Make a Living Riding the Long Tail - Part 3
Should I link to my Etsy shop on my web site?

Pricing and the Dilemna of discounts, coupons, or reduced prices?

TimothyAdamChair
Chairity © 2006
steel
Artist: Timothy Adam

Recently I listened to a program by Timothy Adam of Handmadeology about using the Internet and social networking to give more visibility to your art and craft. He has lots of great ideas and really knows about working the system of online social networking sites. On the other hand, a recent post at Timothy Adam Designs about "Search trends during the holiday shopping season" is very disconcerting as he focuses on discounts, coupons, and free shipping as promotional strategies.

TimothyAdam
Living Steel Jewelry Display
steel
Artist: Timothy Adam

I think discounts, sale coupons, holiday sales, etc. have little effect in stimulating a sale of art or craft and instead have a negative impact that adversely erodes your retail prices permanently.  I believe it is a fallacy to think that a buyer who is already considering a purchase of your work will change their mind just because of a small discount or not.  And anyone who wasn't interested in the first place won't care about discount offers whatsoever.  Furthermore, lowering your effective price with discounts or coupons sends a signal that all your work can be discounted and that this lower price is the true market value of your work.  In effect you are saying that the original retail price was inflated to begin with.[For more information about Discounts read the Professional Guidelines document.]  

It is vitally important that we should not fall into the trap of appearing to be just another mass produced commodity. The arts and crafts market can not afford and should not adopt discounting and similar pricing strategies that are frequently used in the general consumer market like K-Mart and Macy's.  First of all, don't kid yourself, all of these giant chains double or triple the wholesale price to absorb these discounts.  They have designed their products to be easily mass produced and cheap.  It may be a great value for the consumer, but it lacks any differentiation from what thousands or millions of other people buy.   

PinkDotOrbit_Red72GREEN
Pink Dot Pin
Recycled tin cans
Harriete Estel Berman

Instead, the handmade object should be promoted for its unique attributes or value.  By its very nature, a handmade object is a limited edition or one of a kind object. Ideally, art and craft exhibit skilled craftsmanship, personal attention to details, and distinctive creativity.  A buyer is attracted to the work because it reflects and reinforces the buyer's desires, self-identity, and expression of character that they wish to show to the world.  It is unlikely that a small shift in price will alter these perceptions.

Stimulus-Plan72GREEN
Stimulus Plan Pins © 2009
Recycled tin Cans
Harriete Estel Berman

People who buy from the local artist (whether on Etsy or The Artful Home or at the local crafts festival) are making a decision by their very action. Their purchase creates an identity for themselves.  They may want to know the artist or know the inspiration behind the work.  They may admire this alternative lifestyle and want to participate, even vicariously, just for the afternoon. Every time they wear or use their handmade item, they feel richer for the experience.

2Rosesbrac20
Forest Spirit Bracelet © 2009
polymer clay
2 Roses

John Rose from 2 Roses offered this observation:
"We did indeed see a lot of discounting this year. Much of it panic motivated. Anecdotal surveys reinforced that buying volume was equal or above last year's for most artists we spoke to. However arbitrary discounting reduced profits. 

This really points to a fundamental lack of product offering flexibility by the artists we spoke to. Instead of adjusting their product offering to offer lower priced lines and protecting their margins, most simply discounted their regular lines. This is one of those textbook "business 101" mistakes. 

Our reaction to the shift in the economy was to analyze buyer behavior relating to luxury goods and discretionary purchasing. What we found was that there was plenty of buying going on, but shoppers were placing much higher emphasis on "value". By augmenting our regular priced lines with items manufactured to specifically offer a high value at a lower price point AND maintain normal margins, our sales exceeded last years in both volume and profit. The introduction of lower priced lines allowed us to pick up market share and maintain the value perception of our regular priced lines.
BTW this is a classic Fabrege tactic.

A lot of artists just don't understand how badly they hurt themselves and the entire industry when they resort to arbitrary discounting." END QUOTE

Leaves72GREEN
Green Leaves © 2004
Recycled vintage doll house
Harriete Estel Berman

Sell the appeal of your work at its full value.  The mass market chains really can't compete at this level.  

Harriete Estel Berman
Riding the Long Tail on a grand adventure (without discounts.)

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