6/17/2011

Why Deep Discounts Don’t Benefit Your Artisan Business

marci w Iragrant bag

bag from Iragrant

The Handmade Revolution was founded to support indie artisans in making a fair wage living by selling retail without a middleman or working for a corporate chain. As part of the New Economy, “a fair economy that works for people and the planet”, artisans have unprecedented opportunities to connect with an avid and growing sector of buyers who want to change the world by changing their spending habits; by voting with their wallets. As part of the New Economy, I buy free range organic eggs from a local farm. I buy luxury quality handmade bags from an indie designer, one of a kind individually made jewelry, and hand stitched home decor.

Jewelry from PoleStar, hearts from SewnNatural

These things are not selected because they are the cheapest available. Each of these small business owners has a family to support, and, just as I buy fair trade coffee, I expect to pay a price for these quality goods that supports the modest lives of the makers and allows their dreams to grow.

As artisans, we can compete on price or quality, and competing on price is a losing proposition, as factories can always sell their soulless goods for less. Discount shoppers and bargain chasers are not our target market. And this is why Heartsy, which is a Groupon version for Etsy shoppers, cannot deliver on their promise to grow your indie artisan business.

If people want to support indie handmade businesses but want 65% off in order to do it, they are highly unlikely to  return for more at full price. They are far more likely to simply use the next Heartsy coupon available, which is what happens with Groupon shoppers overall.

It is infinitely more worthwhile to advertise and promote the quality of our work, and to reach out to buyers who are looking for that. 70% of my Etsy buyers return for more, and I offer no discounts. I give the best that I have at the fairest price to everyone, and this is building the kind of customer base that allows me to make a living wage. Offering a modest (10%- 15%) discount is all a good indie business needs to do when an incentive seems necessary. This business model works for me, and I recommend it to other artisans. When you put your heart and soul into making an honest and conscientious business, you deserve to profit from it, and slashing profits drastically isn’t necessary to gain attention.

editorial by Lee Wolfe

21 comments:

Eve's Little Earthlings said...

You said it all and I agree completely with you. I set my prices very carefully and slashing them in order to make a few sales is a losing strategy. Those that do offer deep unsustainable discounts undermine the whole handmade movement and make things harder for all artisans.
I have seen many artisans come and go over the years (I started as a potter in 1977) and it seems to me that the artisans offering very low prices end up burning out, leaving the rest of us endless explaining why our items are so "expensive".

ira said...

I'm gross with heartsy and the artists who join them! Oh maybe they just put the 'fake high price' at first and pretend to give their customer a discounted price later on? no idea, but I thought carefully how I pricing my bag. My real buyers don't buy my stuff because they are cheap but because they love them! Infact, my most expensive bag
is my best seller!

ira said...

ANd Lee, thank you so much for the lovely picture of Marcy:)

Jen from SewnNatural said...

great post - very thought-provoking! thank you very much for including oulr little table hearts...

BrokenGhost Couture said...

I wholeheartedly agree. Why would I devalue my product to make a few dollars? It will only hurt you in the end. If a person is trying to clear out their inventory, then it may work for them, but it certainly won't help in getting repeat customers.

colette said...

hello - thank you for your thought-filled article.

i offer 10-15% discounts on occasion, but just as a nice surprise for the buyer - for no good reason other than i want to.

when someone asks for a discount i offer them a 'second,' usually a print with a tiny spot of ink on the back.

if i want to offer something extra for someone who is ordering a lot of stuff, i'll include something from their favorites if possible. but ink and paper are not expensive, i imagine it is not possible for most sellers of jewelry, ceramics etc to do something like this. yes, my time is valuable, but i find a little extra surprise goes a long way in making ME happy.

back to the article...the bottom line for me is that it seems undignified to offer things at such steep discounts. alternately, i'm a bargain shopper in the ready-made retail world, but you get what you pay for...all the stuff that didn't sell at the regular price for some reason.

dang. i just remembered i have some seriously discounted prints - but they are ones that are on a type of paper i don't use anymore...well, so much for my dignity! - colette

PoleStar Jewelry - Handcrafted said...

I totally agree that Heartsy is not good for the handmade movement. I don't understand at all why people would think it would be a good long term business idea.

Sue said...

Amen Lee! While I think it's fine to have the occasion sale or to sell discontinued items or seconds at deep discounts, I agree that the Heartsy/Groupon type stuff is not a good idea at all. One of the arguments I've seen for Heartsy is that it's like wholesale. Um, no, it's not. One wholesale order of 100 pieces is MUCH less work than 100 separate orders for 100 pieces, and then you add on the Etsy fees (which are on the listed price, NOT the Heartsy discounted price) and Pay Pal fees and you're getting closer to a 75% discount. Plus the time spent packing, shipping and communicating about 100 orders - no thanks!

Olga Duron said...

Thank you for a wonderful and thought provoking post. If you love what you do and create a piece perfectly it is truly unique. The effort and painstaking detail should be rightly appreciated by the person buying that one of a kind hand made piece of jewelry or painting, etc.

ABreathOfFrenchAir said...

Great article! I know some people who have participated in a Heartsy deal. A few said they made money, and a few said they didn't. I, personally, would not go through all that work just to cover my costs.

Helmi said...

Great post, thanks for sharing. I'am thinking a lot off starting my own Etsy shop. This is realy a positive Story

WolfeWoman said...

Collette,
Discounting seconds or old pieces is a standard practice, and much different than offering 65% off on anything in your shop! Gap found this out when it tried Groupon. You can't lose revenues on brand new, first quality merchandise without taking a serious hit.

ABreathoffrenchAir- When people claim they "made money" on Heartsy, what they are really saying is that they didn't lose money. They end up working for far less per hour than they need to. If I make $30/hr, why would I slash prices to make $15/hr, in order to promote myself to people who are not my target market? There isn't any rational reason why I'd do that.

Thanks for comments, everyone!

steinschmuckdesign said...

Totally agree Lee, fantastic article! Just sometimes it is not easy to make a fair price with all the concurence arround, that keeping the prices so low... So for me I try to find a good middle Way :)
As the Gold and Silver Price went up soooo much, I really wonder what will happen. Up to now I could not see many Jewelry shops rising there prices, but I can`t see that it can stay like that. And what will customers do, will they still buy when the Prices go up so much?

PurePixie said...

Thank you Lee for this wonderful article!

Pesky Cat Designs said...

Thanks for posting this insightful and wonderful article!

Decorate the Diva said...

I agree Lee... Great post!

Tony Giles said...

Great article, the idea of coupons is great to get your name out there - so for a new restaurant it could be useful but it doesn't seem to fit in with art.

Food for thought - thanks.

Merritt Hyde said...

Fantastic article Lee! You get what you pay for. I am much more likely to save for a quality (higher priced) item than to buy something that lacks the craftsmanship / creativity just because the price is lower.

newhopebeading said...

Amazing article. Thank you so much for posting it. I was starting to think I was alone in the feeling that these deep discount places do a real disservice to handmade. Perhaps it is my imagination but it was not like this 2 1/2 years ago when I started on Etsy... then the tone was all about artist striving to be paid a fair price for their work... so much seems to have changed and it saddens me. Your article is a breath of fresh air. Caroline

fineheart said...

I agree 100% with your post. I always loved supporting handmade artists and buying local. I thought that was what the handmade movement was all about - to support the artists directly - a fair wage, a fair price, and best of all getting a unique something that has a story and a soul. I am glad there are still many of us left that think this way. I am saddened by the loss of others who miss the whole point of owning a small indie handmade business.

anakim said...

Totally agree with you. Love your editorials Lee - all of them are enlightening and important. Thanks!