Are your prices too low? (or How to Price Your Products on Etsy and beyond)

How to price your products – this is a question I get ALL the time. And every time I browse Etsy (and many other sites) I see it ­– the shockingly low price. Too many sellers think low prices mean selling more. The reality is that savvy shoppers looking for handmade goods disagree. Pricing low could mean pricing yourself out of the sale. Your price communicates your product’s value to the consumer and is a major factor in your success.

How do you choose your prices? Do you look at competitors’ prices and chose a comparable price, or do you aim lower? Do you factor in labor, materials and profit? Do you keep your prices low because you’re afraid pricing higher will mean selling less?

Women make up the vast majority of Etsy sellers, and woman, by and large, tend to under value their time and efforts. Instead of asking themselves what an item is worth, they ask what will consumers pay? Not only are they cheating themselves with their unfair prices, but also other Etsy sellers. When too many sellers in a niche under-price their products consumers grow accustomed to the low price, and feel cheated when asked to pay a fair rate.

It’s time to change that.  If you’re looking for a way out of the bargain basement and into profitability, here are some tried and tested tactics that work for how to price your products:

• Price your products according to the market: One simple way to ensure your prices are fair to you (and other artisans) is to look at sellers in your niche. Find 3-5 who are selling items similar to your and find the average price.
• Introduce a new line: Many Etsy sellers many fear they’ll loose steady customers if they suddenly raise prices. I suggest they try an experiment instead. Create a new line of items priced fairly and leave your old prices alone. You might be surprised how much faster the newer higher priced items sell.
• Pay your way: If your price includes only material costs, you’re not paying yourself for your labour costs. Increase your prices to add a small profit on every item, and take that money out of the pot every month. Seeing the result of your efforts will keep you motivated.
• Think about a wholesale price: Your business may be just you right now, but down the road your hobby business could become a full-time job. At any moment a boutique or e-retailer could contact you to carry your product. Would you know what to charge?

How to price your products – handmade, Etsy and beyond

This is the simplest formula you can use – (Labor + Materials) x 2 = Wholesale price

The x2 takes into account your profit and overhead as well, so you’re covered.

And to set your retail price, use this formula – Wholesale Price x 2 = Retail Price (or MSRP)

So if each set of earrings you make costs you $2, and you pay yourself $15 for the half hour it takes to make them, then your wholesale price is $34 and your retail price is $68.

I hope the tactics above will help you figure out how to price your products and bring your prices to a level that treats you fairly and rewards your creativity and efforts.  Pricing your products fairly tells consumers that you have a quality product to offer, so start spreading the news.

In the comments below, I’d love to know about your pricing strategy. What pricing formula do you use and how is it working out for you? Leave a comment and let me know.

The Power of Testimonials And How to Obtain Them

This guest post is brought to you by WePay – the easiest way to accept credit cards online.

You’ve probably seen those little blurbs from clients that independent professionals sometimes have on their website. They’ll say stuff like “best I’ve ever worked with!” or “I recommend Joe Smith for his great skill in social media and networking. He’s very professional!” You may have wondered why Joe Smith bothers.

It may be surprising, but those little testimonial blurbs are very powerful. In fact, they’re so powerful that as a small business owner it’s almost ridiculous to not have them on your own website. Let’s take a look at just what testimonials can do and how you can get some of your own.

The Power

So what do these little blurbs do? Are they there just to pad the person’s ego or do they actually serve a purpose?

Far from just stroking ego, testimonials can offer several things at once. When a potential customer lands on your website and thinks about hiring you, they instantly have a problem to solve. That problem is that they have no idea who you are or what kind of work you can offer.

But, you exclaim, that’s what my portfolio and resume are for! Yes, those are very important, but testimonials are different. Looking at your work is one thing, but hearing how awesome you are from several outside sources is another. It’s a shot of credibility you desperately need to win over new potential clients.

