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Pricing Your ItemsPricing items in the online retail environment is more of an art than a science. For years before the Internet existed, there were hard and fast rules for pricing items to cover your costs and make a profit. Since the advent of the Internet, the rules have changed somewhat. But that doesn't mean it's a "free-for-all." Pricing your items to sell online can mean the difference between success and failure. A beautiful shop with fabulous pictures and well-written descriptions may not be successful, if their items aren't priced just right.
We asked a few veteran shop owners from the various Lanes on Ruby Lane to give us their tips for how to price items correctly. Please note that there is an important difference between pricing an antique or collectible you purchased, and pricing an artisan item that you or another artist produced! A special thanks to those who contributed:
Lisa Stockhammer of The Three Graces:
There is no easy way around it - the best way to price your merchandise is to know what you have, what condition it is in, how rare it is, how collectible and much more. Intimate and in-depth knowledge and research is a dealer's best friend. However, with access to the Internet and other resources, there is a world of information waiting to be found.
1. Check Google. List as many search terms that you are sure of, and hit enter. For example, if you know your object is porcelain, a tea caddie and hand painted, put those terms in and hit enter. If you aren't sure its porcelain, leave that term out. You can always reduce the terms down later, but be as specific as you can and see where that leads. It often brings you right to items that have some relevance to your object. Then search again using more defined that you have found.
2. Ebay - Search on Ebay for your item and remember the "completed items" search category for prices realized. However, Ebay can be deceiving– some items go for higher than they are worth, while many are under valued. Use this as a guide only and find as many items as you can that match your item and compare.
3. Search online antique/vintage malls: Check Ruby Lane or other malls and see if you can find similar items. Use the photographs to make comparisons.
4. Auction houses online and print catalogs can also be useful. Try Christies, Sothebys, Skinner, Bonhams and others for current catalogs and estimates. Sotheby's keeps some historical realized pricing.
In addition, these sources can be of great help:
5. Books are one of the best sources for antique pricing and identification. Many books have been published in recent years on a myriad of antiques and collectibles. Use your local library or bookstore. Amazon.com can be a great source for used books at a fraction of their newly published prices.
6. Museums - local museums (or even those out of town) can be sources of information if you can get an in-road with some of the staff. Even the Victoria & Albert in London or other international museums can be of help in identifying pieces, however, be prepared to be persistent and to wait.
7. Other dealers - getting to know other dealers of like objects is crucial. Ask as many questions as possible when buying as most people are very happy to provide a good deal of information - but usually you must ask - they rarely volunteer so be bold!
8. Browsing is one of the best sources of information out there. Attend every antique show, collectibles fair or flea market you can. Visit local antique shops and such for training your eye is by far one of the most crucial aspects of buying, pricing and selling.
A last caveat, there are always items which look like "the real thing" but are fakes or poor imitations, or something which is actually much more valuable than first glance - but this is quite rare! The bottom line, if you don't want to do the research, get to know the items you are going to sell, become an expert at what you do, then chances are making money is going to be rough going. Just as in any field of endeavor, rookies don't usually make it for long - they become experts or they move on.
Carol Augustine of PMC Studio Art:
1) Do your homework, find out what others are charging. This will provide a basis for your pricing structure. If you're an artist, you need to figure out where your pieces fit within the on-line community of other artists working in the same medium.
2) You do not want to start out as the cheapest or most expensive on-line seller. If you produce a top quality item, and keep your prices at mid-range, you can gradually increase prices later. Undercutting the other artisans and crafters could work against you, even if you work considerably cheaper. Some customers believe they get what they pay for. Don't turn away potential customers by charging too low a price for your items!
3) Spend some time analyzing your costs. Be sure to factor in your labor and profit margins to know what you need to make. Be prepared to make adjustments according to ever-changing market trends.
4) Know your direct costs. Direct costs are monies spent for raw materials, for finishing products and direct related services. Don't forget to factor in the cost of shipping materials.
5) Know and understand your overhead. Your overhead is the indirect costs associated with producing and selling a product. These are items such as, rent, utilities, office supplies, depreciation and anything else that is not a direct material or labor cost. For a small business, doing time-cost studies is usually too time consuming and does not add value to the product.
One simple formula commonly used is to consider indirect costs to be the equivalent of 1/3 of the direct costs or DIRECT COSTS X 33/3% = OVERHEAD. A variation on this is to treat overhead as equal to one-third of the cost of materials or one-third the cost of labor, whichever is greater.
6) Don't forget to add labor costs, including your own. Labor is worth money but avoid overpricing your labor. To find a value to assign to your labor, check out what others doing the same type or similar type of work are being paid and pay yourself the same thing.
7) Add profit to the pricing equation. This is a very important element in any pricing structure but for whatever reason, it is also the one most ignored by artisans. Profit and labor are not the same. Labor is part of the cost to manufacturer an item. Profit is what is left over after all other costs are deducted - it is the company's share. If you're selling wholesale, shop owners generally double the price, or mark up 100%. You need to do the same thing.
