If you are using a formula such as cost of materials x 3 + labor = retail price to set the price of art or artisan work, you are dooming yourself to failure. This formula can tell you whether your business is theoretically profitable, but it won’t guarantee that your work will sell successfully at those prices. All artists and artisans need to understand how the market value of art and craft is determined.
Market value is the price at which an asset would trade in a competitive auction setting. In investments, market value is: the current quoted price at which investors buy or sell a share of common stock or a bond at a given time.
This distinction is critical! The value of your work is not determined by your costs nor your labor! It is determined solely by what others are willing to pay for it in a competitive market. You must get into the heads of your potential buyers and find out what they value, and why they choose one piece of work over another.
Here’s the game plan for success:
1) Get out of the most broadly competitive genres. Make work that is as unique as possible. Style and present it in your photos in a highly original way. Deliver something fresh and new frequently. Try to narrow your competition from thousands of similar shops on Etsy to just a few.
2) Stock prices rise and fall depending on supply and demand, but never forget that you are in charge of your own declared worth. You set your prices! It is better to offer low, introductory prices on new work than to discount old work that did not sell. Raise your prices on your most popular pieces as they become popular, and voila! Your stock just went up. This is far more strategic than having a high introductory price that deflates over time. When you do that, you are making your own stock go down! Offering a low price that increases as demand increases is a reflection of your understanding of market value.
3) When you are stretching and growing, don’t list everything you produce for sale. Make sure that every listing in your shop has your unique touch, and a degree of mastery in its making. The high quality overall helps establish your brand as worthy of top dollar.
I hope this sheds some light on pricing for success. What works for Target and Macy’s will doom you to failure and disappointment as an artisan.
editorial by lee Wolfe