Not only that, these testimonials can also easily lead to repeat business. When clients read your previous clients’ praise and then you deliver on it, you’ve just confirmed their suspicions and reassured them you’re good. When they need something else, they will be back, possibly with new friends.

How to Obtain Testimonials

That’s all well and good, but how do you go about actually getting these testimonials? Of course the first step is to call up old clients and just ask. It doesn’t matter if it was ten days ago or ten years ago. It never hurts to ask, and you may be surprised at what they say about you. Even if you think they won’t remember you,they could remember your work and be willing to praise it.

It doesn’t even have to be anything long and epic, either. You really just need a sentence, maybe two, depending on how you want to put them up on your website. They can say it over the phone or write it in email. All you have to do is ask.

Maybe you’re a newbie small business owner and you don’t really have any former clients. There may be somebody you can call on you did work for at some point – a family friend, perhaps, or even an old employer. Somebody who can give you a quick shout-out so you’re not just making something up.

It might even be worth it to do some (light) free projects just to get the testimonial ball rolling. With such a return on investment, the time you spend on the free project is a pittance compared to all the potential clients who will know you’re legit.

How do you ask for testimonials for clients?

How Crowd Funding Changed the Way Entrepreneurs and Startups Raise Money

By Janelle Pierce

After taking a look at some of these highly successful crowd funding campaigns, it’s easy to see that people powered financing is redefining the way businesses raise capital in the 21st century(and giving us some awesome products in the process).

It used to be that an entrepreneur needed to secure a loan from a wealthy family member or a bank, and start ups had to entice and convince investors that their idea had the potential to succeed, before they received a single dollar. Since most investors and banks don’t want to loan money on ideas alone they often required a product to be in development or fully developed prior to risking their own money to back it. As a result many ideas and products were effectively killed off before ever having seen the light of day.

Crowd funding however, changed all this. Through a process that operates more like a pre-order and less like an investment, crowd funding allows individuals to give large and small amounts of their money, as votes, to entrepreneurs or start-ups they believe in, to produce the products they want to see produced. This is different than the funding models of old in that it allows start-ups and individuals to be fully funded, and sometimes over funded, before the initial development or production of their products begins. Not only does this remove a huge financial burden from the inventor’s shoulders, it allows them to be free of the restraints that a typical loan or investment has, and shows them that there is a demand for their product, before they’ve even produced it.
The new crowd funding model of raising money has afforded inventors and start-ups the ability to sell a product they haven’t yet produced. As a result of this, a unique level of accountability and communication develops between the producers and the customers purchasing their products.Often times customers who help crowd fund a project make them their own and become emotionally invested in the entire process.

Additionally the products produced through crowd funding are often times produced in a more public setting, and receive higher levels of customer feedback than their behind-closed-doors investment counterparts do. This allows entrepreneurs to update their customers on the developments, and receive critiques that help to better the quality or functionality of the item before money is spent mass producing it, a process that used tobe a cost burden for inventors and producers, but thanks to crowd source funding, has become a benefit to customers and producers alike!

Have you ever participated in crowd funding? Share your thoughts in the comments below.
Janelle Pierce enjoys writing about various business issues, and spends her time answering questions like, what is point of sale?

The Confused New Business Owner’s Guide to Taxes

This guest post is brought to you by Outright.com, the alternative to Mint for business. Sign up today, import your business financial accounts, and enjoy a less taxing tax time!

Freelancers and entrepreneurs everywhere are gearing up to tackle their taxes. Are you ready for yours? If this is your first year doing them, you may not be, as the task at hand probably seems rather daunting. In fact, if you’re like most first-year business owners, you have no idea how to start or what you’re in for.

One fact you can take solace in is you’re not alone. Newbies everywhere are in the same boat as you, possibly even more confused. You’re about to discover a few things about your business that may surprise you. So to save the surprise, let’s go over them right now!

This is Just the Beginning

An independent business owner has to become comfortable with doing taxes (or hire a professional if you can afford it). The reason why is because taxes are half your life now. Not only do you have to do your own federal taxes in April, you also have to contend with quarterly estimated taxes every few months. You may even have to contend with sales tax depending on certain circumstances. If you don’t get used to dealing with these taxes, they will drive you insane.

