In today's economy, the temptation to reduce prices to keep your business going must be, to many of you, the bitter pill you think you have to swallow. In some cases, you are right, but mostly you are not.
In every creative business, there is a commodity component and an artistic component to what is provided to a customer. The problem is that many of you try to get paid for the artistic component through the price of your commodity. Several quick examples, a florist doing a line item proposal for a wedding, a stationer charging a per piece fee, an interior designer charging a commission on items selected for a project. To a point, the market will accept a difference in price of the commodity based on your reputation and perceived quality of your work. However, only to a point — would your clients pay $10,000 for an item your nearest competitor charges $3,000 for? Probably not. In the economy we are in, it is the commodity that will face the most price pressure and rightly so.
If you can (and you can), try to figure out how you can price the artistic component of what you do separately. You will still have to price your commodity (i.e., your florals, stationary, etc.), but why not be transparent — say materials and labor plus a reasonable markup. And then focus your energy on earning a proper return for the true value of your business — you and your art. After all, this is what customers are really paying for and what is most subjective in the marketplace.
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Thank you for this post, Sean. It is a struggle in a services business to do pricing, at least for me it is. I don’t want to price myself out of the market, but what I do is far above that of a florist. I have been pricing my services separately. The brides are much more receptive, and have a clearer understanding of what they are getting for their money.
This is great! I am already subscribed and looking forward to where you take this blog!
I enjoyed this post, Sean and look forward to many more nuggets! Congrats on starting your blog and thank you for sharing your wisdom!
Thank you for your comment Pam — checked out your site and can see that you do so much more than a florist. Glad to hear your customers are responding to the art in your business.
Awesome post and I am looking forward to reading more from your blog, especially on pricing.
Accurate post and one that is as relevant today as when it was written 7 years ago. Cheers