricing strategies fit with the overall goals, for your practice and business.
Part 3 looked at price and value. This time I will explain how you can use different pricing strategies to help meet your overall business goals.
Price should be considered as one of your key sales and marketing tools, along with the products you offer, the places you show and sell and the way you promote yourself and your work.
So as well as having a pricing policy, or overall approach, you can use different pricing strategies to help meet your overall business goals.
These goals might include:
- Improving cash flow
- Breaking even or making a certain amount of profit
- Increasing the volume of sales you make
- Getting you foot in the door of a particular retailer or gallery
- Encouraging repeat business
See some of our earlier posts to get you started with goal setting.
As a designer-maker, you can use some of these strategies to help achieve your goals:
Premium Pricing – this involves setting a relatively high price to reflect the fact that work is of premium quality. Consider this approach if you want to position yourself at the higher end of your market and to communicate the added value of one offs, commissions and bespoke services .
Loss Leader – pricing some products in your range at cost (or at a loss) can be used to attract customers and raise awarenes of your brand. Apply this strategy to limited products, or for limited periods of time only. It should lead to the sale of more profitable items in the longer term and and can help even out cash flow in the short term.
Product Line Pricing – different prices can help communicate the different benefits of products in your range, and helps the customer differientiate between what you have to offer. So you can use pricing to drive the sales of particular items by making them appear better value for money in comparison to the other items in your range.
Discounts – sales promotions and discounts are used in retail to boost sales and generate cash out of season. Offering discounts to repeat customers is a great way to reward loyalty. But be wary of devaluing your work by always offering price promotions, sales or offering ‘bargains’.
Finally, try and increase your overall price levels each year as your business grows. You should inform your stockists if you intend to significantly increase your prices. Another way of achiving this is by introducing a new line of work that can be clearly differentiated from your exisitng ranges. Give the new work a higher price tag and gradually phase your old work out.
Let us know how you get on by leaving a comment on your experiences in making your own pricing decisions.
Next time we’ll be posting an interview with Jacob van de Beugel on his approach to pricing, values and goals.
Work pictured above by Jen Rowland.