This is a guest post by Nadine Lerner, the owner of BlueDogz Design, freelance designer, business and branding consultant and blogger. I love how she used trade shows to grow her business and I’m thrilled to have her share her smarts. Read her story here (for inspiration) or follow her onTwitter.
I started out selling at a high end flea/antiques market.
Looking back now, I think I was so happy and flattered that people wanted what I was creating, that I didn’t lose much sleep over my pricing structure. I was repurposing reclaimed pieces, so I wasn’t investing much in my raw materials, and I was not very good at calculating my hours either. If I left after a day at the market with a few hundred dollars and a lot less inventory to take home, I was happy; it had been a successful day.
When retailers started to approach me about selling my designs in their stores, things shifted.
These first experiences were eye opening; retailers told me that they would be at least doubling what I would charge them, (aka: a key stoneor key stoning). To sell a dresser for $250 was not ridiculous, but for $500?
$500 was too much. And, I was being asked to lower my price to $175, in order for the retailers to sell the dresser for $350. I had never considered this.
When I started to exhibit at trade shows, and created a line that could be reproduced over and over again, (not just one of a kind designs), pricing changed again. I had to factor in the obvious raw materials and time, but now, I was being approached by sales reps who earned at least a 15% commission on my wholesale price and larger or prestigious/big name retailers, who wanted discounts.
When I started to manufacture my line overseas, things changed again. I was now bombarded by sales reps (since my line was very competitively priced) and larger retailers willing to buy more volume, thus wanting larger discounts. I was advised early on to at least triple my landed costs on my goods. If I paid $5 for a piece, I needed the wholesale pricing to be at least $15. Retailers would then charge a minimum of $30 for the piece. I think it’s a good framework to work from, and I can tell you that it doesn’t always happen this way. Sometimes you can triple, sometimes not. You hope to go five times, but that’s a bonus. Sometimes you price a piece, it sells to the retailers but doesn’t sell through to the end user, and adjustments need to be made. Pricing can make or break a piece. I tend to try and look at what I am selling as a collection. I know that I will have better margins on some pieces than others, and I keep this in mind. If I can’t make a piece at the right price point for my line, I either change the piece or sometimes just let it go, not creating it at all.
When it comes to pricing, the best you can do is to know what you are selling, know what else is on the market, ensure that you will be making some money at the price you are selling at and find your buyer. I always admire designers who seem to know, right out of the gate, where their designs need to be sold and are willing to walk away from sales for the greater good of their ultimate branding/selling goal. I was the designer wrapping herself into a pretzel shape to make it work and get the sale. Sometimes it’s worth it, sometimes not.
With all my hits and misses, my advice is, learn from your buyers, listen to what they have to say, share what you learn with other buyers (what works and doesn’t work).
Teach them about your product and how to sell it. Ask them what they need from you. Where does pricing need to be for them? Sometimes you can do it, sometimes you can’t, but without asking you’ll never know.
If you are getting price resistance, don’t just lower pricing, that might not be the answer, ask yourself a few questions:
- Am I selling in the right venue, hitting the right audience of buyers? (simply said, location, location, location!)
- Can I price differently? Ie: Increase the quantities I sell to each retailer and lower the price? Thus selling more volume, and ultimately making the sell through easier too. (if what you design is very labour intensive, this won’t be the route you want to take).
- Do I need to include, revamp or think about my product packaging/presentation? Maybe you can add beautiful packaging, tags, a display piece, etc, to really finish off your product, creating the setting to sell your designs properly. A little can go a long way, think luxury!
And lastly, know that what you create, price and sell won’t appeal to or work for everyone, and that is just fine!
I finally got the frame buyer from Neiman Marcus into my booth and she spent time, we spoke, I will venture to say, “we had a moment” …Then she looked at me and said, “Nadine, I LOVE your photo frames, they are adorable, but they aren’t expensive enough for us!”.
Image property of BlueDogz Design
This is the sixth installment of our ongoing IndieBusiness101 series.
If you’ve missed one, find it here:
Tools of the Trade
Picking a tradeshow