Tips for Adjusting Merchandise Pricing in Your Etsy Shop
To ensure that the price you’ve hit on for your Etsy merchandise is, in the immortal words of Goldilocks, just right, you need to do a little research. Many artists and craftspeople underestimate their worth. They lack confidence. As a result, they inevitably underprice their pieces. Underestimating the value of your work doesn’t just hurt you; it hurts everyone who’s trying to earn a living selling handmade goods.
Know your competition’s pricing
Your first order of business is to scope out your competition, both on and off Etsy. What are they charging? If their prices are roughly in line with yours, you’re probably in good shape. But what if they’re significantly higher or, more likely, lower? In that case, put yourself in your prospective buyer’s shoes and ask yourself the following questions:
Would I buy my product or a competitor’s product? Why?
Is my product made of better materials than my competitors’ products?
Did crafting my product or my competitors’ products require more skill?
Is my product different or special in any way?
What do I think my product is worth?
Your answers to these questions help you determine whether you need to adjust your price upward or downward. For example, if your product is better made than your competitor’s, you may be able to adjust your price upward. Ditto if it required more skill to build. Of course, if the opposite is true, you may need to lower your price.
As you research the price of items sold on Etsy, you’ll appreciate Etsy’s Market Research Tool. This tool enables you to see the price points of items sold on Etsy in general terms. To use the tool, log in to your Etsy account and conduct a search for an item you want to research.
Then, on the search results page, click the Research View button next to the Sort By options. Etsy displays a graph depicting the prices of these items and the top tags used.
Your competition doesn’t consist just of people who make an item similar to yours; it’s anyone who’s targeting the same market you are.
Study your target market
In gauging your price, you need to consider your target market. Who, in your estimation, will buy your piece? How much disposable income does that person have? If your target market is 20-something hipsters, chances are, they’re not quite as flush as, say, your 40-something set, so you may need to keep your prices lower.
Has this ever happened to you? You’re shopping for a gift — say, earrings for your sister — but the pair you’ve found is priced far below what you want to spend, so you don’t buy the set, even though the earrings are gorgeous and you know she’d love them. People often shop for gifts with a certain price point in mind.
Figure out how to lower your prices
If your research has revealed that your prices will likely give your market sticker shock, you may need to lower them. The best way to make this work is to attempt to lower your own costs.
Can you purchase your materials more cheaply from a different supplier? Can you spend less time making each piece? Or can you redesign your product to require less in the way of supplies or labor time — for example, omitting the decorative rickrack piping on your plush pup?
Don’t lower your prices to compete with machine-made or imported items. Handmade items have more value and need to be priced accordingly.
Know when to raise your prices
True, you need to lower your price in some circumstances, but other times you can charge — wait for it — more. See, people perceive some products to be more valuable than others. For example, consider the fact that some painters can command stratospherically high prices for their paintings.
It’s not because their raw materials were substantially more expensive — paint and canvas cost pretty much the same amount for everybody. And it’s not that their paintings took longer to create. No, these paintings are insanely expensive because the public perceives their paintings to be valuable.
When pricing your items, see if you can take advantage of this perceived value and position your pieces as premium products. Maybe you use exceptional materials in crafting your piece. Note that buyers will also perceive your work as more valuable if you’ve developed a reputation as an artist — perhaps by showing your pieces at galleries or gaining publicity in some other way.
Be sure to talk up your work in your shop announcement and item descriptions. Share why your pieces are valuable. For example, if you not only craft necklaces, but also make your own beads, be sure to say so. If you use only the best organic cotton to sew your baby clothes, include words to that effect.
Sometimes the very act of tagging your piece with a higher price can make buyers perceive it as more valuable. Of course, that doesn’t mean you should offer some useless doodad or otherwise unremarkable item at an outrageous price. People will see right through that ploy. But if you offer an item that’s beautifully crafted and truly unique, you may be able to capitalize on this phenomenon.
If demand for an item that you sell is so high that you simply can’t keep up, it may be an indication that you’ve priced it too low. On the flip side, when items don’t sell, many shop owners assume that it’s because they’re priced too high. However, your price may be too low. Before you start slashing prices in your store, try raising them. You may be pleasantly surprised.
Evaluate and raise your prices on an annual basis. The beginning of the new year is a good time to bump up prices.