You Should Save Everything

Every piece of paperwork you encounter with your business will come back to life at some point. Whether it’s an invoice, receipt, or a tax form, you will see it again. It’s best to go ahead and start saving everything just in case.

Even better, start a filing system so you can find what you need when you need it. Store all invoices together in one place and receipts in another so they don’t get mixed up. Converting them to a digital format may be the best idea as they will be easy to store and move around. (Don’t worry – the IRS accept digital receipts should there ever be a question about a tax deduction.)

Your Life is Expensive

As a wage or salary worker you’re a little protected from how much money is actually moved through taxes owed. However, as an independent business owner you’ll suddenly find out just how expensive it is.

For example, Medicare and FICA taxes must be taken care of solely by you. Before, they were split between you and the employer, and the employer sent everything in. Now, though, you calculate the amount you owe on Schedule SE which transfers over to the Schedule C for your business. This means less money in your hand – and that’s just one example.

Mistakes Can Be Fixed

Most people think of the IRS as an evil entity sworn to destroy your life forever, but in fact it’s just made up of people. Those people understand nobody is perfect and that they make mistakes from time to time. This is exactly why tax forms like the 1099X exist. It’s a form that lets you fix mistakes you made on your 1040 forms.

Look, you’ll make mistakes, and it will seem like the end of the world. However, it’s not, and you shouldn’t treat it as such. The IRS even lets you file entire years you missed, so they’re obviously not trying to destroy your life. Just remain calm and fix the issue. That being said, its way less stressful to get it right the first time!

If you still have questions about your taxes as an independent seller, head over to the Outright Community and ask away! If this is all new to you, we recommend you start with the First Year Online Sellers Tax Guide. If you need professional advice seek out your local tax professional who deals with businesses like yours. Happy tax season!

How to Maximize Your Time at Networking Events

This guest post is brought to you by WePay – the easiest way to accept credit cards online.

Love going to networking events but hate when you end up walking in circles endlessly or wasting time talking to wrong people? Going to these events seems very useful – usually before you actually go – because you get to imagine all the wheeling and dealing you’ll do. Afterwards, you may wonder what in the world happened and why you went at all.

However, there are plenty of things you can do to maximize the time you spend meeting and greeting. Here are some tips to get you prepared for your next event.

 Know Your Goals

What do you want to get out of this event? You want to have the most specific goals in mind before you ever walk through the front doors. Don’t just say “I want to meet other business leaders.” Make the goal, “I want to meet people in my industry that can help me find consulting work with restaurants.”

When you have specific goals you’re more likely to hone in on the right people off the bat. With vague goals you’ll be more inclined to hang back and let the crowd dictate your movement and conversation, which can lead to you sitting in the corner. And hey, we’ve all been there,It is a lonely place, so get out of the corner and make some contacts!

Social Media

It is more than likely that you signed up through this networking event through a company that has a Facebook or Google Plus page. As a result, you can see the other possible attendees.Do some research beforehand and see which ones will be useful to meet on the day of the event. You may even be able to contact them ahead of time if you’re so inclined.

This gives you even more of an advantage when the event starts. Instead of wandering around the room or talking to people at random, you know exactly who you’re looking for and what you want to talk about. As a bonus, find out what your contacts are interested in other than business (sports, movies, etc.) so you have something to break the ice.

Materials

Is there anything worse than running out of business cards in the middle of an event or forgetting them altogether? You’re rocking and rolling, making contacts left and right, and suddenly you see you’ve run dry. There’s nothing left to do but go home and work with what you have so far.

Make sure you have everything you need way in advance. In fact, get more than you need, as you never know what’s going to happen. Keep in mind everyone there is also going to have business cards, so yours may not stand out. Instead, to make an impression, hand out something else like magnets or coupons for discounted products/services.

How did you make the most out of the last networking event you attended?