June 27, 2016

Should You Discount Your Handmade Products?


handmade

As an entrepreneur who makes the products you sell, you manage a key cost that your non-handmade entrepreneurial colleagues do not. That cost is the amount of time it takes you to create a product from scratch by hand — with your hands.

This cost is one of the many reasons you must be especially careful when fielding requests to discount your products.

Requests for discounts come in many forms, each requiring a firm, proactive and confident response. Below are some replies for you to consider, and put into practice, so they are “at the ready” the next time you are asked to discount your products.

When Asked to Discount Your Products by. . .

Friends and Family

This is tough, particularly when the friends and family members who ask for a discount are supportive of your business. When people have helped and encouraged you, you may be tempted to think that you owe them a discount on your products. You do not.

What you do owe them is friendship, gratitude and appreciation. You owe them support and encouragement as they take action to build their own dreams. You do not owe them a piece of the profit from your business.

The best way to handle this request to discount your products is to create a policy and stick with it from the very beginning. If you decide to offer a discount to friends and family, then you’ll need to define “friends” and “family.” Is it just people you have lived in the same house with, or does Tommy’s first cousin’s wife count too? You’ll need to define and stick to the discount so it is predictable and easy for you to calculate and handle without any fuss.

If you decide not to discount your products, don’t second guess your smart business decision. Ask your friends and family members to subscribe to your newsletter so they can get announcements about discounts and specials when you offer them.

People Who Claim They Can Make it Themselves

When you sell your products at live events, you are likely to encounter people who see that your products are handmade, and decide that you should lower your prices because they “can make that myself.” Naturally, this is insulting. But you must not show that you take offense.

Here is a response you might edit to your own liking:

“I’m happy that I inspired you to consider making your own products. I got started just making stuff too, but today, it’s my business and I do not discount my products. I do have the occasion sale or special offering, so if you subscribe to my newsletter (hand them a pen and the sign up sheet), you can be the first to know about them! Let me know if you have questions about any of our products here today. Thanks!”

You’ll have to play around with the language to account for the circumstances, but you get the idea. Turn the insult into a complement, and ask them to subscribe to your list. If they decline, they’ve done you a favor by letting you know that they are not your target customer, and you can get on with your day.

Wholesalers

Retailers only make money if they can sell your product for at least double your wholesale cost, plus any shipping if they have to pay it. As a result, they have a huge incentive to try to get you to discount your products for them. This can be tempting, especially since good relationships with wholesale customers can yield repeat sales for years into the future.

Don’t let them take advantage of you though. They may ask for things like free shipping or in-store samples … anything that would allow them to make more money by selling your product. Only consider such requests if the numbers work out.

For example, if the cost to ship the goods to the retailer eats up a large chunk of your profit on the sale, then you cannot honor a request to waive shipping. (Increasing your prices to cover shipping could help avoid this problem.) Likewise, if you have priced your goods to make a profit on a minimum quantity purchase, do not let a retailer talk you into selling them a smaller quantity — unless there’s something in it that makes up the loss for you.

Of course it’s hard to turn away any retailer inquiry because it could mean many sales into the future. But if a retailer does not want to pay your price on a first order, they won’t want to pay it on a second one either. Do not do anything once that you do not want to have to do over and over again in the future.

Just like consumers, retailers love to get a special deal now and then, so make sure they have a chance to subscribe to your retailer newsletter, and offer seasonal and special edition discounts just for them.

Social Media Users

Sometimes, you will receive inquiries for discounts via your social media outlets. These must be handled with special care because your public response will be seen by hundreds if not thousands of people.

The first thing to do is to consider the platform. On Twitter, for example, you cram a reply into a mere 140 characters. Here is a suggested reply:

“Our prices are as stated at our site (link to products). Subscribe to our newsletter for notifications of sales, etc. Thank you!”

This reply does several things. It links to your product page and to your newsletter subscription page, which exposes people to your products and to how to join your list. It also says “NO” in a nice way that has a positive and confident reflection on your brand.

You have more room to work with on Facebook and Instagram, but the same basic principles apply. Don’t be insulted. Turn the inquiry into a chance to share your website links with tons of people at once.

In any of these requests to discount your products, you may wish to offer a gift with purchase of a minimum amount, or some other incentive if they become a frequent buyer. The thing to remember is that all of these little discounts add up to huge sums of money. They require extra work in terms of your accounting, and they eat up the time and energy you need to be focused on the customers who will pay full price for your handmade products without batting an eye.

How do you respond to people who ask you to discount your products?

Handmade Photo via Shutterstock

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Donna Maria Coles Johnson


Donna Maria Coles Johnson Donna Maria is the founder and CEO of the Indie Business Network, a trade organization providing mentoring and coaching services, and affordable product liability insurance, to makers and creative entrepreneurs across North America. An award-winning small business advocate, Donna Maria has hosted the Indie Business Podcast since 2005. She blogs at Indie Business Blog.

One Reaction

  1. I love how handmade products are finally getting the attention that they deserve. I am an artist myself and I use to draw CG art for an online forum. I know that handmade products are different but it is nice that people are now willing to pay for the works of people’s hands. This will encourage creativity in the world.

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