Creating fair prices for your handmade goods is vital to the success of your small business. We’ve previously discussed how to calculate prices for your handmade products. Let’s now discuss how to recognize when it’s time to raise the prices of your handmade goods.
If your consistently being asked for restocks, then this may be your first sign to raise your prices. This is especially true if you’re noticing this happening time and time again. This means your customers love what you’re doing. That’s great! This also probably means you’re working longer hours to keep up with the wants of your client base.
You may even be buying more supplies, or buying supplies in bulk to keep up with the demand. This can all add up real quickly. Calculate a new fair price that will keep both you and your customer base happy. Keep in mind this new number shouldn’t be shocking. If you’re getting a lot of heat for raising your prices, it could be a sign you’ve prices your products too high. Be realistic with your new numbers.
Another indicator in recognizing when it’s time to raise the prices of your handmade goods, is an increase in your sell out time. Similar to demand increase, if you notice your products are quickly and consecutively flying off the shelves, then you’ve done a good job in aligning with your customer base. You have confirmation that your clients are loving your products, which is a reassurance you need to feel secure in raising the prices of your handmade goods.
If you’ve been in business for awhile (and are making a stagnant profit), then you may want to consider adjusting the costs of your handmade goods. This is not an excuse to massively increase the prices of your handmade goods. You can lose loyal customers if you raise your prices too high. You may also want to conduct an analysis of the prices of your competitors. Do your prices compete with theirs? Are your handmade items the same or better quality? These are all questions to consider before adjusting the prices of your handmade goods.
When is the last time you compared the expenses of running your business to what they use to be? This could be the cost of rent or utilities for your shop or storefront, an increase of supplies, shipping costs, etc. Anything that you use to keep your small business in motion. Is this a very valid reason to increase the prices of your handmade products. In order for you to function as a business, and supply an income for yourself and your employees, you’ll need to factor in how much money it actually costs to “keep the lights on”. If you notice that your operating costs have increased, then you should consider subtly trying to make up for those expenses within your product prices.
You should be consistently doing research on the market in your niche. This is the same as running an analysis on your competitors. If the market is doing great, then you should follow its lead. The same can be said if the market is down, however. If the market isn’t doing well and you have out of reach prices, your business will suffer. We highly recommend running these type of analysis’ to make sure you’re staying aligned with your community and audience.
All these circumstances are appropriate to consider while contemplating increasing the prices of your handmade goods. Always pay close attention to your customers after you adjust your prices. It’s not uncommon to receive some less than positive comments to your new price change. However, if you’re getting a lot of negative feedback, then it may be a sign you’ve raised your prices too high, or too soon. Have more questions about how to recognize when it’s time to raise the prices of your handmade goods? Ask us in the comments!