Wednesday, June 29, 2011

:: gaining entry has its costs ::

dear friends and readers, i'm here to bounce some things off you.

ready?

okay, go.

so. there's this little thing called a wedding book. some people call it a wedding album but that confuses me because my wedding album has pictures of me and brian in it, and my wedding book is like a catalog of all my wedding designs, all bound neat and nice.

anyway.

the idea of a wedding book is this:

  1. invitation designer creates wedding book.
  2. invitation designer sells this wedding book to retail paper shops around the country (maybe the world!!)
  3. the purchase of this wedding book entitles the retail paper shop to basically be a distributor of invitation designer's invitations. 
  4. retail paper shop pays the invitation designer just wholesale prices for the invitations ordered but charges the consumer full price. in other words, retail paper shop gets a 50% commission for being the one to do all the selling work, etc.
  5. invitation designer fulfills the orders, shipping invitations back to the shop or directly to the consumer.
i debuted my wedding book at NSS and got hearty interest but no purchases (yet?) because i was only offering a 40/60 split (40% commission to the retail paper shop).

so that's the story of wedding books. here's the story of my 40/60 split:

if you're the kind of person (and oh, i'm the kind of person) who wants to sell direct-to-consumers in addition to selling through a retail paper shop, it's not really going to fly if you charge your retail customers one price and the retail paper shop charges their retail customers another price. why would a shop want to invest in my wedding book if they know their own customers can find me on the internet and bypass them altogether, saving a wad of cash in the meantime.

so when i decided to debut a wedding book, i had to raise my prices.

previously, my prices had been set based on the cost of production plus overhead plus my time, paid at a reasonable hourly rate for a graphic designer with some experience under her belt.

there was no cushion added in to allow, say, giving half of the price of each invitation to someone else.

but doubling my prices was just too much. i couldn't do it. it didn't seem justified by the market, it didn't seem fair to my clients, etc.

so instead i raised them about 16% (instead of 100%) and kept the commission at 40% instead of 50% and just hoped that introducing the wedding book would bring in enough extra customers to make it worthwhile that i was basically giving myself a major pay cut on any future wedding-book-generated sales (while giving myself a 16% pay raise on any direct-to-consumer invitation sales).

in the weeks since NSS, with feedback from retail shops regarding the 40/60 split, i've been staring down what seems like the longest corridor ever constructed, and at the end of that long, long corridor are two doors: one says wedding book, one says no wedding book.

i've started and stopped many times along the way, sometimes turning back to where i started, because i don't know which door to walk through when i get to the end of the hallway. in order to walk through the one marked wedding book, more price hikes will be required, for the price of admission to that club is pretty steep.

what's hard is that i don't really know what it will be like on the other side of that door. i don't know if i'll like being in the club and i'm afraid that if i raise my prices enough to get in there, my friends over in no wedding book will stop liking me and i'll end up not making enough money to pay the bills.

at the same time, i sort of want to be in the wedding book club because being there seems cool (if i think about my heroes in the biz, they're all card-carrying members). plus, when you're in, someone else does the selling for you. think about it, because it's pretty major. you still get to do the design and the production, you still get paid, but wow. the only people you have to sell to are the retail paper shop owners. it's an enticing proposition.

but seriously, friends, it's a dilemma for me, because if i really want to gain entry into the wedding book room, i'm going to need to do some major price raising. and i'm not sure that's going to work. i'm not sure the market can sustain that. i worry that i'll be pricing myself above even the other people already in the wedding book room.

i can't decide if i'm having a crisis of faith (faith that if i raise my prices, the customers will still want me) or if i'm just overall turned off by the idea of raising my prices enough to accommodate a 50% commission to someone else.

and if it's the latter, well, then that gives me even more pause because then what the hell did i just go to NSS for??

so now it's your turn. tell me what i'm thinking. show me what you see in my words here that i don't see. what am i afraid of? what shall i do?

Comments (3)

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I can't comment on the prices without knowing them. By this I mean that I can't promise that no matter what you charge your work will sell. However, I can comment on how unfair it is for artists to always take in less than they deserve. We are constantly competing with prices set by big box stores and looking to those prices as fair prices when we set an amount on our handmade work. With that as a standard we are undermining our worth. We are settling for a lower than average pay and certainly no benefits that come with most jobs (health insurance, etc..) just to be able to sell the work we love to make, need to make. I've been thinking (for a long time) that we need to start taking steps to educate our audience. We need to show them the value of handmade. I bet most of them believe in Fair Trade and prefer to purchase items where the workers have adequate conditions and fair pay. Yet, they want their handmade items to be cheaper, because it is handmade by one little person and not a huge factory that needs upkeep. They treat craft fairs like a flea markets and for this I blame the crafter who is under-valuing themselves by not charging a fair wage. I am speaking of the folks who barely make back their materials cost or those who start to offer discounts when a potential customer waivers. We need to set prices that sustain our lives and prove our worth. We wouldn't keep any other job if it didn't pay our bills so why should our business be any less than something we would punch a clock for?
it seems like you wouldn't have done the wedding book if you wanted to continue with the status quo. IMO, you'll never know unless you go for it. think of it this way: do you want to be the shop people go to because the price is right, or the shop that people go to because you're clever and creative. in addition, don't you feel like one of your key differentiators is that you bring flexibility/service to the table? be bold(er) — you started a solo business and are doing it day in and day out. go you! do you want to keep doing things the way you're doing them now or do you want to make more $? it's hard to determine how significant your price hikes will be, but i suspect, sales will come — whether from the wedding book or from elsewhere. and if not as many come, them maybe those folks aren't the best fit for your revised business model. last thought: can you lower your production/variable costs?
Your situation reminds me of when I first started selling online in May 1997. At that time, I'd recently moved cross-country to California, however my prices were still pretty much the same as they'd been in the Midwest. Because of this, I still offered the 20 to 30% wholesale discount that had worked well for me at craft fairs in the Midwest. Since my web site was one of the first sites selling "handmade crafts," I received dozens of wholesale inquiries, but few orders. So I decided to experiment. I redesigned the site and raised my prices so I could offer a 40% wholesale discount on everything. That's when I started getting orders! The new wholesale prices were higher than the old ones, but apparently the buyers were happy that I was able to offer a 40% discount! Don't know that this would work today, especially with the economy the way it is, but I wanted to share my story.

These days I'm trying to get brave enough to price my dolls over $100. I know at certain shows, I could get that and much more, but I've not yet been lucky enough to get into those shows. Someday. Soon. :-)

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