How to Price Your Wares
Generally speaking, you either take the wholesale price and double it, if you are reselling a product, or take the cost of materials and double that to get your labour cost and add the two together. But that is just a rough guideline. You can do what you want!
It is so common for new WAHMs to not charge enough for their product. Why ever could this be? Some experts trace the cause to not eating enough veggies as a child or poor potty training strategies by your parents. I don't know... I think that's a little off. But in the meantime, I am making sure that my kids scarf down lots of broccoli to ensure they'll easily be able to support me when I'm old and feeble. And I plan on being very demanding when I'm old and feeble.
I think that the real reasons for WAHMs to not charge enough include: 
- Fear of losing sales over affordability;
- Fear of looking overly boastful about their product;
- Fear that consumers will have an idea of their wholesale price or manufacturing cost and that they will appear greedy;
- They take advice from friends and family who may not be experienced in business and don't know enough to give advice;
- They compare their products to those sold in large bulk-purchasing department stores like Walmart;
- They compare their products to those similarly made, while inferior (requiring less time and money).
When I started my first business, I was selling my product for $14.99. My first change was to $15.99 and then $17.99. No change in purchasing. I was still getting as many orders. Then I changed the price to $19.99 and some to $21.99. The only difference in purchases was that there were MORE! Obviously, the moral of the story: I want to buy more shoes and handbags.
Some products will sell better at a higher price point because people assume that it signifies higher quality. Great deal for you, huh?! Generally speaking, if it's handmade then people expect it to cost more. (Unless it is made by the hands of little children in Taiwan and then we expect to pay no more than 33 cents.)
Some initial things to consider:
1. What is the market that you are appealing to? The rich sector? The group who spend money on status items? The sporty folk? The organic, "granola" folk? The impassioned, conscientious buyer? The everyday people who buy a solution for their problem and nothing more?
2. At what price point will you resent producing and selling your product? How much of a profit do you need to keep enjoying what you are doing? Is it a realistic number that you come to in the sense that some people WILL pay that? There are some people who, depending on the product, will buy at an 80% mark-up, but most will not pay 300% (unless they are paying solely for ego's sake). If you think the number that you come to is a little on the high end but still realistic, just determine who your market is and advertise to them and don't look back. Don't worry about what your friends and family say. Don't worry about looking boastful. This is your TIME that we are talking about and your time is precious. If you put time into your business, especially if you've made the product yourself, and you don't make enough profit to feel that it's been worth your time, you will just end up stressed out and resentful and your family will feel it too. Is the extra cash worth that?
3. Feel free to ask opinions of anyone and everyone but only take advice from people who have experience. If you are starting an online store, why take criticism or advice from someone who doesn't even shop online at all? I find that I get VERY different feedback about my ideas and articles if I ask fellow WAHMs and everyone besides WAHMs what they think. If other people don't quite "get it", I don't sweat it because I know that my fellow sistas ;-) will provide support and be the only sounding board that I really need. But it's always interesting to hear what other people think too.
4. Most people have no idea how much it costs to produce your something-or-other but they do know that Walmart can do it cheaper for a whole lotta reasons that you can't match. The best that you can do is offer better customer service, whatever other perks you can think of and some people will support you while others will still go to Walmart for the cheaper version of what you sell because they are just trying to do best by their family's budget and ya gotta respect that. Now, if the quality of your competition's product is inferior, don't be afraid to say so without saying so! Like, don't name names, for goodness sake! But give a list of your great features and benefits (with the emphasis on BENEFITS). Most people will understand what you are saying and if you start writing, "...while other business actually use plastic thingies, we only use metal thingies because we actually care about you." you will really, really turn off most buyers.
