09 November 2011
My Troubled Relationship with Discount Sales
It is so hard to not get sucked in. I can have my resolve in place, but then people keep asking "When is this going to go in sale?" My answer is that it isn't. This is really hard as a person who sells things to not have sales. The pressure comes from all sides. It comes from customers, from fellow craftspeople, from society. With things out there like Groupon and Living Social. From all of the Peer pressure to participate in Black Friday and Cyber Monday sales. It reenforces the idea that it is not okay to make your living selling things. That may sound hyperbolic, but that is what it boils down to. We are pushed on all sides to think that price is the only factor, and you cannot sell anything if you aren't constantly lowering your prices in order to get people to buy your goods. This is unsustainable. At some point, the price will be too low to make a profit. The price will be too low for your work to have any value. And if you make all of your product by hand by yourself, you cannot follow the model of mass produced goods. And in order for an item to be put on sale, it is either overpriced to mark down or the person making it is not making enough money on it.
Mass produced goods have several things you don't have if you make things yourself. They have access to cheap supplies and cheap labour. They have more room to make lower margins because they the advantage of a high sales volume.
The next argument is that if you price your goods properly, you can afford to have a sale now and then. I would like to argue that you might be able to afford it in dollars, but not in perception. I have my good priced properly; all of my materials are accounted for (usually materials are less than 10% of my product, it is all labour), my labour on the piece itself, the design process are all in the wholesale price while paying myself a living wage. You double the wholesale price to get the retail price. The retail price covers my time to photograph, market, sell etc. my products to the general public. If you are a store, you get that retail mark up to cover the costs of running your retail business.
But can you afford the perception that your product is not worth it's retail price? That is what sales say. If you are constantly having sales, then why would anyone ever pay full retail? This is another perception that I would like to figure out how to change peoples' mentality around. And is this the customer that you want to attract? I don;t know about you, but I am trying to establish long term relationships with people who will continue to follow me and support me over time; not just a quick one-off sale at a loss.
How do you establish the perception of the worth of your product? Take cost out of the equation for a moment, and focus on the product. Can you tell me why it is special? How long did it take you to develop the skills to make this? What do your particular sensibilities bring to your product line? What emotions does this evoke? How can we stop trying to compete with the mass production model? I don't have all of the answers here, but I think it is important to consider these questions. If we do not value our work, then we cannot expect anyone else to either.
I am not saying that you shouldn't have the occasional sale. Discounting goods on occasion can be a good tool in your business toolbox. This is one you should use with care. I tend towards giving discounts to my most loyal customers as a reward for continued business than trying to start out my relationship with a customer by setting a precedent of expectations that aren't sustainable.