Here's a simple pricing equation: Materials + Overhead + Labor + Profit = Price
Formulas are fun but for me they are not practical. You may still need to adjust your prices to fit whatever consumer market you are trying to reach.
8) Reduce you costs to increase profits. If your costs are excessive your prices may be too high to compete effectively. Look for ways to make improvements and reduce your costs.
Profit is what will allow you to grow your business, it is the money you will invest to develop new products, it is the pay back for all the long hours you have put in and for the risks you have taken. Profit is the reason we operate a business, because without it we cannot succeed and prosper.
Elizabeth Kepner of Jewels by Liz:
Pricing of collectibles is not an absolute science. Some say a collectible is worth exactly what someone is willing to pay for it. However, there are some tools you can use to establish the appropriate price:
Start with Books & Pricing Guides. Study.
1. Be aware that these are guides only.
2. The prices may be inflated or understated, depending on the category.
3. Date of publishing may reflect outdated information.
Look and see what items sell for at present. Research.
1. Go to different websites.
2. Go to auction sites.
3. Use your fellow sellers as resources.
4. Be aware that items may price differently in BOM shops than online shops.
5. Check for Scarcity/Availability.
Watch for HOT items. Monitor.
1. Items in high demand and low supply may bring higher than typical prices.
2. Remember HOT can turn to COLD. Case in point, about 5-6 years ago, Lucite purses were bringing premium prices. A little over l year later, the market was flooded with Lucite purses and Shop Owners literally had Lucite purses they were unable to sell at rock bottom prices.
3. Watch for Trends (i.e. something selling high then going down in price).
Setting a Price. Flexibility.
1. An item purchased at garage sale prices allows for greater pricing flexibility.
2. Leave at least some room in your pricing for movement.
3. It's a lot easier to go down on price than up.
Zenna Inness of Ever After:
You make your money on the things you sell when you, yourself, buy them. Educate yourself in as many areas of interest (glass, china, pottery, toys - whatever) as possible, including the present state of the market for prices, so that you are able to recognize a good buy when you see it....that's where real profit is made.
And here's a post from another shop which has a lot of good pricing insights as well:
Let me begin by stating that books are WORTHLESS in regards to value (although they are awesome as a means of identification). Price is determined by the buyer and seller at a given period in time. An item is worth what a buyer is willing to pay for an item and what the seller is willing to sell the item for.
Also note, that just because one party or the other does not like the price does not mean the item has more or less value, only that an agreement could not be reached at that point in time between the buyer and seller. Therefore, it was not valued at a specific price AT THAT POINT IN TIME. Tomorrow is another day and maybe then an arrangement can be reached.
I have often told this story on this board and I will do it again: When I first started selling in an antique mall I priced my items very reasonably. My best items were running out the door and yes I was making money. The problem was I COULD NOT replace the items I sold for the money I sold them for!!! Needless to say, after a few months I raised my prices and made an interesting discovery. I was still selling about the same dollar wise BUT I WAS KEEPING MORE OF MY ITEMS THEREFORE MY NET WORTH WAS NOT DECLINING.
As a seller you must determine what your time is worth. That is all we do. We exchange time (a finite item that all of us have but cannot keep) for money. If you are selling online for entertainment and as a hobby then by all means price the stuff cheap and move it.
Sellers like me think differently. I am here for the long haul and to make a living. In order to do that I must make a profit. It takes a lot of sales to pay "rent" on thousands of items here. The items I do sell must also pay for the items that did not sell that month. Additionally, I want to see profit above and beyond that, to pay for my other expenses like overhead.
(If you make a great buy,) I would recommend you profit from it rather than give items away. I command top dollar for my items. For that top dollar my customers get a properly described item, awesome service and a properly packed package that was shipped promptly and will arrive safely. All of the above things cost both time and money. I want to profit from all the effort I put into my business therefore I charge people for the privilege of doing business with me (and it is a privilege). We are not the only ones to benefit from the relationship with our customers. They benefit from us as well. After all, if it wasn't for us they would not be able to buy anything!
Now in regards to how I actually price items it varies. I like to get 200-300% profit. In other words if I have $10.00 into an item I want somewhere between $20.00 and $30.00. Obviously I cannot do this all of the time and on numerous items my profit is closer to 50% ie. a $10.00 item will sell for $15.00. But when the year is over and I have averaged it all out my profit is about 100% BEFORE expenses. After expenses it is closer to 15 or 20%. For this modest sum I lose a lot of sleep, work myself like crazy and experience the stress of trying to feed my family at periods in time where sales are not there. At times I even wonder if it is all worth it. My only true satisfaction is that every year I know my net worth is increasing because I have more stuff than I did the year before.
You will get out of your business what you put into it. Whatever you decide to do it is RIGHT for you. There is no right or wrong answer here. There is only a difference in how one approaches their business.