How to Charge More and Get the Sale
You heard me mention the term "price point". Every time you hit a $10 mark that is a price point and for some reason, staying below that mark, even if just by a penny or two, makes a consumer feel like they are spending sooo much less than if you hit that $10 mark. While I find prices that end in .99 annoying, I have, on many occassions, reluctantly recognized that I will come home from a store and tell my husband, "Look at what I picked up! And it was only six bucks!" when it was actually $6.99!! I even try to round up these prices in my head at the store and view them as $7 instead of $6.99 but when it comes time to recite a price back to my husband, all I remember is the first digit on the price tag: 6. Now, if I am already aware of this, what psychological tricks are being played on me that I don't recognize?
I've heard that some studies have shown that 7 seems to be a magic number. 7, 17, 27... Anything ending in 7 elicits a response in people. A friend of mine used to work for a chiropractic clinic and told me that they sold dramatically more treatment packages at $37 than at $35! Other studies show that any odd number is perceived as a better deal than a nearby even number. Boy, we humans are complicated creatures.
What the experts at the Internet Marketing Center have found is that 19.95 will always outsell 12.95 and 29.95 will always outsell 19.95. From there, the most successful price points are 49.95, 69.95, 97, 197, 297 and so on. Isn't it interesting that after $97, the most successful price points are at every hundred ending at 97?
You can also try pricing your product a little bit lower than you'd like and then add a little more to your shipping and handling. If you make this obvious in any way, it will instantly create a feeling of distrust with your customer, however, so be very sensitive when trying this little tactic.
How can you sell customers an experience?
Numbers aside, another thing that you really need to consider is how to reach the emotional core of your consumers. People are no longer looking for the cheapest price out there. They will pay more for better service, for convenience, for quality, and for feeling appreciated. Try these five suggestions:
1. Be sure to send an automatic reply when an order is placed to say that the order was received and when it will ship and how to track it. OR, even better, if you can, send a personal email thanking them by name for their order and maybe asking them what they are buying it for (their child? A gift?). OR, even better than that, you can purchase some incredible software that does a number of amazing things, only one of which is to send personalized emails automatically to your customers. It will also allow you to collect personal info about your customers and then send them specials or emails that apply to them specifically based on their location, their ages of children, etc.
Then, when your customers write back, they will include more details upon which you can further discuss, creating a relationship! You can even keep notes wherever you keep track of your customers orders, about your customers and their children or whatever details you can gather. Then, when they return, you can thank them again for their order with another personalized email asking them about their children and what is new in their life, etc.
2. Humour your customers. Include a little joke or funny quote in their confirmation email or on their receipt or throughout your website. Land of Nod is a great example of using humour to sell products. They aren't afraid to be campy and it's endearing.
3. Add a LiveChat feature to your web site, if you possibly can or make your phone number readily available in case your customer has questions. Or, at least, guarantee a response time!
4. Offer a personalized shopping service where you help customers find gifts based on a few factors such as sex, age and hobbies of your gift recipient. Don't assume that categorizing your web site into age brackets is enough to help. Online shoppers are impatient and they want what they want yesterday. If there is some way that you can cut their time investment down in finding what they need, they will surely appreciate this experience. Imagine if you could add a quiz feature to your site where the shopper can enter different details about the person that they are buying for and then your quiz can generate some suggestions to match!
5. Offer the best warranty that you possibly can. If it's jewelry that you are selling, offer to repair damage indefinitely. If it's a product that can be touched up in any way, offer to do this free of charge. Thomas the Tank Engine trains come with a lifetime guarantee. Cutco knives are the same. The require that you keep the receipt and most consumers won't. And yet, they will appreciate the gesture and the comfort in knowing upon purchase that their product is guaranteed, even if they never take advantage of it.
6. Offer a frequent Buyer Reward Program! Five purchases and they get a free _______. Be as generous as you can! Also, consider offering some sort of reward for referrals.
Oops! That's six suggestions, not five. Well, buy 5 and get 1 free!
If you really think that your product is unique and hard to price or in a very competitive market, there is software that can help you find the perfect price and one such is PlanWrite Business Plan Software, with prices starting at $49.95.
